<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-80437
PROSPECTUS SUPPLEMENT
To prospectus dated December 9, 1999
$719,166,228
(Approximate)
[LOGO OF GREENPOINT CREDIT]
Seller and Servicer
Manufactured Housing Contract Trust
Pass-Through Certificates, Series 2000-3,
Issuer
The securities issuer will issue eight classes of securities, seven of which
are offered under this prospectus supplement.
<TABLE>
<CAPTION>
Underwriting
Certificate Pass-Through Price to Discounts and Proceeds to
Class Balance Rate Public Commissions Seller
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I A $337,652,000 8.45% 99.99180% 0.235% 99.75680%
I M-1 25,214,000 9.01% 99.94737% 0.450% 99.49737%
I M-2 19,733,000 9.25% 97.68804% 0.550% 97.13804%
II A-1 155,656,917 LIBOR + 0.27% 100.00000% 0.275% 99.72500%
II A-2 125,000,000 AUCTION 100.00000% 0.275% 99.72500%
Total $663,255,917 $662,758,740 $1,787,283 $660,971,457
</TABLE>
. The approximate principal amount of the offered certificates may vary by
plus or minus 5%.
. The securities issuer will also issue the Class R certificates which are not
being offered by this prospectus supplement.
. The Class II A-2 certificates are being issued as Auction Rate
Securities(SM). The initial pass-through rate for the Class II A-2
certificates will be set not later than May 17, 2000, and will not exceed the
lesser of the maximum auction rate set forth in this prospectus supplement in
Annex III and the weighted average of the net contract rates of the group II
contracts. The pass-through rate for the Class II A-2 certificates will be
recalculated monthly beginning in July 2000 pursuant to the auction
procedures set forth in this prospectus supplement in Annex III and Annex IV.
. The pass-through rates on the offered certificates will be capped at the
weighted average of the net contract rates of the contracts in the related
contract group. See "Description of the Certificates--Pass-Through Rates and
Last Scheduled Distribution Dates" in this prospectus supplement.
The required monthly payments of interest and scheduled principal are
unconditionally guaranteed only to the holders of the Class II A-1 and Class II
A-2 certificates by
[LOGO OF MBIA]
The Class I certificates are not covered by MBIA Insurance Corporation. See
"MBIA Insurance Corporation" and "Description of the Certificates--The
Certificate Insurance Policy" in this prospectus supplement.
Consider carefully the risk factors beginning on page S-10 in this prospectus
supplement and page 4 in the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or
determined that this prospectus supplement or the prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
The underwriter named below will offer the five classes of certificates listed
in the table above to the public at the offering price and will receive the
discount as listed on this cover page. GreenPoint Credit, LLC or one of its
affiliates may offer the Class I B-1 and Class I B-2 certificates from time to
time as more fully described in "Method of Distribution" in this prospectus
supplement.
Underwriter
Salomon Smith Barney
May 12, 2000
(SM) Auction Rate Securities is a service mark of Salomon Smith Barney Inc.
<PAGE>
Important Notice About Information Presented In This Prospectus
Supplement and the Accompanying Prospectus
You should rely only on the information contained in this document or to
which we have referred you in this prospectus supplement. We have not
authorized anyone to provide you with information that is different. This
document may only be used where it is legal to sell these securities.
We provide information to you about the offered certificates in two
separate documents that progressively provide more detail:
. the accompanying prospectus, which provides general information, some of
which may not apply to your series of certificates, and
. this prospectus supplement, which describes the specific terms of your
series of certificates.
We have defined certain significant terms in the "Glossary" found on page
S-82 of this prospectus supplement. Capitalized terms used in this prospectus
supplement but not defined in this prospectus supplement shall have the meanings
assigned to them in the accompanying prospectus.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
S-2
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Summary Information......................................................................................... S-4
Risk Factors................................................................................................ S-10
The Contract Pool........................................................................................... S-16
General................................................................................................... S-16
Group I Contracts......................................................................................... S-17
Group II Contracts........................................................................................ S-22
The Seller and Servicer..................................................................................... S-30
Delinquency and Loan
Loss/Repossession
Experience............................................................................................. S-31
GreenPoint's Management's
Discussion and Analysis of
Delinquency, Repossession and Loan Loss Experience..................................................... S-32
The Letters of Credit Bank.................................................................................. S-32
GreenPoint Bank........................................................................................... S-32
GreenPoint Bank Financial
Information............................................................................................ S-33
Where You Can Obtain
Additional Information
About GreenPoint Bank.................................................................................. S-33
MBIA Insurance Corporation.................................................................................. S-34
MBIA Financial Information................................................................................ S-34
Where You Can Obtain
Additional Information
About MBIA............................................................................................. S-35
Financial Strength Ratings of
MBIA................................................................................................... S-35
Prepayment and Yield Considerations......................................................................... S-35
Weighted Average Life of the
Certificates........................................................................................... S-39
Group I Assumptions....................................................................................... S-40
Group II Assumptions...................................................................................... S-47
Description of the Certificates............................................................................. S-51
General................................................................................................... S-51
Pass-Through Rates and Last
Scheduled Distribution
Dates.................................................................................................. S-51
Conveyance of Contracts................................................................................... S-52
Payments on the Contracts; the
Certificate Accounts................................................................................... S-55
Distributions............................................................................................. S-56
Interest Distributions.................................................................................... S-56
Principal Distributions on the
Class II A-2 Certificates.............................................................................. S-57
Priority of Distributions................................................................................. S-57
Cross-Collateralization
Provisions............................................................................................. S-61
Subordination of the Class I M
Certificates........................................................................................... S-61
Subordination of the Class I B
Certificates and Class R
Certificates........................................................................................... S-61
Losses on Liquidated Contracts............................................................................ S-62
The Letters of Credit..................................................................................... S-63
The Certificate Insurance Policy.......................................................................... S-64
Advances.................................................................................................. S-65
Reports to Certificateholders............................................................................. S-65
Optional Termination and
Termination Auction.................................................................................... S-67
Termination of the Agreement.............................................................................. S-68
Collection and Other Servicing
Procedures............................................................................................. S-69
Servicing Compensation;
Certain Other Matters
Regarding the Servicer................................................................................. S-69
Rights Upon an Event of
Default................................................................................................ S-69
The Auction Agent......................................................................................... S-70
The Trustee............................................................................................... S-70
Registration of the Offered
Certificates........................................................................................... S-70
Federal Income Tax Consequences............................................................................. S-75
ERISA Considerations........................................................................................ S-76
General................................................................................................... S-76
Class A Certificates...................................................................................... S-77
Subordinate Certificates.................................................................................. S-78
Ratings..................................................................................................... S-79
Legal Investment............................................................................................ S-80
Method of Distribution...................................................................................... S-80
Use of Proceeds............................................................................................. S-81
Legal Matters............................................................................................... S-81
Experts..................................................................................................... S-81
Glossary.................................................................................................... S-82
Annex I Global Clearance, Settlement and
Tax Documentation Procedures.............................................................................. I-1
Annex II ERISA Representation Letter....................................................................... II-1
Annex III Auction Procedures............................................................................... III-1
Annex IV Settlement Procedures............................................................................. IV-1
</TABLE>
S-3
<PAGE>
Summary Information
The following summary highlights selected information from this prospectus
supplement. It does not contain all of the information that you need to
consider in making your investment decision. To understand the terms of the
offered certificates, read carefully this entire prospectus supplement and the
accompanying prospectus.
This summary provides an overview of certain calculations, cash flows and other
information to aid your understanding and is qualified by the full description
of these calculations, cash flows and other information in this prospectus
supplement and the accompanying prospectus.
What the Offered Certificates Represent
The offered certificates represent an ownership interest in a trust fund. The
trust fund will contain a contract pool and certain other assets, as described
under "Description of the Certificates--General" in this prospectus supplement.
The contract pool will consist of two groups of manufactured housing installment
sales contracts and installment loan agreements.
The offered certificates only represent interests in the assets of the trust
fund. All payments to certificateholders will come only from the amounts
received in connection with those assets.
Information About the Contract Pool
The contract pool will consist of approximately 21,309 contracts with an
aggregate scheduled principal balance as of the date of the latest related cut-
off date of approximately $719,166,228.92 which will be conveyed to the trust
fund on the closing date. Each contract was either originated or purchased by
GreenPoint Credit, LLC in the ordinary course of its business or purchased in
bulk from bulk sellers.
The contract pool consists of two contract groups. As of the date of the latest
related cut-off date, contract group I consists of approximately 14,762 fixed
rate contracts with an aggregate scheduled principal balance of approximately
$438,509,311.32 and contract group II consists of approximately 6,547 adjustable
rate contracts with an aggregate scheduled principal balance of approximately
$280,656,917.60.
The Class I certificates represent an interest in the contracts in contract
group I and the Class II certificates represent an interest in the contracts in
contract group II.
For a further description of the contracts, see "The Contract Pool," "--Group I
Contracts" and "--Group II Contracts" in this prospectus supplement.
The Offered Certificates
GreenPoint Credit, LLC will deposit the contracts into the trust fund. The
trust fund has been created for the purpose of issuing the Manufactured Housing
Contract Trust Pass-Through Certificates, Series 2000-3. The approximate
initial principal balance, the pass-through rate and the last scheduled
distribution date of each class of the offered certificates will be as follows:
<TABLE>
<CAPTION>
Initial
Principal Pass-Through Last Scheduled
Class Balance Rate Distribution Date
----- ------- ---- -----------------
<S> <C> <C> <C>
I A..... $337,652,000 8.45% June 2031
I M-1... $ 25,214,000 9.01% June 2031
I M-2... $ 19,733,000 9.25% June 2031
I B-1... $ 24,118,000 9.25% February 2021
I B-2... $ 31,792,311 9.25% June 2031
II A-1.. $155,656,917 LIBOR + 0.27% December 2021
II A-2.. $125,000,000 AUCTION June 2031
</TABLE>
<TABLE>
<S> <C>
. The approximate principal amount of the offered certificates may vary by plus
or minus 5%.
. The securities issuer will also issue Class R certificates which are not being offered by this
prospectus supplement.
. The Class II A-2 certificates are being issued as Auction Rate SecuritiesSM. The initial
pass-through rate for the Class II A-2 certificates will be set not later than May 17, 2000, and
will not exceed the lesser of the maximum auction rate set forth in this prospectus supplement in
Annex III and the weighted average of the net contract rates of the group II contracts. The
pass-through rate for the Class II A-2 certificates will be recalculated monthly beginning in July
2000 pursuant to the auction procedures set forth in this prospectus supplement in Annex III and
Annex IV.
. The pass-through rates on the offered certificates will be capped at the weighted average of the net
contract rates of the contracts in the related contract group. See "Description of the
Certificates--Pass-Through Rates and Last Scheduled Distribution Dates" in this prospectus
supplement.
</TABLE>
S-4
<PAGE>
There is currently no underwriting arrangement for the Class I B-1 and Class I
B-2 certificates. GreenPoint Credit, LLC or one of its affiliates initially
will retain the Class I B-1 and Class I B-2 certificates, but may sell some or
all of the Class I B-1 and Class I B-2 certificates at a later date.
The trust fund will also issue the Class R certificates which will not be sold
to the public. The Class R certificates are subordinated to the offered
certificates and provide some limited credit support for the offered
certificates.
The certificates whose class designation begins with a roman numeral "I"
correspond to contract group I and the certificates whose class designation
begins with a roman numeral "II" correspond to contract group II. The
certificates generally receive distributions based only on principal and
interest collected from contracts in the corresponding contract group.
Denominations
The Class I certificates and the Class II A-1 certificates are offered in
minimum denominations of $50,000 each and multiples of $1 in excess thereof.
The Class II A-2 certificates are offered in minimum denominations of $25,000
each and integral multiples of $25,000 in excess thereof.
The Letters of Credit
GreenPoint Bank will provide two letters of credit to protect certain
certificateholders against certain losses. As described in more detail in this
prospectus supplement, if funds in the related certificate account are
insufficient to distribute interest or scheduled principal to certain
certificateholders on any distribution date, GreenPoint Bank may be required to
make a payment into the applicable certificate account to cover the shortfall
pursuant to a draw on the related letter of credit.
The first letter of credit will provide credit support only to the Class I B-2
certificates, and will be available to pay principal and interest shortfalls on
the Class I B-2 certificates. The second letter of credit will provide credit
support to the Class II certificates, will be issued in an amount as determined
by MBIA Insurance Corporation and may be amended, replaced, substituted, reduced
or cancelled at any time by mutual agreement of MBIA Insurance Corporation and
GreenPoint Bank. Any amendment, replacement, substitution, reduction or
cancellation of the second letter of credit will be without the consent of the
Class II certificateholders, the seller, the servicer or the trustee.
See "The Letters of Credit Bank" and "Description of the Certificates--The
Letters of Credit" in this prospectus supplement.
The Certificate Insurance Policy and MBIA Insurance Corporation
MBIA Insurance Corporation will provide a certificate insurance policy to
protect only the holders of the Class II certificates against certain losses.
In most instances, if funds in the group II certificate account are insufficient
to distribute interest or scheduled principal to the Class II certificateholders
on any distribution date and GreenPoint Bank is in default under the related
letter of credit or that letter of credit has been cancelled or is otherwise
insufficient, MBIA Insurance Corporation will make a payment into the group II
certificate account to cover the shortfall under the certificate insurance
policy. The Class I certificates will not have the benefit of the certificate
insurance policy.
See "The Letters of Credit Bank," "MBIA Insurance Corporation," "Description of
the Certificates--The Certificate Insurance Policy" and "--The Letters of
Credit" in this prospectus supplement.
Distributions on the Certificates
General
Each month, the trustee, Bank One, National Association, will make distributions
of interest and principal to the holders of the certificates.
The first distribution date with respect to the Class I certificates and the
Class II A-1 certificates will be June 20, 2000. Thereafter, distributions on
the Class I certificates and the Class II A-1 certificates will be made on the
20th day of each month, or if the 20th day is not a business day, on the next
business day. The first distribution date with respect to the
S-5
<PAGE>
Class II A-2 certificates will be July 10, 2000. Thereafter, distributions on
the Class II A-2 certificates will be made on the 8th day of each month, or if
the 8th day is not a business day, on the next business day.
The Obligors under the contracts are required to pay their interest and
principal during each month to the servicer. Within two business days of
receipt of payments from Obligors, the servicer will forward these amounts to
the trustee. On the distribution date occurring in the following month or the
second succeeding month, as the case may be, the trustee will distribute the
amount remitted by the servicer to the trustee during the prior month, for each
contract group, less fees and expenses owed to the servicer in respect of that
contract group, plus amounts drawn under the letters of credit or certificate
insurance policy, as applicable, to the holders of the certificates related to
that contract group, in the amount and priority set forth in this prospectus
supplement.
See "Description of the Certificates--Priority of Distributions" in this
prospectus supplement.
Distributions of Interest
Interest Accrual. With respect to each distribution date, each Class I
certificate will accrue interest at 1/12th of the applicable pass-through rate
on the certificate balance or adjusted certificate balance, as applicable, of
the certificate immediately prior to the related distribution date.
With respect to each distribution date, each Class II certificate will accrue
interest on its certificate balance at a rate equal to the product of:
. the actual number of days during the interest period divided by 360; and
. the applicable pass-through rate.
Interest Period. For any distribution date, the interest period for the Class I
certificates, is the calendar month preceding the related distribution date.
For any distribution date, the interest period for the Class II certificates
will be the period from the preceding distribution date, or for the first
distribution date, from the closing date, through the day prior to the related
distribution date.
See "Description of the Certificates--Interest Distributions" in this prospectus
supplement.
Distributions. On each distribution date, interest will be distributed to
certificateholders in the order described in "Description of the Certificates--
Priority of Distributions" in this prospectus supplement. It is possible that,
on any given distribution date, there will be insufficient payments from a
contract group to cover interest owed on the related certificates. If there are
insufficient payments or there are losses on the contracts and, with respect to
the Class I B-2 certificates the related letter of credit has been reduced to
zero or there is a default by GreenPoint Bank under that letter of credit or,
with respect to the Class II certificates the related letter of credit has been
cancelled or is otherwise insufficient or GreenPoint Bank is in default under
that letter of credit and there is a default by MBIA Insurance Corporation under
the certificate insurance policy and, in each case, amounts available from
cross-collateralization, if any, are insufficient, the related classes of
certificates may not receive the full amount of accrued interest.
The classes of certificates that do not receive the full interest payment will
be entitled to receive the shortfall in interest distributions in the following
month in the same priority as their distribution of current interest.
See "The Letters of Credit Bank," "MBIA Insurance Corporation," "Description of
the Certificates--Priority of Distributions," "--The Letters of Credit" and "--
The Certificate Insurance Policy" in this prospectus supplement.
LIBOR. The pass-through rate for the Class II A-1 certificates will be adjusted
each month, based on changes in LIBOR for one-month U.S. dollar deposits,
subject to the cap based on the weighted average of the net contract rates of
the group II contracts, as described in "Description of the Certificates--Pass-
Through Rates and Last Scheduled Distribution Dates" in this prospectus
supplement.
S-6
<PAGE>
Auction Rate. The pass-through rate for the Class II A-2 certificates will be
adjusted each month, based on the auction procedures described in Annex III and
Annex IV to this prospectus supplement. The auction procedures cap the pass-
through rate for the Class II A-2 certificates at the weighted average of the
net contract rates of the group II contracts.
Distributions of Principal
General. Certificateholders will receive payments of principal corresponding to
payments of principal on the contract group related to their certificates in the
amount and priority set forth in this prospectus supplement. See "Description
of the Certificates--Priority of Distributions" in this prospectus supplement.
It is possible that there will be insufficient payments from the contracts in a
particular contract group to cover principal payable to the holders of
certificates related to that contract group. If there is a shortfall in
collections or there are losses on the contracts and, with respect to the Class
I B-2 certificates the related letter of credit has been reduced to zero or
there is a default by GreenPoint Bank under the letter of credit or, with
respect to the Class II certificates the related letter of credit has been
cancelled or is otherwise insufficient or GreenPoint Bank is in default under
that letter of credit and there is a default by MBIA Insurance Corporation under
the certificate insurance policy and, in each case, amounts available from
cross-collateralization, if any, are insufficient, the related classes of
certificates may not receive the full amount of principal distributions to which
they are otherwise entitled.
See "The Letters of Credit Bank," "MBIA Insurance Corporation," "Description of
the Certificates--Priority of Distributions," "--The Letters of Credit" and "--
The Certificate Insurance Policy" in this prospectus supplement.
Subordination of the Class I Subordinate Certificates
The rights of the holders of each class of Class I subordinated certificates to
receive distributions of amounts available in the group I certificate account
will be subordinate, to the limited extent described in this prospectus
supplement, to the right of the holders of more senior classes of Class I
certificates. This subordination is intended to enhance the likelihood of
receipt by the holders of more senior classes of Class I certificates of their
monthly payments of interest and the ultimate receipt by those holders of
principal equal to the related initial certificate balance of their
certificates.
See "Description of the Certificates--Priority of Distributions," "--
Subordination of the Class I M Certificates" and "--Subordination of the Class I
B Certificates and Class R Certificates" in this prospectus supplement.
Allocation of Losses
General. A contract suffers a loss when the servicer determines that:
. it has received all amounts it expects to recover from that contract; and
. the amounts recovered are less than the sum of the outstanding principal
balance of the contract and the accrued and unpaid interest thereon.
Group I Contracts. Losses on the group I contracts will be allocated in the
following order of priority:
. first, to the Class I B-2 certificates;
. second, to the Class I B-1 certificates;
. third, to the Class I M-2 certificates; and
. fourth, to the Class I M-1 certificates.
The Class I A certificates will absorb losses only after the adjusted
certificate balances of the Class I B-2, Class I B-1, Class I M-2 and Class I
M-1 certificates have been reduced to zero. See "Risk Factors--Losses on the
Contracts May Reduce the Yield on the Offered Certificates" and "Description
of the Certificates--Losses on Liquidated Contracts" in this prospectus
supplement.
Group II Contracts. In the event losses on the group II contracts would
reduce the amount available for distribution to the Class II A-1 and Class II
A-2 certificates, GreenPoint Bank is in default under the related letter of
credit or that letter of credit has been cancelled or is otherwise
insufficient, there is a default by MBIA Insurance Corporation under the
certificate insurance policy and, in each case, amounts available from cross-
collateralization, if
S-7
<PAGE>
any, are insufficient, losses on the group II contracts will be allocated pro
rata among the Class II A-1 and Class II A-2 certificates. See "Risk Factors--
Losses on the Contracts May Reduce the Yield on the Offered Certificates" and
"Description of the Certificates--Losses on Liquidated Contracts" in this
prospectus supplement.
Advances
The servicer will advance its own funds to cover any shortfalls in payments of
principal and interest due to the offered certificates in any month that:
. the servicer receives a payment on a contract that is less than the full
scheduled payment; or
. the servicer receives no payment on a contract; and
. the servicer determines that the advance will be recoverable from future
payments or collections on that contract.
In addition, since not all of the contracts have scheduled payments due during
the initial collection period, on the first distribution date the servicer will
also advance amounts necessary to cover any resulting interest shortfall on any
class of certificates.
Except for the first distribution date, any advances made by the servicer with
respect to a distribution date will not exceed the amount of delinquent contract
payments that were due in the prior month.
See "Description of the Certificates--Advances" in this prospectus supplement.
Prepayment and Yield Considerations
The yield to maturity of each class of certificates will depend upon, among
other things:
. the price at which the certificates are purchased;
. the applicable pass-through rate;
. the rate of principal prepayments on the related contracts; and
. the occurrence of defaults on the related contracts.
A higher than anticipated rate of principal prepayments on the contracts would
reduce the aggregate principal balance of the contracts more quickly than
expected, thereby reducing the aggregate interest payments that would otherwise
be payable with respect to the contracts. A higher rate of principal
prepayments could result in a lower than expected yield to maturity on the
related classes of certificates purchased at a premium. A lower than
anticipated rate of principal prepayments could result in a lower than expected
yield to maturity on the related classes of certificates purchased at a discount
since payments of principal with respect to the related contracts would occur
later than anticipated.
For a discussion of special prepayment and yield considerations applicable to
the offered certificates, see "Risk Factors--The Yield On the Offered
Certificates Could Be Limited By a Higher Than Expected Rate of Prepayments on
the Contracts Underlying the Certificates" and "Prepayment and Yield
Considerations" in this prospectus supplement.
Book-Entry Registration
The offered certificates will be available only in book-entry form through the
facilities of DTC, Clearstream, Luxembourg and the Euroclear System. See
"Description of the Certificates--Registration of the Offered Certificates" in
this prospectus supplement and Annex I to this prospectus supplement.
Optional Termination
The pooling and servicing agreement provides that on or after the distribution
date on which the aggregate scheduled principal balances of the contracts is
less than 10% of the aggregate scheduled principal balances of the contracts as
of the cut-off date, the servicer and in some cases, the holder of the Class R
certificates, will have the right to purchase all outstanding contracts and
terminate the trust fund as more fully described in "Description of the
Certificates--Optional Termination and Termination Auction" in this prospectus
supplement.
Tax Status
For federal income tax purposes, GreenPoint Credit, LLC will cause an election
to be made to treat the trust fund as a "real estate mortgage investment
S-8
<PAGE>
conduit." Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint
Credit, LLC, based on certain assumptions set forth in this prospectus
supplement and in the prospectus, is of the opinion that the electing portion of
the trust fund will qualify as a "real estate mortgage investment conduit" for
federal income tax purposes and that the offered certificates will constitute
"regular interests" in the "real estate mortgage investment conduit" for federal
income tax purposes and will be treated as debt instruments of the trust fund
for purposes of calculating a certificateholder's federal income tax liability.
Holders of the offered certificates that would otherwise report income under a
cash method of accounting will be required to include in income interest on the
certificates, including "original issue discount," if any, in accordance with
the accrual method of accounting with the effect that an investor may be
required to report income for federal income tax purposes despite not yet having
received a cash distribution in respect of the income.
Because the prices of the Class I B-1 and Class I B-2 certificates have not been
determined at this time, it is possible that the Class I B-1 and Class I B-2
certificates may be issued with "original issue discount." Assuming in each
case that a substantial amount of a class of offered certificates, other than
the Class I B-1 and Class I B-2 certificates, is sold at the price for that
class stated on the cover of this prospectus supplement, and subject to the
uncertainties concerning the determination of "original issue discount"
discussed in "Federal Income Tax Consequences--Taxation of Regular Certificates-
- -Original Issue Discount" in the prospectus, the offered certificates, other
than the Class I B-1 and Class I B-2 certificates, will not be issued with
"original issue discount."
For further information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax Consequences" in
this prospectus supplement and in the accompanying prospectus.
ERISA Considerations
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the Class I A,
Class II A-1 and Class II A-2 certificates will be eligible for purchase by
persons investing assets of employee benefit plans or individual retirement
accounts. Sales of the Class I M-1, Class I M-2, Class I B-1 or Class I B-2
certificates to most such plans or retirement accounts are prohibited, except as
may be permitted under an exemption available to insurance companies using
general account assets.
Ratings
The Class I A, Class I M-1, Class I M-2, Class I B-1 and Class I B-2
certificates are required to receive the ratings of "AAA," "AA," "A," "BBB" and
"BBB," respectively, by Standard & Poor's Ratings Service and "AAA," "AA," "A,"
"BBB" and "BBB," respectively, by Fitch IBCA, Inc.
The Class II A-1 and Class II A-2 certificates are required to receive the
ratings of "AAA" and "AAA," respectively, by Standard & Poor's Ratings Service
and "Aaa" and "Aaa," respectively, by Moody's Investors Service, Inc. The
ratings on the Class II certificates do not address whether or not the Class II
A-1 or Class II A-2 certificates will receive any related carryover amount or
the ability of the holder of the Class R certificates to purchase any contract
that has been converted to a fixed rate of interest.
A rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time.
See "Ratings" in this prospectus supplement.
Legal Investment
The Class I A, Class I M-1, Class II A-1 and Class II A-2 certificates will, and
the Class I M-2, Class I B-1 and Class I B-2 certificates will not, be "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984. See "Legal Investment" in this prospectus supplement. You should
consult your own legal advisors in determining whether and to what extent the
offered certificates constitute legal investments for you.
S-9
<PAGE>
Risk Factors
The offered certificates are not suitable investments for all investors.
In particular, you should not purchase the offered certificates unless you
understand the prepayment, credit, liquidity and market risks associated with
the offered certificates.
The offered certificates are complex securities. You should possess,
either alone or together with an investment advisor, the expertise necessary to
evaluate the information contained in this prospectus supplement and the
accompanying prospectus in the context of your financial situation and tolerance
for risk.
You should carefully consider the following risk factors prior to any
decision to invest in the offered certificates. The following discussion
supplements, and does not replace or supersede, the discussion under "Risk
Factors" in the prospectus.
<TABLE>
<S> <C>
The Yield On the General Risks Associated with Higher Than Expected Prepayments. The offered
Offered Certificates certificates represent an interest in a trust fund containing manufactured housing
Could Be Affected By contracts. As the Obligors make payments of interest and principal on the
a Higher Than contracts, the related certificateholders will receive payments on the related
Expected Rate of distribution date. Because the Obligors are free to make those payments faster
Prepayments on the than scheduled, certificateholders may receive distributions of principal faster
Contracts Underlying than expected. Therefore, the offered certificates may be paid in full earlier
the Certificates than the scheduled maturity of the offered certificates. Once a certificateholder
receives a distribution of principal, interest will no longer accrue on that
amount of principal. There is no guarantee that certificateholders will receive
principal payments on the offered certificates at any specific rate or on specific
dates.
Payment of principal on the contracts may be in the following forms:
. scheduled payments of principal; and
. principal prepayments which consist of:
-- prepayments in full of a contract;
-- repurchases by the seller of any contracts that violate any representations
and warranties in the pooling and servicing agreement;
-- partial prepayments on any contract;
-- liquidation principal, which is the principal recovered after foreclosing on
or otherwise liquidating a defaulted contract; and
-- with respect to group II contracts, repurchases by the holder of the Class R
certificates of variable rate contracts that have been converted to a fixed
interest rate.
For a complete discussion of the situations that might cause prepayments, see
"Prepayment and Yield Considerations" in the prospectus and in this prospectus
supplement.
Offered Certificates Bought at Premiums and Discounts May Receive a Lower Yield
Than Expected. Offered certificates purchased at a discount may receive a lower
yield than expected if the rate of principal payments is slower than expected.
Offered certificates purchased at a premium may receive a lower yield than
expected if the rate of principal payments is faster than expected. See
"Prepayment and Yield Considerations" in this prospectus supplement.
</TABLE>
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Prepayments May Limit Pass-Through Rates Due to the Weighted Average Cap on
Pass-Through Rates. The pass-through rate for each class of offered certificates
will not exceed the weighted average of the net contract rates of the contracts in
the related contract group. For any distribution date, the net contract rate for
a group I contract equals the rate of interest borne by that contract minus 1.00%.
For the first twelve distribution dates, the net contract rate of any group II
contract equals the rate of interest borne by that contract minus 1.00%, and for
each distribution date thereafter, the net contract rate of that contract equals
the rate of interest borne by that contract minus 1.50%.
Disproportionate prepayments of contracts in a particular contract group with net
contract rates that are higher than the pass-through rates for any class of
offered certificates related to that contract group will increase the possibility
that the pass-through rate for that class of certificates will be lowered to the
weighted average of the net contract rates in the related contract group.
There is no mechanism to compensate the holders of the related classes of offered
certificates for any cap on the pass-through rate other than, with respect to the
Class II certificates, the payment, if any, of a carryover amount. Carryover
amounts are not covered by MBIA Insurance Corporation or the related letter of
credit. See "Prepayment and Yield Considerations," "Description of the
Certificates--Priority of Distributions" and "--Pass-Through Rates and Last
Scheduled Distribution Dates" in this prospectus supplement.
Variable Rate Contracts With Contract Rates Based on a Twelve-Month LIBOR Index
May Prepay at a Higher Rate Than Other Variable Rate Contracts. Approximately
99.8%, by principal balance as of the cut-off date, of the group II contracts are
variable rate contracts based on a twelve-month LIBOR index. While GreenPoint
Credit, LLC does not anticipate that variable rate contracts based on a
twelve-month LIBOR index will have materially different delinquency or default
rates from other types of variable rate contracts, GreenPoint Credit, LLC has a
limited operating history with respect to variable rate contracts based on a
twelve-month LIBOR index and therefore no assurance can be given that variable
rate contracts based on a twelve-month LIBOR index will not have higher
prepayments, delinquencies or losses than other types of variable rate contracts.
See "Prepayment and Yield Considerations" in this prospectus supplement.
</TABLE>
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<TABLE>
<S> <C>
The Class II Certificates
May Have a Lower Yield if
One-Month LIBOR is
Greater than the Interest
Rate Accruing on the
Group II Contracts
The group II contracts are variable rate contracts that:
. provide for periodic adjustments to their interest rates;
. may not have their first interest adjustment dates for a period of time that is longer than
would otherwise be indicated by the index under which the contracts are adjusted;
. bear interest at the rate set at the origination of the contract until their
first adjustment dates; and
. after the first adjustment date, will only adjust every 12 months thereafter. However, the
Class II A-1 certificates adjust monthly based on the one-month LIBOR index. The one-month
LIBOR index:
. is a different index than the index with which the contracts adjust; and
. may be higher or adjust differently than the index under which the contracts
are adjusted.
Because the pass-through rate on the Class II A-1 certificates may be capped by
the weighted average of the net contract rates on the group II contracts, the
yield to the holders of the Class II A-1 certificates may be lower than a yield
based upon the one-month LIBOR index.
Similarly, the Class II A-2 certificates are subject to adjustment monthly
pursuant to the auction procedures set forth in Annex III and Annex IV to this
prospectus supplement. Since the pass-through rate on the Class II A-2
certificates may be capped by the weighted average of the net contract rates on
the group II contracts, the yield to the holders of the Class II A-2 certificates
may be lower than a yield based upon the auction procedures.
There May Not Be Funds to Although holders of the Class II certificates will be entitled to any related
Pay Holders of the Class interest shortfalls resulting from the cap based on the weighted average of the
II Certificates Amounts net contract rates of the group II contracts from and to the limited extent of
in Respect of Interest funds available therefor as provided in this prospectus supplement, there can be
Shortfalls Resulting From no assurance that funds will be available or sufficient for payment of any
the Cap Based on the interest shortfalls resulting from the cap based on the weighted average of the
Weighted Average of the net contract rates of the group II contracts. In addition, the related letter of
Net Contract Rates of the credit and the certificate insurance policy do not cover, and the ratings of the
Group II Contracts Class II certificates do not address, the likelihood of payment of any interest
shortfalls resulting from the cap based on the weighted average of the net
contract rates of the group II contracts.
Some Variable Rate Although all of the group II contracts are variable rate, the Obligor on each of
Contracts May Convert to the contracts can convert from a variable rate to a fixed rate as long as the
Fixed Rates Which May Obligor is current in payment on the Obligor's contract. If an Obligor converts a
Reduce the Yield to contract from a variable rate to a fixed rate, the holder of the Class R
Holders of the Class II certificates is obligated to purchase the converted contract from the trust fund.
Certificates The fixed rate may be lower than the pass-through rate on the Class II A-1
certificates or the pass-through rate on the Class II A-2 certificates. Since the
pass-through rates on the Class II certificates are capped by the weighted average
of the net contract rates of the group II contracts, any conversion to a fixed
rate of a contract that has not been
</TABLE>
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<TABLE>
<S> <C>
purchased by the holder of the Class R certificates may make it more likely that
the pass-through rates on the Class II A-1 certificates or Class II A-2
certificates will be lower than the pass-through rate based upon the one-month
LIBOR index or produced by the auction procedures, as applicable.
Upon the Occurrence of So long as MBIA Insurance Corporation is not in default in payment under the
Events of Default of the certificate insurance policy, upon the occurrence of an event of default of the
Servicer Under the servicer under the pooling and servicing agreement, MBIA Insurance Corporation
Pooling and Servicing will be deemed to be the holders of the Class II certificates for purposes of any
Agreement, MBIA Insurance voting or consent rights as provided in the pooling and servicing agreement. If
Corporation Will Exercise MBIA Insurance Corporation is in default under the certificate insurance policy,
Any Voting or Consent under certain circumstances described in the pooling and servicing agreement,
Rights of the Class II GreenPoint Bank (or a substitute letter of credit provider if the letter of credit
Certificates has been replaced) will have certain rights upon an event of default that may be
prior to the holders of the Class II certificates. See "The Letters of Credit
Bank," "MBIA Insurance Corporation," "Description of the Certificates--The
Certificate Insurance Policy," "--The Letters of Credit" and "--Rights Upon an
Event of Default" in this prospectus supplement.
The Letter of Credit The letter of credit relating to the Class II certificates will be issued in an
relating to the Class II amount as determined by MBIA Insurance Corporation and may be amended, replaced,
Certificates May Be substituted, reduced or cancelled at any time by mutual agreement of MBIA
Amended, Replaced, Insurance Corporation and GreenPoint Bank, without the consent of the holders of
Substituted, Reduced or the Class II certificates, the seller, the servicer or the trustee. There can be
Cancelled at Any Time no assurance that the letter of credit relating to the Class II certificates will
remain in effect or provide credit support to the Class II certificates for any
period of time.
See "Description of the Certificates--The Letters of Credit" in this prospectus
supplement.
Certificateholders Must The trust fund will not have, nor is it permitted or expected to have, any
Rely on the Limited significant assets or sources of funds other than the contracts and related
Assets of the Trust Fund assets, the certificate account, the letters of credit and the certificate
Only for Payment on the insurance policy. Certificateholders must rely upon payments on the contracts in
Offered Certificates and the related contract group and draws on the related letter of credit and payments
Will Have No Recourse of claims made under the certificate insurance policy, as applicable, for payments
Against the Seller or the on their certificates. Although the letters of credit and the certificate
Servicer if the Offered insurance policy will be available for certain of the offered certificates to
Certificates Incur cover shortfalls in distributions of interest and scheduled principal due thereon,
Shortfalls and/or Losses if, with respect to the Class II certificates, MBIA Insurance Corporation defaults
in its obligations under the certificate insurance policy and with respect to the
Class I or Class II certificates, GreenPoint Bank defaults in its obligations
under the related letter of credit or the related letter of credit is otherwise
insufficient, the trustee will depend solely on current distributions on the
contracts in the related contract group - and excess cashflow from the other
contract group, if any, to the very limited extent described in "Description of
the Certificates--Cross-Collateralization Provisions" in this prospectus
supplement - to make payments on the offered certificates. See "The Letters of
Credit Bank," "MBIA Insurance Corporation," "Description of the Certificates--The
Letters of Credit" and "--The Certificate Insurance Policy" in this prospectus
supplement.
</TABLE>
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<TABLE>
<S> <C>
The offered certificates will not represent interests in or obligations of
GreenPoint Credit, LLC or any of its affiliates. None of the offered certificates
nor the underlying contracts or any collections thereon will be insured or
guaranteed against losses by any governmental agency or instrumentality, the
underwriter or any of its affiliates, GreenPoint Credit, LLC or any of its
affiliates, other than GreenPoint Bank's limited obligations under the letters of
credit.
Random Lot Procedures Make Distributions of principal on the Class II A-2 certificates will be made in round
the Timing and Amount of lots of $25,000 and integral multiples thereof. Further, distributions will be
Distributions on the allocated to specific Class II A-2 certificates in accordance with the
Class II A-2 Certificates then-applicable established random lot procedures of DTC, and the then-applicable
Uncertain established procedures of its participating organizations and indirect
participating organizations, which may or may not be by random lot. On any
distribution date, some Class II A-2 certificates may receive distributions of
principal while others may not.
The Delay in Payment May The effective yield to each holder of Class I certificates will be below that
Lower the Effective Yield which would otherwise be produced by the applicable interest rate and the purchase
on the Class I price of that holder's certificate because, while interest will accrue from the
Certificates Below the first day of the month to the last day of the month, the accrued interest will not
Expected Yield be paid until the distribution made on the 20th day, or, if the 20th day is not a
business day, the next succeeding business day, of the following month. In
addition, the Class I certificates will accrue interest on their respective
certificate balances on the last day of the related interest period. Therefore,
interest on the Class I certificates will accrue on a lower outstanding balance
than the actual certificate balances during the prior interest period. See
"Prepayment and Yield Considerations" in this prospectus supplement.
Losses on the Contracts If there is a shortfall in the amount available for distribution on the
May Reduce the Yield on certificates due to delinquencies or losses on the contracts in the related
the Offered Certificates contract group and, with respect to the Class I B-2 certificates the related
letter of credit has been reduced to zero or the letter of credit bank is in
default under that letter of credit or, with respect to the Class II certificates
MBIA Insurance Corporation is in default under the certificate insurance policy
and the related letter of credit has been cancelled or is otherwise insufficient
or GreenPoint Bank is in default under that letter of credit and, in each case,
amounts available from cross-collateralization, if any, are insufficient, the
yield to maturity on the related offered certificates may be reduced by losses on
the contracts in the related contract group. See "Prepayment and Yield
Considerations," "The Letters of Credit Bank," "MBIA Insurance Corporation,"
"Description of the Certificates--The Letters of Credit" and "--The Certificate
Insurance Policy" in this prospectus supplement.
Lack of Secondary Market The underwriters of the offered certificates intend to make a secondary market in
or SMMEA Eligibility the offered certificates, but will have no obligation to do so. There can be no
Could Affect the assurance that a secondary market for any class of offered certificates will
Liquidity of the Offered develop, or if one does develop, that it will continue or provide sufficient
Certificates liquidity of investment or that it will remain for the term of the related class
of offered certificates.
</TABLE>
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<TABLE>
<S> <C>
The Class I M-2, Class I B-1 and Class I B-2 certificates will not constitute
"mortgage related securities" for purposes of SMMEA. Accordingly, many
institutions with legal authority to invest only in SMMEA securities will not be
able to invest in the Class I M-2, Class I B-1 and Class I B-2 certificates,
thereby limiting the market for the Class I M-2, Class I B-1 and Class I B-2
certificates. In light of the foregoing, investors should consult their own
counsel as to whether they have the legal authority to invest in non-SMMEA
securities such as the Class I M-2, Class I B-1 and Class I B-2 certificates. See
"Risk Factors--The Lack of Secondary Markets May Limit the Ability to Resell
Certificates" in the accompanying prospectus and "Legal Investment" in this
prospectus supplement.
The Market Value of the The ratings on the Class I B-2 certificates are based, in part, on the ratings of
Class I B-2 Certificates the long-term and short-term unsecured debt of the letter of credit bank.
Could Be Negatively Therefore, a reduction in the ratings of the letter of credit bank may have a
Affected By a Reduction corresponding reduction in the ratings on the Class I B-2 certificates. A
in the Ratings of The reduction in the rating of the Class I B-2 certificates would reduce the market
Letter of Credit Bank value of those certificates and may affect the related certificateholders' ability
to sell them. See "The Letters of Credit Bank" and "Description of the
Certificates--The Letters of Credit" in this prospectus supplement.
Subordination of Class I M The rights of the holders of each class of Class I subordinated certificates to
and Class I B Certificates receive distributions of available amounts in the trust fund will be subordinate,
to the limited extent described in this prospectus supplement, to the rights of
the holders of more senior classes of certificates related to the same contract
group. Consequently, if shortfalls and/or losses arise with respect to the
certificates related to that contract group, they will be borne by the more
subordinate certificateholders first.
See "Description of the Certificates--Subordination of the Class I M Certificates"
and "--Subordination of the Class I B and Class R Certificates" in this prospectus
supplement.
</TABLE>
S-15
<PAGE>
The Contract Pool
General
Each Contract was either originated or purchased by GreenPoint on an
individual basis in the ordinary course of its business or purchased in bulk
from Bulk Sellers. A description of the general practices of GreenPoint with
respect to the origination or purchase of manufactured housing contracts similar
to the Contracts being conveyed to the Trust Fund as described in this
prospectus supplement is set forth in the prospectus under "The Seller--Loan
Originations" and "The Seller--Underwriting Practices." On the Closing Date,
the Seller will convey the Contracts to the Trust Fund. So long as GreenPoint
is acting as the servicer, it will obtain and maintain possession of all
Contract documents. See "The Contract Pools" in the prospectus. The final
scheduled payment date for the Contract with the latest maturity is scheduled to
occur in May 2030.
Contracts totaling $629,083.77 are simple interest contracts that were
originated in the States of Kansas and Florida. The remaining Contracts are all
actuarial Contracts. See "The Contract Pools" in the prospectus.
The Scheduled Payments for each simple interest contract would, if made
exactly on their respective Due Dates, result in a nearly full amortization of
the Contract. However, pursuant to a simple interest contract, interest is
computed and charged to the Obligor on the outstanding Scheduled Principal
Balance of the related Contract based on the number of days elapsed between the
date through which interest was last paid on the Contract through receipt of the
Obligor's most current payment, and the portions of each Scheduled Payment that
are allocated to interest and principal are adjusted based on the actual amount
of interest charged. Thus, the portions of each Scheduled Payment allocable to
principal and interest will depend on the amount of interest accrued to the date
payment is received. For example, if less than a full month has elapsed between
the interest paid-to date and the next date payment is made on the Contract, the
amount of interest actually paid by the Obligor will be less than a full month's
interest on the principal balance of the Contract. Conversely, if more than a
full month has elapsed between payments on a Contract, the amount of interest
actually paid by the Obligor will be greater than a full month's interest on the
principal balance of the Contract. No Scheduled Payment on a Contract will be
considered to be delinquent once 90% of the amount thereof is received. Late
payments or payments of less than 100% of any Scheduled Payment on a simple
interest contract will result in the Contract amortizing more slowly than
originally scheduled, creating a balance due at maturity.
Under certain circumstances, the amount of accrued interest on a simple
interest contract could exceed the amount of the Scheduled Payment. This could
happen, for example, in the case of delinquency, or in the case of the first
Scheduled Payment due after one or more Scheduled Payments have been paid ahead
as described in the previous paragraph, because interest continues to accrue on
simple interest contracts during the months in which the paid-ahead Scheduled
Payments would have become due. In such event, the entire amount of the payment
will be allocated to interest, and although some accrued interest will remain
unpaid, the unpaid interest will not be added to the principal balance of the
Contract and will not bear interest. Under other circumstances, no interest
will have accrued between the dates of receipt of Scheduled Payments on simple
interest contracts. This could be the case if, for example, one or more
Scheduled Payments were paid ahead on a Due Date occurring in a month prior to
the months in which the Scheduled Payments would have become due, as described
above. In that event, the entire amount of the paid-ahead Scheduled Payments
generally will be allocated to principal.
The underwriting practices of GreenPoint regarding loan-to-value ratios of
Contracts it originates or purchases are set forth in the prospectus under "The
Seller--Loan Originations" and "The Seller--Underwriting Practices." No Contract
at its origination had an LTV in excess of approximately 100%.
Manufactured homes, unlike site-built homes, generally depreciate in value,
and GreenPoint believes that, upon repossession, the market value of a
manufactured home securing a manufactured housing contract is generally lower
than the principal balance of the related manufactured housing contract. The
percentage recovery of principal on liquidation of manufactured housing
contracts historically has been adversely affected by
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downturns in regional or local economic conditions. These regional or local
economic conditions are often volatile and no predictions can be made regarding
future economic loss upon liquidation.
Under certain limited circumstances, as set forth in the Agreement, the
servicer may make a one-time modification to the Contract Rate on any Contract
by an amount equal to the lesser of:
. 5% of the Contract Rate for the related Contract; and
. 0.50%.
The charge-off policy with respect to any particular Contract is determined
by GreenPoint on a case by case basis.
The Land Home Contracts and Land-in-Lieu Contracts included in the Contract
Pool will be secured by either first mortgages or deeds of trust on the real
estate on which the related manufactured home is located, depending upon the
prevailing practice in the state in which the underlying property is located.
See "Certain Legal Aspects of the Contracts--Land Home and Land-in-Lieu
Contracts" in the prospectus.
Each Group I Contract has a Contract Rate that is fixed and generally
provides for level payments over the term of such Contract. Each Group II
Contract has a Contract Rate that is adjustable, as further described in "--
Group II Contracts" below. Each Contract fully amortizes the principal balance
of the Contract over the term of the Contract. All of the Contracts are
actuarial obligations, except as noted in the second paragraph of this section.
None of the Contracts are insured in whole or in part by the Veterans
Administration, the Federal Housing Administration or any other governmental
entity or instrumentality.
Fees and Expenses. Fees and expenses, which can be paid or financed by the
related borrower to GreenPoint or to a loan broker, include:
. a processing fee, which ranges from $27 to $100, subject to state law
limitations;
. for Land Home Contracts and Land-in-Lieu Contracts, an origination fee
equal to 2% of the amount financed;
. for Contracts in which the borrower uses a broker, subject to state law
limitations:
. if the loan amount is under $20,000, a maximum of 5% of the amount
financed;
. if the loan amount is between $20,000 and $75,000, a maximum of
$1,500; and
. if the loan amount is $75,000 or greater, a maximum of 2% of the
amount financed;
. at the borrower's request, the borrower may opt to "buy down" or reduce
the Contract Rate by 0.25% for each "point" paid or financed, subject to
a maximum of eight "points" for Land Home and Land-in-Lieu Contracts
and, since March 2000, four "points" for other Contracts (prior to March
2000, the maximum for non-Land Home and non-Land-in-Lieu Contracts was 6
"points"); and
. for Step-Up Rate Contracts or Step-Up Rate Contracts, the borrower can
finance 2.75 "points." This marketing program was established for fixed-
rate, non-Land Home and non-Land-in-Lieu Contracts only and was
discontinued in March 2000.
Group I Contracts
As of the Cut-off Date, the Group I Contracts will have an aggregate unpaid
principal balance of approximately $438,509,311.32. Group I Contracts totaling
approximately $53,746,062.12 by principal balance as of the Cut-off Date were
purchased in bulk from Bulk Sellers. The average outstanding principal balance
of the Group I Contracts as of the Cut-off Date was approximately $29,705.28.
Approximately 74.7% of the Group I Contracts by outstanding principal balance as
of the Cut-off Date are secured by manufactured homes
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which were new at the time of origination or purchase by GreenPoint and
approximately 25.3% of the Group I Contracts by outstanding principal balance as
of the Cut-off Date are secured by manufactured homes which were used at the
time of origination or purchase by GreenPoint. As of the Cut-off Date, each
Group I Contract has a Contract Rate of at least 6.750% and not more than
19.000% per annum. As of the Cut-off Date, the weighted average Contract Rate of
the Group I Contracts is approximately 11.552% per annum. The Group I Contracts
have remaining maturities as of the Cut-off Date of at least 1 month but not
more than 360 months and original maturities of at least 24 months but not more
than 362 months. As of the Cut-off Date, the Group I Contracts had a weighted
average original term to scheduled maturity of approximately 299.42 months, and
a weighted average remaining term to scheduled maturity of approximately 278.94
months. Group I Contracts totaling $528,810.13 are simple interest contracts
that were originated in the States of Kansas and Florida. The remaining Group I
Contracts are all actuarial Contracts. See "The Contract Pools" in the
prospectus.
The remaining term to stated maturity of a Group I Contract is calculated
as of the Cut-off Date. With respect to Group I Contracts that were originated
or purchased by GreenPoint on an individual basis in the ordinary course of its
business, management of GreenPoint estimates that in excess of 95% of the
manufactured homes are used as primary residences by the Obligors under the
Group I Contracts secured by their manufactured homes. With respect to Group I
Contracts that were originated or purchased by GreenPoint on an individual basis
in the ordinary course of its business, the weighted average loan-to-value ratio
at the time of origination of those Group I Contracts was approximately 87.778%.
The Group I Contracts are secured by manufactured homes located in 48 states.
Approximately 11.02%, 9.81%, 8.37% and 5.51% of the Group I Contracts by
outstanding principal balance as of the Cut-off Date were secured by
manufactured homes located in Texas, North Carolina, Georgia and Florida,
respectively. No other state represented more than 5% of the Group I Contracts
by aggregate unpaid principal balance as of the Cut-off Date. Approximately
25.2%, by principal balance as of the Cut-off Date, of the Group I Contracts are
Land Home Contracts or Land-in-Lieu Contracts.
Approximately 4.2% by outstanding principal balance as of the Cut-off Date
of the Group I Contracts are Step-Up Rate Contracts. Approximately 4.2% by
outstanding principal balance as of the Cut-off Date of the Group I Contracts
provide for two increases in the Contract Rate from the initial Contract Rate
and the remaining Group I Contracts that are Step-Up Rate Contracts - which
represent less than 0.1% of the Group I Contracts - provide for a single
increase in the Contract Rate. All of the Group I Contracts that are Step-Up
Rate Contracts are still bearing interest at their initial Contract Rate.
During the Low Rate Period, the total amount and the principal portion of each
Scheduled Payment on each Contract is determined on a basis that would cause the
Contract to be fully amortized over its term if the Contract were to bear
interest during its entire term at its initial Contract Rate and were to have
level payments over its entire term. The total amount and principal portion of
each Scheduled Payment due after the end of the applicable Low Rate Period is
determined on a basis that would cause the Contract, which would then be bearing
interest at a stepped-up rate, to be fully amortized over its remaining term on
a level-payment basis. The Low Rate Periods for those Group I Contracts that
are Step-Up Rate Contracts providing for a single increase in the Contract Rate
will end no earlier than February 10, 2001 and no later than April 1, 2001. The
Contract Rates for those Step-Up Rate Contracts will increase by 2.26% or 2.51%.
The period with the interim applicable Contract Rate for those Group I Contracts
that are Step-Up Rate Contracts providing for two increases in the Contract Rate
will end no later than May 2, 2001 and the Low Rate Periods will end no later
than May 2, 2002. The Contract Rates for the Step-Up Rate Contracts providing
for two increases in the Contract Rate will increase first by 1.25% and then by
an additional 1.25%. The statistical information concerning the Group I
Contracts set forth above and in the following tables, to the extent it relates
to the Contract Rates of the Step-Up Rate Contracts, takes into account only
their Contract Rates as of the Cut-off Date.
Set forth below are tables containing certain additional characteristics of
the Group I Contracts as of the Cut-off Date. Entries in the tables may not add
to 100% due to rounding.
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Geographical Distribution of Manufactured Homes as of Origination - Group I
Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
State as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ----- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Alabama....................................... 653 $ 17,783,339.96 4.06%
Arizona....................................... 504 13,549,479.48 3.09
Arkansas...................................... 352 10,592,949.91 2.42
California.................................... 485 9,668,652.88 2.20
Colorado...................................... 212 7,654,235.39 1.75
Connecticut................................... 1 22,844.16 0.01
Delaware...................................... 42 1,220,867.81 0.28
Florida....................................... 825 24,144,262.21 5.51
Georgia....................................... 1,517 36,699,302.32 8.37
Hawaii........................................ 1 14,518.03 0.00
Idaho......................................... 76 2,411,157.92 0.55
Illinois...................................... 219 7,331,836.75 1.67
Indiana....................................... 359 12,224,250.37 2.79
Iowa.......................................... 57 1,927,204.82 0.44
Kansas........................................ 82 2,673,226.66 0.61
Kentucky...................................... 436 14,834,670.24 3.38
Louisiana..................................... 331 12,198,154.58 2.78
Maine......................................... 36 1,984,199.86 0.45
Maryland...................................... 47 1,142,972.03 0.26
Massachusetts................................. 3 76,678.38 0.02
Michigan...................................... 378 14,661,663.16 3.34
Minnesota..................................... 155 3,446,759.45 0.79
Mississippi................................... 317 7,571,603.95 1.73
Missouri...................................... 359 9,546,360.18 2.18
Montana....................................... 51 1,530,455.38 0.35
Nebraska...................................... 62 2,331,245.92 0.53
Nevada........................................ 140 4,188,135.55 0.96
New Hampshire................................. 41 2,143,425.22 0.49
New Jersey.................................... 23 504,417.28 0.12
New Mexico.................................... 414 9,019,734.52 2.06
New York...................................... 228 10,375,830.06 2.37
North Carolina................................ 1,409 43,015,741.33 9.81
North Dakota.................................. 14 466,971.62 0.11
Ohio.......................................... 401 15,020,241.21 3.43
Oklahoma...................................... 271 9,422,735.89 2.15
Oregon........................................ 244 7,217,165.64 1.65
Pennsylvania.................................. 271 7,915,774.09 1.81
South Carolina................................ 656 11,418,929.37 2.60
South Dakota.................................. 31 1,217,980.69 0.28
Tennessee..................................... 608 17,720,873.97 4.04
Texas......................................... 1,349 48,314,641.79 11.02
Utah.......................................... 26 782,893.59 0.18
Vermont....................................... 35 2,036,586.68 0.46
Virginia...................................... 406 13,146,326.40 3.00
Washington.................................... 344 8,368,553.99 1.91
West Virginia................................. 179 5,548,828.23 1.27
Wisconsin..................................... 55 1,640,943.75 0.37
Wyoming....................................... 57 1,779,688.65 0.41
------ --------------- ------
Total.................................... 14,762 $438,509,311.32 100.00%
</TABLE>
S-19
<PAGE>
Distribution of Original Principal Balances - Group I Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Original Principal Balance as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- -------------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
$0-5,000...................................... 7 $ 30,273.07 0.01%
5,001-7,500................................... 75 482,074.57 0.11
7,501-10,000.................................. 206 1,758,137.11 0.40
10,001-12,500................................. 396 3,399,422.06 0.78
12,501-15,000................................. 884 7,375,530.70 1.68
15,001-17,500................................. 1,245 11,755,670.42 2.68
17,501-20,000................................. 1,239 14,055,458.09 3.21
20,001-22,500................................. 1,039 15,102,267.55 3.44
22,501-25,000................................. 1,025 18,316,382.64 4.18
25,001-27,500................................. 1,013 21,691,967.03 4.95
27,501-30,000................................. 968 23,166,835.31 5.28
30,001-32,500................................. 819 22,174,833.72 5.06
32,501-35,000................................. 746 22,473,669.59 5.13
35,001-40,000................................. 1,143 39,673,471.62 9.05
40,001-45,000................................. 790 32,240,923.29 7.35
45,001-50,000................................. 675 31,429,533.67 7.17
50,001-55,000................................. 531 27,576,400.38 6.29
55,001-60,000................................. 433 24,712,367.59 5.64
60,001-65,000................................. 328 20,422,777.18 4.66
65,001-70,000................................. 247 16,668,785.82 3.80
70,001-75,000................................. 204 14,731,445.81 3.36
75,001-80,000................................. 166 12,834,958.06 2.93
80,001-85,000................................. 128 10,510,762.79 2.40
Over $85,000.................................. 455 45,925,363.25 10.47
------ --------------- ------
Total.................................... 14,762 $438,509,311.32 100.00%
</TABLE>
. The greatest Group I Contract original Scheduled Principal Balance is
$199,597. The Scheduled Principal Balance of this Contract as of the Cut-off
Date represents 0.05% of the aggregate Scheduled Principal Balance of the
Group I Contracts as of the Cut-off Date.
Distribution of Original Loan-to-Value Ratios - Group I Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Loan-to-Value Ratio as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Less than or equal to 50%..................... 104 $ 2,147,622.42 0.56%
51-60......................................... 98 2,985,983.96 0.78
61-70......................................... 187 7,521,104.04 1.95
71-80......................................... 1,090 39,476,709.80 10.26
81-85......................................... 878 38,063,480.13 9.89
86-90......................................... 4,537 171,185,712.94 44.49
91-95......................................... 2,678 117,442,620.37 30.52
96-100%....................................... 182 5,940,015.54 1.54
----- --------------- ------
Total.................................... 9,754 $384,763,249.20 100.00%
</TABLE>
. Does not include Contracts totaling approximately $53,746,062.12 by principal
balance as of the Cut-off Date which were purchased in bulk from Bulk
Sellers.
S-20
<PAGE>
Contract Rates as of the Cut-off Date - Group I Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Contract Rate as of Cut-off Date as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- -------------------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
6.75-6.99..................................... 2 $ 181,207.94 0.04%
7.00-7.24..................................... 2 146,324.49 0.03
7.25-7.49..................................... 13 866,715.37 0.20
7.50-7.74..................................... 23 1,983,147.88 0.45
7.75-7.99..................................... 37 3,166,657.89 0.72
8.00-8.24..................................... 103 8,065,955.80 1.84
8.25-8.49..................................... 225 17,223,932.81 3.93
8.50-8.74..................................... 359 27,979,281.21 6.38
8.75-8.99..................................... 309 21,217,740.74 4.84
9.00-9.24..................................... 82 5,335,625.55 1.22
9.25-9.49..................................... 77 4,085,030.87 0.93
9.50-9.74..................................... 152 9,305,722.40 2.12
9.75-9.99..................................... 205 11,502,686.64 2.62
10.00-10.24................................... 334 17,588,186.09 4.01
10.25-10.49................................... 117 6,271,873.98 1.43
10.50-10.74................................... 342 16,181,530.54 3.69
10.75-10.99................................... 352 14,145,772.16 3.23
11.00-11.24................................... 643 31,065,507.17 7.08
11.25-11.49................................... 213 8,744,067.97 1.99
11.50-11.74................................... 553 22,419,696.16 5.11
11.75-11.99................................... 310 6,117,728.02 1.40
12.00-12.24................................... 246 8,503,268.51 1.94
12.25-12.49................................... 932 29,870,039.96 6.81
12.50-12.74................................... 600 16,672,603.33 3.80
12.75-12.99................................... 1,031 18,869,287.52 4.30
13.00-13.24................................... 422 8,710,181.79 1.99
13.25-13.49................................... 1,406 21,358,518.39 4.87
13.50-13.74................................... 1,305 18,515,049.08 4.22
13.75-13.99................................... 1,287 25,419,858.09 5.80
14.00-14.24................................... 400 9,427,884.77 2.15
14.25-14.49................................... 315 6,211,371.55 1.42
14.50-14.74................................... 286 5,481,118.31 1.25
14.75-14.99................................... 490 8,599,798.15 1.96
15.00-15.24................................... 319 6,248,045.82 1.42
15.25-15.49................................... 154 2,980,703.69 0.68
15.50-15.74................................... 550 8,653,199.00 1.97
15.75-15.99................................... 123 2,090,876.80 0.48
16.00-16.24................................... 74 1,229,487.11 0.28
16.25+%....................................... 369 6,073,627.77 1.39
------ --------------- ------
Total.................................... 14,762 $438,509,311.32 100.00%
</TABLE>
S-21
<PAGE>
Remaining Months to Maturity - Group I Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Months Remaining as of Cut-off-Date as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ----------------------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
1-30.......................................... 1,022 $ 4,441,357.58 1.01%
31-60......................................... 2,256 18,193,266.15 4.15
61-90......................................... 904 13,827,635.14 3.15
91-120........................................ 1,572 27,325,112.85 6.23
121-150....................................... 146 2,188,116.48 0.50
151-180....................................... 1,324 26,920,374.10 6.14
181-210....................................... 9 255,369.00 0.06
211-240....................................... 2,473 77,810,448.77 17.74
241-270....................................... 4 233,656.13 0.05
271-300....................................... 744 30,794,219.85 7.02
301-360....................................... 4,308 236,519,755.27 53.94
------ --------------- ------
Total.................................... 14,762 $438,509,311.32 100.00%
</TABLE>
Group II Contracts
Each Group II Contract either provides for a Contract Rate fixed for one
year or a Contract Rate fixed for three years from the date of origination, or
with respect to any Group II Contracts that had an interest-only period, eleven
months from the date of the first payment of interest on the Contract, and then
adjusts annually (each, an "Adjustment Date") thereafter to an amount equal to
the sum, rounded, if applicable, of the Index on the date 45 days preceding the
Adjustment Date, and the number of basis points, if any (the "Gross Margin"),
set forth in the related Contract, subject to the limitation set forth in the
related Contract with respect to increases and decreases on any Adjustment Date
(the "Periodic Cap") and the maximum and minimum rates, if any, set forth in the
related Contract (the "Maximum Cap" and the "Minimum Cap," respectively). None
of the Group II Contracts are currently in an interest-only period.
The "Index" with respect to each Group II Contract is either:
. Twelve-Month LIBOR; or
. the per annum rate equal to the monthly average yield on U.S.
Treasury securities adjusted to a constant maturity ("CMT") of
one year.
Approximately 99.8% of the Group II Contracts have an Index based on
Twelve-Month LIBOR.
The Contract Rate on each Group II Contract can be converted to a fixed
rate at the request of the related Obligor for a fee of $200.00 so long as the
requesting Obligor is not delinquent in payment on the related Contract. The
converted fixed rate will be the current fixed rate offered by the Seller for
manufactured housing installment sales contracts or installment loan agreements
with characteristics that are similar to the converted Contract. GreenPoint
Bank, as initial holder of the Class R Certificates, is obligated to repurchase
any Group II Contract so converted as of the date of the conversion in an amount
equal to the Scheduled Principal Balance of the converted Contract on the date
of conversion plus accrued interest thereon. Any amounts received in respect of
the repurchase shall be deposited into the Certificate Account for distribution
on the Distribution Date in the month following the repurchase.
As of the Cut-off Date, the Group II Contracts will have an aggregate
unpaid principal balance of approximately $280,656,917.60. The average
outstanding principal balance of the Group II Contracts as of the
S-22
<PAGE>
Cut-off Date was approximately $42,868.02. Approximately 88.4% of the Group II
Contracts by outstanding principal balance as of the Cut-off Date are secured by
manufactured homes which were new at the time of origination and approximately
11.6% of the Group II Contracts by outstanding principal balance as of the Cut-
off Date are secured by manufactured homes which were used at the time of
origination. As of the Cut-off Date, each Group II Contract has a Contract Rate
of at least 6.750% and not more than 16.500% per annum. As of the Cut-off Date,
the weighted average Contract Rate of the Group II Contracts is approximately
9.742% per annum. The Group II Contracts have remaining maturities as of the
Cut-off Date of at least 9 months but not more than 360 months and original
maturities of at least 24 months but not more than 360 months. As of the Cut-off
Date, the Group II Contracts had a weighted average original term to scheduled
maturity of approximately 314.20 months, and a weighted average remaining term
to scheduled maturity of approximately 313.32 months. The remaining term to
stated maturity of a Contract is calculated as of the Cut-off Date. Management
of GreenPoint estimates that in excess of 95% of the manufactured homes are used
as primary residences by the Obligors under the Group II Contracts secured by
their manufactured homes. The weighted average loan-to-value ratio at the time
of origination of the Group II Contracts was approximately 89.234%. The Group II
Contracts are secured by manufactured homes and real estate located in 45
states. Approximately 10.41%, 8.37%, 7.40%, 7.09%, 6.23% and 5.86% of the Group
II Contracts by aggregate unpaid principal balance as of the Cut-off Date were
secured by manufactured homes or real estate located in Texas, Georgia, Alabama,
North Carolina, Florida and Mississippi, respectively. No other state
represented more than approximately 5.00% of the Group II Contracts by aggregate
unpaid principal balance as of the Cut-off Date. Approximately 12.7%, by
principal balance as of the Cut-off Date, of the Group II Contracts are Land
Home Contracts or Land-in-Lieu Contracts. Group II Contracts totaling
$100,273.64 are simple interest contracts that were originated in the State of
Kansas. The remaining Group II Contracts are all actuarial Contracts. See "The
Contract Pools" in the prospectus.
All of the Periodic Caps for the Group II Contracts are 2.00%. The months
to the next Adjustment Date for the Group II Contracts as of the Cut-off Date
ranged from 3 to 36 months with a weighted average of approximately 11.54
months. The Maximum Cap for the Group II Contracts as of the Cut-off Date
ranged from 11.750% to 21.500% with a weighted average of approximately 14.743%.
The Gross Margins for the Group II Contracts as of the Cut-off Date ranged from
0.500% to 11.250% with a weighted average of approximately 4.989%.
Approximately 3.17%, 96.54% and 0.29%, respectively, of the Group II Contracts,
by principal balance as of the Cut-off Date have their first Adjustment Date in
2000, 2001 and 2003, respectively.
Set forth below are tables containing certain additional characteristics of
the Group II Contracts as of the Cut-off Date. Entries in the tables may not
add to 100% due to rounding.
S-23
<PAGE>
Geographical Distribution of Manufactured Homes as of Origination -
Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
State as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ----- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Alabama....................................... 507 $ 20,777,143.18 7.40%
Arizona....................................... 124 5,609,424.50 2.00
Arkansas...................................... 119 4,141,529.09 1.48
California.................................... 29 1,051,975.64 0.37
Colorado...................................... 44 2,034,342.28 0.72
Delaware...................................... 6 232,418.93 0.08
Florida....................................... 338 17,488,179.01 6.23
Georgia....................................... 497 23,481,641.18 8.37
Idaho......................................... 35 1,602,473.62 0.57
Illinois...................................... 108 3,903,139.52 1.39
Indiana....................................... 145 6,737,072.87 2.40
Iowa.......................................... 149 5,749,964.31 2.05
Kansas........................................ 101 4,394,965.62 1.57
Kentucky...................................... 332 13,365,259.50 4.76
Louisiana..................................... 186 7,166,404.68 2.55
Maine......................................... 12 724,849.00 0.26
Maryland...................................... 20 904,725.16 0.32
Michigan...................................... 238 11,385,340.17 4.06
Minnesota..................................... 112 4,308,477.18 1.54
Mississippi................................... 434 16,448,383.76 5.86
Missouri...................................... 235 8,618,312.21 3.07
Montana....................................... 36 1,461,555.88 0.52
Nebraska...................................... 27 1,230,211.96 0.44
Nevada........................................ 27 1,680,594.24 0.60
New Hampshire................................. 6 377,418.85 0.13
New Jersey.................................... 3 114,292.63 0.04
New Mexico.................................... 30 1,324,373.82 0.47
New York...................................... 12 476,976.18 0.17
North Carolina................................ 445 19,884,697.53 7.09
North Dakota.................................. 30 1,301,803.19 0.46
Ohio.......................................... 117 4,960,618.90 1.77
Oklahoma...................................... 120 4,757,100.88 1.69
Oregon........................................ 96 5,165,860.84 1.84
Pennsylvania.................................. 58 2,431,825.27 0.87
South Carolina................................ 330 13,722,669.42 4.89
South Dakota.................................. 99 4,086,316.75 1.46
Tennessee..................................... 203 8,263,746.82 2.94
Texas......................................... 688 29,218,979.69 10.41
Utah.......................................... 35 2,069,732.47 0.74
Vermont....................................... 6 277,223.42 0.10
Virginia...................................... 90 3,810,093.16 1.36
Washington.................................... 86 5,400,790.15 1.92
West Virginia................................. 121 4,115,477.21 1.47
Wisconsin..................................... 83 3,061,135.90 1.09
Wyoming....................................... 28 1,337,401.03 0.48
----- --------------- ------
Total.................................... 6,547 $280,656,917.60 100.00%
</TABLE>
S-24
<PAGE>
Distribution of Original Principal Balances of Contracts - Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Original Principal Balance as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- -------------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C>
$0-5,000................................ 1 $ 4,163.69 0.00%
5,001-7,500............................. 6 39,567.01 0.01
7,501-10,000............................ 34 294,533.76 0.10
10,001-12,500........................... 45 497,513.50 0.18
12,501-15,000........................... 84 1,142,912.07 0.41
15,001-17,500........................... 92 1,501,129.05 0.53
17,501-20,000........................... 111 2,064,451.94 0.74
20,001-22,500........................... 161 3,420,624.88 1.22
22,501-25,000........................... 252 6,000,208.67 2.14
25,001-27,500........................... 354 9,292,088.75 3.31
27,501-30,000........................... 394 11,311,783.64 4.03
30,001-32,500........................... 425 13,273,642.24 4.73
32,501-35,000........................... 476 16,063,786.26 5.72
35,001-40,000........................... 853 31,895,517.88 11.36
40,001-45,000........................... 690 29,311,347.76 10.44
45,001-50,000........................... 649 30,760,433.75 10.96
50,001-55,000........................... 557 29,182,726.33 10.40
55,001-60,000........................... 420 24,070,229.11 8.58
60,001-65,000........................... 289 17,989,108.11 6.41
65,001-70,000........................... 210 14,149,339.29 5.04
70,001-75,000........................... 117 8,455,930.45 3.01
75,001-80,000........................... 77 5,954,136.44 2.12
80,001-85,000........................... 66 5,452,167.69 1.94
Over $85,000............................ 184 18,529,575.33 6.60
----- --------------- ------
Total.............................. 6,547 $280,656,917.60 100.00%
</TABLE>
. The greatest Group II Contract original Scheduled Principal Balance is
$193,180. The Scheduled Principal Balance of this Contract as of the Cut-off
Date represents 0.07% of the aggregate Scheduled Principal Balance of the
Group II Contracts as of the Cut-off Date.
Distribution of Original Loan-to-Value Ratios of Contracts - Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Loan-to-Value Ratio as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Less than or equal to 50%...................... 43 $ 952,709.92 0.34%
51-60.......................................... 28 776,361.41 0.28
61-70.......................................... 50 1,899,663.83 0.68
71-80.......................................... 499 20,083,592.14 7.16
81-85.......................................... 485 21,728,954.87 7.74
86-90.......................................... 3,847 166,712,810.82 59.40
91-95.......................................... 1,489 64,665,475.37 23.04
96-100......................................... 106 3,837,349.24 1.37
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
</TABLE>
S-25
<PAGE>
Distribution of Contract Rates of Contracts as of the Cut-off Date -
Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Contract Rate As of Cut-off Date as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- -------------------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C>
6.75-6.99%..................................... 1 $ 85,801.48 0.03%
7.00-7.24...................................... 19 1,398,083.19 0.50
7.25-7.49...................................... 92 7,337,467.35 2.61
7.50-7.74...................................... 106 8,256,814.59 2.94
7.75-7.99...................................... 48 2,680,764.78 0.96
8.00-8.24...................................... 83 4,330,398.16 1.54
8.25-8.49...................................... 226 12,792,040.60 4.56
8.50-8.74...................................... 230 14,361,812.24 5.12
8.75-8.99...................................... 875 45,709,519.44 16.29
9.00-9.24...................................... 117 5,932,016.33 2.11
9.25-9.49...................................... 607 27,953,013.34 9.96
9.50-9.74...................................... 129 5,915,868.55 2.11
9.75-9.99...................................... 386 18,412,281.88 6.56
10.00-10.24.................................... 874 32,572,893.09 11.61
10.25-10.49.................................... 303 13,226,071.77 4.71
10.50-10.74.................................... 222 8,809,933.65 3.14
10.75-10.99.................................... 103 4,399,377.52 1.57
11.00-11.24.................................... 650 22,960,943.38 8.18
11.25-11.49.................................... 174 6,211,467.25 2.21
11.50-11.74.................................... 311 10,845,891.83 3.86
11.75-11.99.................................... 201 6,368,358.00 2.27
12.00-12.24.................................... 218 6,087,716.97 2.17
12.25-12.49.................................... 109 3,207,662.68 1.14
12.50-12.74.................................... 71 1,991,828.96 0.71
12.75-12.99.................................... 173 3,453,261.16 1.23
13.00-13.24.................................... 46 1,329,180.35 0.47
13.25-13.49.................................... 24 560,293.34 0.20
13.50-13.74.................................... 28 812,533.12 0.29
13.75-13.99.................................... 4 107,538.84 0.04
14.00-14.24.................................... 74 1,578,610.89 0.56
14.25-14.49.................................... 3 87,234.76 0.03
14.50-14.74.................................... 20 471,144.90 0.17
14.75-14.99.................................... 2 68,975.50 0.02
15.00-15.24.................................... 3 58,590.33 0.02
15.50-15.74.................................... 8 143,425.95 0.05
16.00-16.24.................................... 2 44,439.32 0.02
Greater than 16.24%............................ 5 93,662.11 0.03
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
</TABLE>
S-26
<PAGE>
Distribution of Remaining Months to Maturity of Contracts as of Cut-off Date -
Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Months Remaining as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- --------------------------------------- ------------------------- ---------------------- ----------------------
<S> <C> <C> <C>
1-30........................................... 2 $ 8,992.71 0.00%
31-60.......................................... 18 254,681.94 0.09
61-90.......................................... 26 378,170.55 0.13
91-120......................................... 117 2,155,151.91 0.77
121-150........................................ 48 830,040.52 0.30
151-180........................................ 497 11,475,816.99 4.09
211-240........................................ 2,066 71,572,782.64 25.50
271-300........................................ 530 21,986,710.87 7.83
301-360........................................ 3,243 171,994,569.74 61.28
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
</TABLE>
Distribution of Maximum Cap of Contracts - Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Maximum Cap as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ----------- ---------------------- ------------------------- -----------------------
<S> <C> <C> <C>
11.51-12.00%................................... 20 $ 1,483,884.67 0.53%
12.01-12.50.................................... 198 15,594,281.94 5.56
12.51-13.00.................................... 131 7,011,162.94 2.50
13.01-13.50.................................... 456 27,153,852.84 9.68
13.51-14.00.................................... 992 51,641,535.77 18.40
14.01-14.50.................................... 736 33,868,881.89 12.07
14.51-15.00.................................... 1,258 50,910,871.83 18.14
15.01-15.50.................................... 525 22,035,492.00 7.85
15.51-16.00.................................... 752 27,333,601.24 9.74
16.01-16.50.................................... 487 17,133,452.50 6.10
16.51-17.00.................................... 420 12,481,517.77 4.45
17.01-17.50.................................... 180 5,199,491.64 1.85
17.51-18.00.................................... 219 4,782,441.51 1.70
18.01-18.50.................................... 52 1,372,826.46 0.49
18.51-19.00.................................... 78 1,686,149.73 0.60
19.01-19.50.................................... 23 558,379.66 0.20
19.51-20.00.................................... 5 127,565.83 0.05
20.01-20.50.................................... 8 143,425.95 0.05
20.51-21.00.................................... 2 44,439.32 0.02
21.01-21.50%................................... 5 93,662.11 0.03
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
</TABLE>
S-27
<PAGE>
Distribution of Gross Margins of Contracts - Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Gross Margin as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ------------ ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
0.50-1.50%..................................... 5 $ 356,240.85 0.13%
1.51-2.00...................................... 12 895,648.54 0.32
2.01-2.50...................................... 25 1,495,734.83 0.53
2.51-3.00...................................... 286 19,966,225.90 7.11
3.01-3.50...................................... 234 12,200,768.22 4.35
3.51-4.00...................................... 443 26,419,933.28 9.41
4.01-4.50...................................... 1,350 67,092,405.69 23.91
4.51-5.00...................................... 558 22,061,101.97 7.86
5.01-5.50...................................... 1,252 52,378,791.64 18.66
5.51-6.00...................................... 602 23,621,134.87 8.42
6.01-6.50...................................... 703 23,760,711.13 8.47
6.51-7.00...................................... 511 16,248,081.31 5.79
7.01-7.50...................................... 210 5,383,461.18 1.92
7.51-8.00...................................... 211 5,466,631.61 1.95
Greater than 8.00%............................. 145 3,310,046.58 1.18
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
Distribution of Next Adjustment Date of Contracts as of Cut-off Date - Group II Contracts
% of Contracts
Aggregate Scheduled by Scheduled
Month of Next Adjustment Date as of the Number of Contracts Principal Balance Principal Balance
Cut-off Date as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- ----------------------------------------- ---------------------- ---------------------- ----------------------
July 2000...................................... 1 $ 32,831.15 0.01%
August 2000.................................... 2 123,450.86 0.04
September 2000................................. 6 621,503.75 0.22
October 2000................................... 5 480,160.42 0.17
November 2000.................................. 30 2,893,880.26 1.03
December 2000.................................. 58 4,758,489.79 1.70
January 2001................................... 65 5,261,970.90 1.87
February 2001.................................. 103 7,068,226.66 2.52
March 2001..................................... 2,499 103,191,712.22 36.77
April 2001..................................... 3,096 128,417,175.96 45.76
May 2001....................................... 657 26,937,021.08 9.60
October 2001................................... 1 67,153.78 0.02
March 2003..................................... 11 281,249.58 0.10
April 2003..................................... 13 522,091.19 0.19
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
</TABLE>
S-28
<PAGE>
Distribution of Debt-to-Income Ratios - Group II Contracts
<TABLE>
<CAPTION>
% of Contracts
Aggregate Scheduled by Scheduled
Number of Contracts Principal Balance Principal Balance
Debt-to-Income Ratio as of the Cut-off Date as of the Cut-off Date as of the Cut-off Date
- -------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
1-5%........................................... 5 $ 165,542.35 0.06%
6-10........................................... 10 420,494.24 0.15
11-15.......................................... 73 2,302,109.35 0.82
16-20.......................................... 219 7,826,382.92 2.79
21-25.......................................... 357 12,884,718.37 4.59
26-30.......................................... 515 20,179,972.29 7.19
31-35.......................................... 719 28,554,589.83 10.17
36-40.......................................... 828 34,676,537.09 12.36
41-45.......................................... 879 37,119,337.23 13.23
46-50.......................................... 1,041 46,410,701.92 16.54
51-55.......................................... 905 40,923,890.69 14.58
56-60.......................................... 577 27,900,538.62 9.94
61-65.......................................... 240 11,947,685.24 4.26
Greater than 65%............................... 157 8,270,389.89 2.95
Not Available.................................. 22 1,074,027.57 0.38
----- --------------- ------
Total..................................... 6,547 $280,656,917.60 100.00%
</TABLE>
S-29
<PAGE>
The Seller and Servicer
The following information supplements the information in the prospectus
under the heading "The Seller."
The Seller commenced operations on September 30, 1998. See "Risk Factors--
Limited Operating History of Seller and Servicer" in the prospectus. On October
1, 1999 GreenPoint Credit Corp. changed its corporate structure from a Delaware
corporation to a Delaware limited liability company. GreenPoint Credit Corp.
was merged with a newly created affiliate company named GreenPoint Credit, LLC
and the surviving entity is named GreenPoint Credit, LLC. GreenPoint Credit,
LLC's sole member is GreenPoint Mortgage Funding, Inc., which is a wholly owned
subsidiary of Headlands Mortgage Company, which is a wholly owned subsidiary of
GreenPoint Bank. As of April 30, 2000, the Seller had total assets of
approximately $1,976.1 million, total liabilities of approximately $1,462.3
million and total stockholders' equity of approximately $513.7 million. The
Seller's principal place of business is located in San Diego, California.
The volume of manufactured housing contracts originated by GreenPoint,
acquired by GreenPoint in the Acquisition (See "The Seller--The Acquisition" in
the prospectus), or purchased from dealers on an individual basis by GreenPoint,
for the periods indicated below and certain other information at the end of the
related periods are as follows:
Contracts Originated or Purchased on an Individual Basis
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Year to Date Year to Date
December 31, 1998 December 31, 1999 March 31, 2000
--------------------- --------------------- -----------------
<S> <C> <C> <C>
Principal Balance of Contracts Purchased......... $1,451,368 $3,045,734 $730,501
Number of Contracts Purchased.................... 38,010 75,622 17,582
Average Contract Size............................ $ 38.18 $ 40.27 41.55
Number of Regional Offices....................... 45 45 45
</TABLE>
The table above includes only Contracts originated by GreenPoint or
purchased from dealers and does not include any portfolios acquired in bulk from
third parties other than from Bank of America, FSB in the Acquisition. Regional
offices include offices in the United States originating or purchasing
manufactured housing contracts as of the end of the time period.
The following table shows the size of the portfolio of manufactured housing
contracts serviced, including Contracts already in repossession, by GreenPoint,
through the manufactured housing regional office system, as of the dates
indicated:
Size of Serviced Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of As of As of
December 31, 1998 December 31, 1999 March 31,2000
--------------------- --------------------- -----------------
<S> <C> <C> <C>
Unpaid Principal Balance of Contracts Being $11,504,320 $13,054,239 $13,371,583
Serviced........................................
Average Contract Unpaid Principal Balance........ $ 27.7 $ 29.9 30.3
Number of Contracts Being Serviced............... 415,373 437,093 441,610
</TABLE>
S-30
<PAGE>
Delinquency and Loan Loss/Repossession Experience
The loss and delinquency information of Bank of America, FSB, in its
capacity as servicer of its manufactured housing installment sales contracts and
installment loan agreement portfolio, has been disclosed in various filings made
by Bank of America, FSB with the Securities and Exchange Commission and the
filings are publicly available to potential investors. GreenPoint acquired the
servicing personnel and $794,958,000.00 in manufactured housing installment
sales contracts and installment loan agreements from Bank of America, FSB in the
Acquisition. See "The Acquisition" in the prospectus. Since October 1, 1998,
GreenPoint has been the servicer of all of the manufactured housing installment
sales contracts and installment loan agreements that had been serviced by Bank
of America, FSB. GreenPoint makes no representation or warranty with respect to
the completeness or accuracy of the loss and delinquency information contained
in any filings made by Bank of America, FSB with the Securities and Exchange
Commission or any filings made by Bank of America, FSB with any other public
entity and disclaims any liability with respect thereto. Further, the loss and
delinquency experience of Bank of America, FSB as servicer of manufactured
housing installment sales contracts and installment loan agreements may not be
reflective of the loss and delinquency experience that GreenPoint will encounter
as servicer of manufactured housing installment sales contracts and installment
loan agreements.
The following table sets forth the delinquency experience of manufactured
housing contracts serviced by GreenPoint since October 1998, excluding contracts
already in repossession and approximately $600,000,000 of contracts owned by
Nations Credit Manufactured Housing Corporation and serviced by GreenPoint since
August 1999, as of the dates indicated:
Delinquency Experience
<TABLE>
<CAPTION>
As of As of As of
December 31, 1998 December 31, 1999 March 31, 2000
----------------- ----------------- --------------
<S> <C> <C> <C>
Number of Contracts Outstanding................. 411,852 433,221 437,477
Number of Contracts Delinquent:
30-59 days...................................... 6,397 8,244 4,836
60-89 days...................................... 1,753 2,055 1,339
90 days or more................................. 2,372 2,641 2,315
------- ------- -------
Total Contracts Delinquent...................... 10,522 12,940 8,490
======= ======= =======
Delinquencies as a Percentage of Contracts 2.55% 2.99% 1.94%
Outstanding.....................................
</TABLE>
The "Number of Contracts Delinquent" is based on the number of days
payments are contractually past due and assumes 30-day months. Consequently, a
payment due on the first day of a month is not 30 days delinquent until the
first day of the following month. "Delinquencies as a Percentage of Contracts
Outstanding" is calculated by number of Contracts.
Since GreenPoint has only been servicing the Contracts for a limited amount
of time, the delinquency experience reflected in the table above may not
necessarily be indicative of the actual performance of the Contracts over time.
The following table sets forth the loan loss/repossession experience of
manufactured housing contracts serviced by GreenPoint since January 1, 2000,
including contracts already in repossession, but excluding approximately
$600,000,000 of contracts owned by Nations Credit Manufactured Housing
Corporation and serviced by GreenPoint since August 1999, as of the dates
indicated:
S-31
<PAGE>
Loan Loss/Repossession Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year to Date Year to Date
December 31, 1999 March 31, 2000
----------------- --------------
<S> <C> <C>
Number of Contracts Being Serviced.................... 437,093 441,610
Aggregate Principal Balance of Contracts Being $13,054,239 $13,371,583
Serviced.............................................
Average Principal Recovery Upon Liquidation........... 46.15% 45.19%
Contract Liquidations................................. 3.88% 0.93%
Net Losses:
Dollars............................................. $ 281,757 $ 70,675
Percentage.......................................... 2.16% 0.53%
Contracts in Repossession............................. 3,872 4,133
</TABLE>
The "Average Principal Recovery Upon Liquidation" is calculated as a
percentage of the outstanding principal balance of contracts that were
liquidated during the applicable period, based on the gross amounts recovered
upon liquidation, proceeds applied to unpaid interest accrued through the date
of repossession and after the payment of repossession and other liquidation
expenses. Deficiency recoveries received subsequent to liquidation date are
also included net of collection expenses paid to third parties. "Contract
Liquidations" are calculated by the number of contracts liquidated during the
period as a percentage of the total number of contracts being serviced as of
period end. The calculation of the dollar amount of "Net Losses" includes
unpaid interest accrued through the date of repossession and all repossession
and other liquidation expenses and is reduced by deficiency recoveries received
subsequent to the date of liquidation net of collection expenses paid to third
parties. The percentage of "Net Losses" is calculated as a percentage of the
total number of Contracts being serviced as of period end. The "Number of
Contracts Being Serviced," the "Aggregate Principal Balance of Contracts Being
Serviced" and the total number of "Contracts in Repossession" are based upon the
total number of Contracts being serviced by GreenPoint as of March 31, 2000.
GreenPoint's Management's Discussion and Analysis of Delinquency, Repossession
and Loan Loss Experience
Management has not observed any material economic development in the
general business environment of the country or in local areas where GreenPoint
originates its manufactured housing contracts which has unfavorably affected
portfolio performance in relation to delinquencies, repossessions and loan
losses. However, the delinquency, loan loss and repossession experience of
manufactured housing contracts historically has been adversely affected by a
downturn in regional or local economic conditions. These regional or local
economic conditions are often volatile, and no predictions can be made regarding
future economic loss upon repossession. Information regarding the geographic
location, at origination, of the manufactured homes securing the Contracts in
the Contract Pool is set forth under "The Contract Pool" in this prospectus
supplement.
The Letters of Credit Bank
GreenPoint Bank
GreenPoint Bank is a subsidiary of GreenPoint Financial Corp., whose
principal office is located in New York, New York. GreenPoint Financial Corp.
is a bank holding company with three principal operating segments, reflecting
its three major business lines, mortgage banking, manufactured housing and
consumer banking. GreenPoint Bank represents the consumer banking line and has
$11.7 billion in deposits in 73 branches serving more than 400,000 households in
the greater New York area. GreenPoint Bank is a New York
S-32
<PAGE>
state-chartered savings bank with its principal office in New York, New York and
is subject to examination and primary regulation by the State of New York
Banking Department.
In 1989, the United States Congress passed comprehensive financial
institutions legislation known as FIRREA. Pursuant to the provisions of FIRREA,
an FDIC-insured financial institution sharing common ownership with a failed
institution can be required to indemnify the FDIC for its losses resulting from
the insolvency of the failed institution, even if such indemnification causes
the affiliated institution also to become insolvent. As a result, GreenPoint
Bank may, under certain circumstances, be obligated for the liabilities of the
banking subsidiaries of GreenPoint Financial Corp.
NO BANKING OR OTHER AFFILIATE CONTROLLED BY GREENPOINT FINANCIAL CORP.,
EXCEPT GREENPOINT BANK, IS OBLIGATED TO MAKE PAYMENTS UNDER THE LETTERS OF
CREDIT.
GreenPoint Bank Financial Information
The table below summarizes selected consolidated information of GreenPoint
Bank determined in accordance with generally accepted accounting principles:
Summary Financials
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of or for the
Year-Ended
December 31, 1999
(Unaudited)
-----------
<S> <C>
Total Assets.................................................................... $15,396,402
Total Liabilities............................................................... 13,256,372
Stockholder's Equity............................................................ 2,140,030
Net Interest Income............................................................. 550,472
Provision for Loan Losses....................................................... 14,175
Non-interest Income............................................................. 391,871
Non-interest Expense............................................................ 545,849
Net Income...................................................................... 222,058
</TABLE>
Where You Can Obtain Additional Information About GreenPoint Bank
GreenPoint Bank submits quarterly to the FDIC reports called "Consolidated
Reports of Condition and Income for a Bank With Domestic and Foreign Offices"
(each, a "Call Report", and collectively, the "Call Reports"). The publicly
available portions of the Call Reports with respect to GreenPoint Bank are on
file with the FDIC, and copies of such portions of the Call Reports may be
obtained from the FDIC, Disclosure Group, Room F518, 550 17th Street, N.W.,
Washington, D.C. 20429, at prescribed rates.
The information contained in "The Letters of Credit Bank" in this
prospectus supplement relates to and has been obtained from GreenPoint Bank and
is furnished solely to provide limited introductory information regarding
GreenPoint Bank and does not purport to be comprehensive. Information regarding
GreenPoint Bank is qualified in its entirety by the detailed information
appearing in the documents and financial statements referenced above.
S-33
<PAGE>
MBIA Insurance Corporation
MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary
of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The
Company is not obligated to pay the debts of or claims against MBIA. MBIA is
domiciled in the State of New York and licensed to do business in and subject to
regulation under the laws of all 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands,
the Virgin Islands of the United States and the Territory of Guam. MBIA has two
European branches, one in the Republic of France and the other in the Kingdom of
Spain. New York has laws prescribing minimum capital requirements, limiting
classes and concentrations of investments and requiring the approval of policy
rates and forms. State laws also regulate the amount of both the aggregate and
individual risks that may be insured, the payment of dividends by MBIA, changes
in control and transactions among affiliates. Additionally, MBIA is required to
maintain contingency reserves on its liabilities in certain amounts and for
certain periods of time.
MBIA does not accept any responsibility for the accuracy or completeness of
this prospectus supplement or any information or disclosure contained in this
prospectus supplement, or omitted from this prospectus supplement, other than
with respect to the accuracy of the information regarding MBIA set forth under
the headings "MBIA Insurance Corporation" and "Experts." Additionally, MBIA
makes no representation regarding the Offered Certificates or the advisability
of investing in the Offered Certificates.
The Certificate Insurance Policy is not covered by the Property/Casualty
Insurance Security Fund specified in Article 76 of the New York Insurance Law.
MBIA Financial Information
The consolidated financial statements of MBIA, a wholly owned subsidiary of
the Company and its subsidiaries as of December 31, 1999 and December 31, 1998
and for each of the three years in the period ended December 31, 1999, prepared
in accordance with generally accepted accounting principles, included in the
Annual Report on Form 10-K of the Company for the year ended December 31, 1999
are hereby incorporated by reference into this prospectus supplement and shall
be deemed to be a part hereof. Any statement contained in a document
incorporated by reference herein shall be modified or superseded for purposes of
this prospectus supplement to the extent that a statement contained herein or in
any other subsequently filed document which also is incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus supplement.
All financial statements of MBIA and its subsidiaries included in documents
filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, subsequent to the date of this
prospectus supplement and prior to the termination of the offering of the
Offered Certificates shall be deemed to be incorporated by reference into this
prospectus supplement and to be a part hereof from the respective dates of
filing such documents.
The tables below present selected financial information of MBIA determined
in accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities ("SAP") and generally accepted accounting
principles ("GAAP"):
S-34
<PAGE>
<TABLE>
<CAPTION>
SAP
------------------------------------------------------
(In Millions)
December 31, 1998 December 31, 1999
------------------------ ------------------------
(Audited) (Audited)
<S> <C> <C>
Admitted Assets................................. $6,521 $7,045
Liabilities..................................... 4,231 4,632
Capital and Surplus............................. 2,290 2,413
</TABLE>
<TABLE>
<CAPTION>
GAAP
------------------------------------------------------
(In Millions)
December 31, 1998 December 31, 1999
------------------------ ------------------------
(Audited) (Audited)
<S> <C> <C>
Assets.......................................... $7,518 $7,446
Liabilities..................................... 3,241 3,218
Shareholder's Equity............................ 4,277 4,228
</TABLE>
Where You Can Obtain Additional Information About MBIA
Copies of the financial statements of MBIA incorporated by reference herein
and copies of MBIA's 1999 year-end audited financial statements prepared in
accordance with statutory accounting practices are available, without charge,
from MBIA. The address of MBIA is 113 King Street, Armonk, New York 10504. The
telephone number of MBIA is (914) 273-4545.
Financial Strength Ratings of MBIA
Moody's Investors Service, Inc. rates the financial strength of MBIA "Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. rates the financial strength of MBIA "AAA."
Fitch IBCA, Inc. rates the financial strength of MBIA "AAA."
Each rating of MBIA should be evaluated independently. The ratings reflect
the respective rating agency's current assessment of the creditworthiness of
MBIA and its ability to pay claims on its policies of insurance. Any further
explanation as to the significance of the above ratings may be obtained only
from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the
securities, and such ratings may be subject to revision or withdrawal at any
time by the rating agencies. Any downward revision or withdrawal of any of the
above ratings may have an adverse effect on the market price of the securities.
MBIA does not guaranty the market price of the securities nor does it guaranty
that the ratings on the securities will not be revised or withdrawn.
Prepayment and Yield Considerations
The Contracts have maturities at origination ranging from 24 to 362 months,
but may be prepaid in full or in part at any time. The prepayment experience of
the Contracts, including prepayments and liquidations due to defaulted
contracts, casualties and condemnations or due to the exercise of an optional
termination or termination
S-35
<PAGE>
auction (see "--Optional Termination and Termination Auction" in this prospectus
supplement), will affect the average life of the Certificates. The weighted
average life of, and, if purchased at other than par, the yield to maturity on,
the Certificates will relate to the rate of payment of principal on the
Contracts in the related Group, including, for this purpose, prepayments,
liquidations due to defaulted contracts, casualties and condemnations. Based on
GreenPoint's experience with the portfolio of conventional manufactured housing
contracts serviced by it, GreenPoint anticipates that a number of Contracts will
be prepaid in full prior to their maturity. A number of factors, including
homeowner mobility, general and regional economic conditions and prevailing
interest rates may influence prepayments. In addition, repurchases of Contracts
on account of certain breaches of representations and warranties as described
below under "Description of the Certificates--Conveyance of Contracts" will have
the effect of prepayment of such Contracts and therefore will affect the life of
the related Certificates. Most of the Contracts contain provisions that prohibit
the owner from selling the manufactured home without the prior consent of the
holder of the related Contract. Such provisions are similar to "due-on-sale"
clauses and may not be enforceable in some states. See "Certain Legal Aspects of
the Contracts--Transfers of Manufactured Homes; Enforceability of Due-on-Sale
Clauses" in the Prospectus. The servicer's policy is to permit most sales of
manufactured homes where the proposed buyer meets the servicer's then current
underwriting standards and enters into an assumption agreement. See "--Weighted
Average Life of the Certificates" below and "Prepayment and Yield
Considerations" in the Prospectus.
If a purchaser of a Class of Offered Certificates purchases them at a
discount and calculates its anticipated yield to maturity based on an assumed
rate of payment of principal on such Offered Certificates that is faster than
the rate actually realized, such purchaser's actual yield to maturity will be
lower than the yield so calculated by such purchaser.
As described under "Description of the Certificates" in this prospectus
supplement, to the extent that, on any Distribution Date, the Available
Distribution Amount for a Group is not sufficient to permit a full distribution
of the Formula Principal Distribution Amount related to that Group or the
portion thereof due on the related Distribution Date to the Class or Classes of
Certificates entitled to that distribution, amounts available from cross-
collateralization, if any, are not sufficient, and there is a Credit Enhancement
Default related to that Group, the effect will be to delay the amortization of
the related Class or Classes of Certificates. If a purchaser of a Class of
Certificates purchases them at a discount and calculates its anticipated yield
to maturity based on an assumed rate of payment of principal on the Certificates
that is faster than the rate actually realized, the purchaser's actual yield to
maturity will be lower than the yield so calculated by the purchaser.
The servicer or the holder of the Class R Certificates, as applicable, has
the option to purchase or, in the alternative, the servicer may direct the
trustee to conduct a termination auction in order to sell, the Contracts and any
property constituting the Trust Fund if on any Distribution Date the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance. See "Description of the Certificates--Optional Termination and
Termination Auction" in this prospectus supplement. The exercise of the option
to purchase would effect the early retirement of the then outstanding
Certificates.
The rate of distributions of principal of the Certificates and the yield to
maturity of the Certificates also will be directly related to the rate of
payment of principal, including prepayments, of the Contracts in the related
Group. The rate of principal distributions on the Certificates will be affected
by the amortization schedules of the Contracts in the related Group and the rate
of principal payments on the Contracts in the related Group, including
prepayments due to liquidations upon default. The Contracts may be prepaid by
the Obligors at any time without payment of any prepayment fee or penalty.
S-36
<PAGE>
On or after any Distribution Date, if any, on which the aggregate
Certificate Balances of the Certificates relating to a particular Group is
greater than the aggregate Scheduled Principal Balance of the Contracts in that
Group, if the related Available Distribution Amount plus any related Credit
Enhancement Amount, as applicable, is not sufficient to permit a full
distribution of the related Formula Principal Distribution Amount to the related
certificateholders, those certificateholders will absorb, in the order described
in this prospectus supplement:
. all losses on each Liquidated Contract in that Group in the amount by
which its Liquidation Proceeds, net of Liquidation Expenses and
applicable Monthly Advances, are less than its unpaid principal balance
plus accrued and unpaid interest thereon at the weighted average Pass-
Through Rate plus the percentage rate used to calculate the monthly
servicing fee; and
. other shortfalls in the Available Distribution Amount for that Group,
and will incur a loss on their investments. See "Description of the
Certificates--Losses on Liquidated Contracts" in this prospectus
supplement.
In the event that there were a sufficiently large number of delinquencies
on the Contracts in a Group in any Collection Period that were not covered by
Monthly Advances as described in this prospectus supplement, the amounts paid to
some certificateholders related to that Group could be less than the amount of
principal and interest that would otherwise be payable on those Certificates
with respect to that Collection Period if there is a related Credit Enhancement
Default. In that event, even if delinquent payments on those Contracts were
eventually recovered upon liquidation, since the amounts received would not
include interest on delinquent interest payments, the effective yield on the
affected Certificates would be reduced, and under certain circumstances it is
possible that sufficient amounts might not be available for the ultimate payment
of all principal of those Certificates plus accrued interest thereon at the
related Pass-Through Rate, thus also reducing the effective yield on those
Certificates.
While partial prepayments of the principal on the Contracts are applied on
each Due Date, Obligors are not required to pay interest on the Contracts after
the date of a full prepayment of principal. As a result, full prepayments in
advance of the related Due Dates for such Contracts in any Collection Period
will reduce the amount of interest received from Obligors during such Collection
Period to less than one month's interest. On the other hand, when a Contract is
prepaid in full during any period, but after the Due Date for such Contract in
such Collection Period, the effect will be to increase the amount of interest
received from the related Obligor during such Collection Period to more than one
month's interest. If a sufficient number of Contracts in a Group are prepaid in
full in a given Collection Period in advance of their respective Due Dates,
interest payable on all of those Contracts during that Collection Period may be
less than the interest payable on the related Classes of Certificates with
respect to such Collection Period. As a result, the Trust Fund may not receive
sufficient monies to pay the interest on those Certificates in the amounts set
forth in this prospectus supplement under "Description of the Certificates--
Distributions" and to make a full distribution to those certificateholders of
the related Formula Principal Distribution Amount allocable to them. Although
no assurance can be given in this matter, the servicer does not anticipate that
the net shortfall of interest received because of prepayments in full in any
Collection Period would be great enough, in the absence of delinquencies and
losses due to liquidations, to reduce the Available Distribution Amount for a
Group, with respect to a Distribution Date, below the amount required to be
distributed to the related certificateholders on that Distribution Date in the
absence of the prepayment interest shortfalls.
As is the case with fixed rate obligations generally, the rate of
prepayment on a pool of contracts with fixed rates, such as the Group I
Contracts, is affected by prevailing market rates for manufactured housing
contracts of a comparable term and risk level. When the market interest rate is
below the Contract Rate on a Group I Contract, the related Obligor may have an
increased incentive to refinance its Contract. Depending on prevailing market
rates, the future outlook for market rates and economic conditions generally,
some Obligors may sell or refinance their Contracts in order to realize their
equity in the manufactured home, to meet cash flow
S-37
<PAGE>
needs or to make other investments. However, no assurance can be given as to the
level of prepayments that the Group I Contracts will experience.
The allocation of distributions to the holders of Class I Certificates in
accordance with the Agreement will have the effect of accelerating the
amortization of each Class of Class I Certificates that is senior in right of
payment of principal to one or more other Classes of Class I Certificates in the
sequence indicated in this prospectus supplement under "Description of the
Certificates--Priority of Distributions" from the amortization that would be
applicable if distributions in respect of the Formula Principal Distribution
Amount related to the Class I Certificates were made pro rata according to the
Class I A, Class I M-1, Class I M-2, Class I B-1 and Class I B-2 Certificate
Balances. As described in this prospectus supplement under "Description of the
Certificates--Subordination of the Class I M Certificates" and "--Subordination
of the Class I B and Class R Certificates," to the extent that, on any
Distribution Date, the Available Distribution Amount related to the Class I
Certificates plus the Class I B-2 Letter of Credit Draw Amount, as applicable,
and amounts available from cross-collateralization, if any, are not sufficient
to permit a full distribution of the Formula Principal Distribution Amount or
the portion thereof due on that Distribution Date to any Class of Class I
Certificates entitled to distribution, the effect will be to delay the
amortization of that Class of Class I Certificates.
The Pass-Through Rates on the Class I A Certificates, Class I M-1
Certificates, Class I M-2 Certificates, Class I B-1 Certificates and Class I B-2
Certificates on any Distribution Date will respectively be 8.45%, 9.01%, 9.25%,
9.25% and 9.25% per annum, unless the Group I Contracts prepay in such a manner
that the related Net Funds Cap is less than the related Pass-Through Rate, in
which case the Class I A Pass-Through Rate, the Class I M-1 Pass-Through Rate,
the Class I M-2 Pass-Through Rate, the Class I B-1 Pass-Through Rate and the
Class I B-2 Pass-Through Rate, as the case may be, will equal the related Net
Funds Cap.
The effective yield to each holder of a Class I Certificate will be below
that otherwise produced by the applicable Pass-Through Rate and the purchase
price of that holder's Certificate because, while interest will accrue in
respect of each calendar month, the distribution of interest to those holders
will be made on the 20th day of the month, or, if the 20th day is not a business
day, the next succeeding business day, following the Collection Period in which
it accrues.
Adjustable rate obligations may be subject to a greater rate of principal
prepayments in a declining interest rate environment. For example, if
prevailing interest rates fall significantly, adjustable rate Contracts such as
the Group II Contracts could be subject to higher prepayment rates than if
prevailing interest rates remain constant because the availability of fixed-rate
contracts at competitive interest rates may encourage Obligors to refinance
their adjustable rate Contract to "lock in" a lower fixed interest rate.
However, no assurance can be given as to the level of prepayments that the Group
II Contracts will experience.
Although all of the Group II Contracts are variable rate, the Obligor on
each of the Group II Contracts can convert from a variable rate to a fixed rate
as long as the Obligor is current in payment on the Obligor's Contract. If an
Obligor converts a Group II Contract from a variable rate to a fixed rate, the
holder of the Class R Certificates is obligated to purchase the converted
Contract. The fixed rate may be lower than the Pass-Through Rate on the Class
II A-1 Certificates or the Pass-Through Rate on the Class II A-2 Certificates.
Since the Pass-Through Rates on the Class II Certificates are capped by the
related Net Funds Cap, any conversion to a fixed rate of a Group II Contract
that has not been purchased by the holder of the Class R Certificates may make
it more likely that the Pass-Through Rates on the Class II A-1 Certificates or
Class II A-2 Certificates will be lower than the Pass-Through Rate based upon
LIBOR plus a spread or produced by the Auction Procedures (see Annex III and
Annex IV to this prospectus supplement), as applicable.
Approximately 99.8%, by principal balance as of the Cut-off Date, of the
Group II Contracts are variable rate contracts based on a Twelve-Month LIBOR
index. While GreenPoint does not anticipate that variable rate contracts based
on a Twelve-Month LIBOR index will have materially different delinquency or
default rates from other types of variable rate contracts, GreenPoint has a
limited operating history with variable rate contracts based
S-38
<PAGE>
on a Twelve-Month LIBOR index and therefore no assurance can be given that
variable rate Contracts based on a Twelve-Month LIBOR index will not have higher
prepayments, delinquencies or losses than other types of variable rate
contracts.
Weighted Average Life of the Certificates
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Certificates
under the stated assumptions and is not a prediction of the prepayment rate that
might actually be experienced by the Contracts.
Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security will be
repaid to the investor. The weighted average life of the Certificates will be
affected by the rate at which principal on the Contracts is paid. Principal
payments on Contracts may be in the form of scheduled amortization or
prepayments (for this purpose, the term "prepayment" includes repayments and
liquidations due to default or other dispositions of Contracts and repurchases
of Contracts by the Seller due to breaches of representations and warranties
contained in the Agreement). Prepayments on contracts may be measured by a
prepayment standard or model. The Prepayment Model used in this Prospectus
Supplement is based on an assumed rate of prepayment each month of the then
unpaid principal balance of a pool of new Contracts. 100% of the Prepayment
Model assumes prepayment rates of 3.7% per annum of the then unpaid principal
balance of such Contracts in the first month of the life of the Contracts and an
additional 0.1% per annum in each month thereafter until the 24th month.
Beginning in the 24th month and in each month thereafter during the life of the
Contracts, 100% of the Prepayment Model assumes a constant prepayment rate of
6.00% per annum.
As used in the following tables, "0% of the Prepayment Model" assumes no
prepayments on the Contracts; "150% of the Prepayment Model" assumes the
Contracts will prepay at rates equal to 150% of the Prepayment Model assumed
prepayment rates; "175% of the Prepayment Model" assumes the Contracts will
prepay at rates equal to 175% of the Prepayment Model assumed prepayment rates;
"200% of the Prepayment Model" assumes the Contracts will prepay at rates equal
to 200% of the Prepayment Model assumed prepayment rates; "250% of the
Prepayment Model" assumes the Contracts will prepay at rates equal to 250% of
the Prepayment Model assumed prepayment rates; and "275% of the Prepayment
Model" assumes the Contracts will prepay at rates equal to 275% of the
Prepayment Model assumed prepayment rates.
There is no assurance, however, that prepayments of the Contracts will
conform to any level of the Prepayment Model, and no representation is made that
the Contracts will prepay at the prepayment rates shown or any other prepayment
rate. The rate of principal payments on pools of manufactured housing contracts
is influenced by a variety of economic, geographic, social and other factors,
including the level of interest rates and the rate at which manufactured
homeowners sell their manufactured homes or default on their contracts. Other
factors affecting prepayment of contracts include changes in Obligors' housing
needs, job transfers, unemployment and Obligors' net equity in the manufactured
homes. Because the outstanding principal balances of the Contracts are, in
general, much smaller than mortgage loan balances and the original term to
maturity of each such contract is generally shorter, the reduction or increase
in the size of the monthly payments on contracts of the same maturity and
principal balance arising from a change in the interest rate thereon is
generally much smaller. Consequently, changes in prevailing interest rates may
not have a similar effect, or may have a similar effect, but to a smaller
degree, on the prepayment rates on manufactured housing contracts.
S-39
<PAGE>
Group I Assumptions
The percentages and weighted average lives in the following tables relating
to the Class I Certificates, were determined using the following assumptions
(the "Group I Structuring Assumptions"):
. scheduled interest and principal payments on the Group I Contracts are
received in a timely manner and prepayments are made at the indicated
percentages of the Prepayment Model with 30 days interest thereon set
forth in the tables;
. the servicer or the holder of the Class R Certificates does not exercise
its right of optional termination described above;
. the Group I Contracts will, as of the Cut-off Date, be grouped into
sixteen pools having the characteristics set forth below under "Assumed
Contract Characteristics";
. the Initial Certificate Balance, the Pass-Through Rate and the
Distribution Date of each Class of Class I Certificates are as set forth
under "Summary Information";
. no interest shortfalls will arise in connection with prepayment in full
of the Group I Contracts;
. there will be no delinquencies or losses on the Group I Contracts;
. the Monthly Servicing Fee Rate is 1.00% per annum; and
. the Class I Certificates are purchased on May 18, 2000.
No representation is made that the Group I Contracts will experience
delinquencies or losses at the respective rates assumed above or at any other
rates.
Assumed Contract Characteristics
<TABLE>
<CAPTION>
Contract Rate
Remaining Months to After First Months to Contract Rate
Scheduled Contract Term to First Rate Rate Second Rate After Second
Pool Principal Balance Rate Maturity Age Step-Up Step-Up Step-Up Rate Step-Up
----- ----------------- --------- -------- --- ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1........... $ 10,078,387.11 14.099% 106 1 N/A N/A N/A N/A
2........... 28,870,029.76 13.963 176 1 N/A N/A N/A N/A
3........... 76,870,309.17 12.799 239 1 N/A N/A N/A N/A
4........... 29,329,540.55 11.602 298 1 N/A N/A N/A N/A
5........... 220,851,998.41 10.381 358 1 N/A N/A N/A N/A
6........... 432,345.29 13.893 8 162 N/A N/A N/A N/A
7........... 1613,813.66 12.897 21 156 N/A N/A N/A N/A
8........... 8,927,867.37 13.284 33 146 N/A N/A N/A N/A
9........... 8,910,311.52 13.612 40 145 N/A N/A N/A N/A
10.......... 1,969,912.71 14.465 55 173 N/A N/A N/A N/A
11.......... 2,274,318.61 13.929 68 165 N/A N/A N/A N/A
12.......... 5,631,534.99 12.811 80 155 N/A N/A N/A N/A
13.......... 13,170,835.71 13.130 92 144 N/A N/A N/A N/A
14.......... 10,815,122.26 13.428 100 140 N/A N/A N/A N/A
15.......... 266,931.99 11.716 315 1 12 14.166 N/A N/A
16.......... 18,496,052.21 9.903 341 4 9 11.153 21 12.403
</TABLE>
Since the tables were prepared on the basis of the assumptions in the
preceding paragraph, there may be discrepancies between the characteristics of
the actual Group I Contracts and the characteristics of the contracts assumed in
preparing the tables. Any such discrepancy may have an effect upon the
percentages of the Class I A Initial Certificate Balance, Class I M-1 Initial
Certificate Balance, Class I M-2 Initial Certificate Balance, Class I B-1
Initial Certificate Balance and Class I B-2 Initial Certificate Balance
outstanding and weighted average lives of the Class I A Certificates, Class I
M-1 Certificates, Class I M-2 Certificates, Class I B-1 Certificates and Class I
B-2 Certificates set forth in the tables. In addition, since the actual Group I
Contracts and
S-40
<PAGE>
the Trust Fund have characteristics which differ from those assumed in preparing
the tables set forth below, the distributions of principal on the Class I A
Certificates, Class I M-1 Certificates, Class I M-2 Certificates, Class I B-1
Certificates and Class I B-2 Certificates may be made earlier or later than as
indicated in the tables.
It is not likely that Group I Contracts will prepay at any constant
percentage of the Prepayment Model to maturity or that all Group I Contracts
will prepay at the same rate. In addition, the diverse remaining terms to
maturity of the Group I Contracts, which include recently originated Contracts,
could produce slower distributions of principal than as indicated in the tables
at the various percentages of the Prepayment Model specified even if the
weighted average remaining term to maturity of the Group I Contracts is the same
as the weighted average remaining term to maturity of the Assumed Contract
Characteristics for the Group I Contracts.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed in this prospectus supplement.
Based on the Group I Structuring Assumptions, the following tables indicate
the resulting weighted average lives of the Certificates and set forth the
percentage of the Class I A Initial Certificate Balance, Class I M-1 Initial
Certificate Balance, Class I M-2 Initial Certificate Balance, Class I B-1
Initial Certificate Balance and Class I B-2 Initial Certificate Balance that
would be outstanding after each of the dates shown at the indicated percentages
of the Prepayment Model.
S-41
<PAGE>
Percent of the Class I A Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 175% 200% 250% 275%
- ----------------- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage........................... 100 100 100 100 100 100
May 2001..................................... 96 88 86 85 82 80
May 2002..................................... 92 74 71 69 63 60
May 2003..................................... 88 62 58 54 47 43
May 2004..................................... 85 51 46 42 33 29
May 2005..................................... 81 45 40 36 28 24
May 2006..................................... 78 40 35 31 23 19
May 2007..................................... 74 35 30 26 19 16
May 2008..................................... 71 31 26 22 15 13
May 2009..................................... 68 27 23 19 13 10
May 2010..................................... 65 24 20 16 10 8
May 2011..................................... 62 21 17 14 9 7
May 2012..................................... 59 19 15 12 7 5
May 2013..................................... 56 16 13 10 6 4
May 2014..................................... 53 14 11 8 5 3
May 2015..................................... 50 12 9 7 4 3
May 2016..................................... 47 10 8 6 3 2
May 2017..................................... 44 9 7 5 2 2
May 2018..................................... 41 8 5 4 2 1
May 2019..................................... 38 6 4 3 1 1
May 2020..................................... 34 5 4 2 1 1
May 2021..................................... 31 4 3 2 1 1
May 2022..................................... 29 4 2 2 1 *
May 2023..................................... 26 3 2 1 1 *
May 2024..................................... 22 2 2 1 * *
May 2025..................................... 19 2 1 1 * *
May 2026..................................... 16 1 1 1 * *
May 2027..................................... 12 1 1 * * *
May 2028..................................... 8 1 * * * *
May 2029..................................... 4 * * * * *
May 2030..................................... 0 0 0 0 0 0
Weighted Average Life (years)................ 15.00 6.69 5.94 5.30 4.29 3.88
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
. Use of a "*" in the table above denotes a value that is less than 0.5% but
greater than zero.
S-42
<PAGE>
Percent of the Class I M-1 Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 175% 200% 250% 275%
- ----------------- ----- ----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage........................... 100 100 100 100 100 100
May 2001..................................... 100 100 100 100 100 100
May 2002..................................... 100 100 100 100 100 100
May 2003..................................... 100 100 100 100 100 100
May 2004..................................... 100 100 100 100 100 100
May 2005..................................... 100 88 87 86 83 81
May 2006..................................... 100 78 76 73 68 66
May 2007..................................... 100 69 65 62 56 53
May 2008..................................... 100 60 56 53 46 43
May 2009..................................... 100 53 49 45 38 35
May 2010..................................... 100 47 43 39 31 28
May 2011..................................... 100 42 37 33 26 23
May 2012..................................... 100 36 32 28 21 18
May 2013..................................... 98 32 27 23 17 15
May 2014..................................... 93 27 23 20 14 12
May 2015..................................... 88 24 20 16 11 9
May 2016..................................... 83 20 17 14 9 7
May 2017..................................... 78 17 14 11 7 6
May 2018..................................... 73 15 12 9 6 4
May 2019..................................... 66 12 10 7 4 3
May 2020..................................... 59 10 8 6 3 3
May 2021..................................... 55 8 6 5 3 2
May 2022..................................... 50 7 5 4 2 1
May 2023..................................... 45 6 4 3 2 1
May 2024..................................... 40 5 3 2 1 1
May 2025..................................... 33 3 2 2 1 1
May 2026..................................... 28 3 2 1 1 *
May 2027..................................... 21 2 1 1 * *
May 2028..................................... 14 1 1 * * *
May 2029..................................... 7 * * * * *
May 2030..................................... 0 0 * 0 0 0
Weighted Average Life (years)................ 21.86 11.20 10.54 9.97 9.04 8.65
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
. Use of a "*" in the table above denotes a value that is less than 0.5% but
greater than zero.
S-43
<PAGE>
Percent of the Class I M-2 Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 175% 200% 250% 275%
- ----------------- ----- ----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage........................... 100 100 100 100 100 100
May 2001..................................... 100 100 100 100 100 100
May 2002..................................... 100 100 100 100 100 100
May 2003..................................... 100 100 100 100 100 100
May 2004..................................... 100 100 100 100 100 100
May 2005..................................... 100 88 87 86 83 81
May 2006..................................... 100 78 76 73 68 66
May 2007..................................... 100 69 65 62 56 53
May 2008..................................... 100 60 56 53 46 43
May 2009..................................... 100 53 49 45 38 35
May 2010..................................... 100 47 43 39 31 28
May 2011..................................... 100 42 37 33 26 23
May 2012..................................... 100 36 32 28 21 18
May 2013..................................... 98 32 27 23 17 15
May 2014..................................... 93 27 23 20 14 12
May 2015..................................... 88 24 20 16 11 9
May 2016..................................... 83 20 17 14 9 7
May 2017..................................... 78 17 14 11 7 6
May 2018..................................... 73 15 12 9 6 4
May 2019..................................... 66 12 10 7 4 3
May 2020..................................... 59 10 8 6 3 3
May 2021..................................... 55 8 6 5 3 2
May 2022..................................... 50 7 5 4 2 1
May 2023..................................... 45 6 4 3 2 1
May 2024..................................... 40 5 3 2 1 1
May 2025..................................... 33 3 2 2 1 1
May 2026..................................... 28 3 2 1 1 *
May 2027..................................... 21 2 1 1 * *
May 2028..................................... 14 1 1 * * *
May 2029..................................... 7 * * * * *
May 2030..................................... 0 0 0 0 0 0
Weighted Average Life (years)................ 21.86 11.20 10.54 9.97 9.04 8.65
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
. Use of a "*" in the table above denotes a value that is less than 0.5% but
greater than zero.
S-44
<PAGE>
Percent of the Class I B-1 Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 175% 200% 250% 275%
- ----------------- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage........................... 100 100 100 100 100 100
May 2001..................................... 100 100 100 100 100 100
May 2002..................................... 100 100 100 100 100 100
May 2003..................................... 100 100 100 100 100 100
May 2004..................................... 100 100 100 100 100 100
May 2005..................................... 100 73 70 67 60 56
May 2006..................................... 100 49 43 37 26 21
May 2007..................................... 100 27 20 12 0 0
May 2008..................................... 100 8 0 0 0 0
May 2009..................................... 100 0 0 0 0 0
May 2010..................................... 100 0 0 0 0 0
May 2011..................................... 100 0 0 0 0 0
May 2012..................................... 100 0 0 0 0 0
May 2013..................................... 95 0 0 0 0 0
May 2014..................................... 83 0 0 0 0 0
May 2015..................................... 72 0 0 0 0 0
May 2016..................................... 61 0 0 0 0 0
May 2017..................................... 50 0 0 0 0 0
May 2018..................................... 36 0 0 0 0 0
May 2019..................................... 22 0 0 0 0 0
May 2020..................................... 6 0 0 0 0 0
May 2021..................................... 0 0 0 0 0 0
May 2022..................................... 0 0 0 0 0 0
May 2023..................................... 0 0 0 0 0 0
May 2024..................................... 0 0 0 0 0 0
May 2025..................................... 0 0 0 0 0 0
May 2026..................................... 0 0 0 0 0 0
May 2027..................................... 0 0 0 0 0 0
May 2028..................................... 0 0 0 0 0 0
May 2029..................................... 0 0 0 0 0 0
May 2030..................................... 0 0 0 0 0 0
Weighted Average Life (years)................ 16.79 6.09 5.86 5.67 5.38 5.27
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
S-45
<PAGE>
Percent of the Class I B-2 Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 175% 200% 250% 275%
- ----------------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage........................... 100 100 100 100 100 100
May 2001..................................... 100 100 100 100 100 100
May 2002..................................... 100 100 100 100 100 100
May 2003..................................... 100 100 100 100 100 100
May 2004..................................... 100 100 100 100 100 100
May 2005..................................... 100 100 100 100 100 100
May 2006..................................... 100 100 100 100 100 100
May 2007..................................... 100 100 100 100 98 93
May 2008..................................... 100 100 99 93 81 75
May 2009..................................... 100 94 86 79 67 61
May 2010..................................... 100 83 75 68 55 50
May 2011..................................... 100 73 65 58 45 40
May 2012..................................... 100 64 56 49 37 32
May 2013..................................... 100 56 48 41 30 26
May 2014..................................... 100 48 41 35 24 20
May 2015..................................... 100 42 35 29 20 16
May 2016..................................... 100 36 29 24 16 13
May 2017..................................... 100 31 25 20 13 10
May 2018..................................... 100 26 20 16 10 8
May 2019..................................... 100 21 17 13 8 6
May 2020..................................... 100 17 13 10 6 4
May 2021..................................... 97 15 11 8 5 3
May 2022..................................... 89 12 9 7 4 3
May 2023..................................... 80 10 7 5 3 2
May 2024..................................... 70 8 6 4 2 1
May 2025..................................... 59 6 4 3 1 1
May 2026..................................... 48 5 3 2 1 1
May 2027..................................... 37 3 2 1 1 *
May 2028..................................... 25 2 1 1 * *
May 2029..................................... 11 1 1 * * *
May 2030..................................... 0 0 0 0 0 0
Weighted Average Life (years)................ 25.70 15.08 14.09 13.23 11.81 11.22
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
. Use of a "*" in the table above denotes a value that is less than 0.5% but
greater than zero.
S-46
<PAGE>
Group II Assumptions
The percentages and weighted average lives in the following tables relating
to the Class II A-1 Certificates and Class II A-2 Certificates were determined
using the following assumptions (the "Group II Structuring Assumptions"):
. scheduled interest and principal payments on the Group II Contracts are
received in a timely manner and prepayments are made at the indicated
percentages of the Prepayment Model with 30 days interest thereon set forth
in the tables;
. there will be no losses or delinquencies on the Group II Contracts;
. no Group II Contracts convert from an adjustable rate to a fixed rate of
interest;.
. the Group II Contracts will, as of the Cut-off Date, be grouped into nine
pools having the characteristics set forth below under "Assumed Contract
Characteristics";
. 1yr CMT=6.30100%, Twelve-Month LIBOR=7.34375%;
. the Initial Certificate Balance and the Pass-Through Rate of the Class II A-1
Certificates and Class II A-2 Certificates, is as set forth or described
under "Summary Information";
. the Distribution Date of the Class II A-1 Certificates occurs on the 20th of
each month commencing on June 20, 2000 whether or not that day is a business
day;
. the Distribution Date of the Class II A-2 Certificates occurs on the 8th of
each month commencing on July 8, 2000 whether or not that day is a business
day;
. the Class II A-1 Certificates and Class II A-2 Certificates are purchased on
May 18, 2000; and
. neither the servicer nor the holder of the Class R Certificates exercises its
right of optional termination described above. No representation is made that
the Group II Contracts will experience delinquencies or losses at the
respective rates assumed above or at any other rates.
Assumed Contract Characteristics
<TABLE>
<CAPTION>
Months
to
Scheduled Remaining Next
Principal Contract Term to Gross Rate Maximum Periodic Reset
Pool Balance Rate Maturity Age Margin Change Rate Cap Rate Cap Index Frequency
- ---- -------- -------- -------- --- ------ ------ -------- -------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.......... $ 477,556.24 9.231% 301 4 4.873% 10 14.231% 2.000% 1YR TSY 12
2.......... 4,758,489.79 7.967 353 0 3.636 8 12.967 2.000% 1YR LBR 12
3.......... 5,261,970.90 7.774 354 1 3.462 9 12.774 2.000% 1YR LBR 12
4.......... 7,068,226.66 8.233 347 1 3.702 10 13.233 2.000% 1YR LBR 12
5.......... 103,006,447.20 9.820 322 1 5.243 11 14.821 2.000% 1YR LBR 12
6.......... 128,348,320.53 9.886 305 0 5.002 12 14.886 2.000% 1YR LBR 12
7.......... 26,937,021.08 10.071 294 0 5.010 13 15.071 2.000% 1YR LBR 12
8.......... 803,340.77 11.021 262 0 5.336 36 16.021 2.000% 1YR LBR 12
9.......... 3,995,544.43 8.091 350 1 3.709 7 13.091 2.000% 1YR LBR 12
</TABLE>
Since the tables were prepared on the basis of the assumptions in the
preceding paragraph, there are discrepancies between the characteristics of the
Group II Contracts being conveyed to the Trust Fund and the characteristics of
the contracts assumed in preparing the tables. Any such discrepancy may have an
effect upon the percentages of the Class II A-1 Initial Certificate Balance and
Class II A-2 Initial Certificate Balance outstanding and weighted average lives
of the Class II A-1 Certificates and Class II A-2 Certificates set forth in the
tables. In addition, since the actual Group II Contracts and the Trust Fund
have characteristics which differ
S-47
<PAGE>
from those assumed in preparing the tables set forth below, the distributions of
principal on the Class II A-1 Certificates and Class II A-2 Certificates may be
made earlier or later than as indicated in the tables.
It is not likely that Group II Contracts will prepay at any constant
percentage of the Prepayment Model to maturity or that all Group II Contracts
will prepay at the same rate. In addition, the diverse remaining terms to
maturity of the Group II Contracts, which include recently originated Contracts,
could produce slower distributions of principal than as indicated in the tables
at the various percentages of the Prepayment Model specified even if the
weighted average remaining term to maturity of the Group II Contracts is the
same as the weighted average remaining term to maturity of the Assumed Contract
Characteristics.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed in this prospectus supplement.
Based on the Group II Structuring Assumptions, the following tables
indicate the resulting weighted average lives of the Class II A-1 Certificates
and Class II A-2 Certificates and sets forth the percentage of the Class II A-1
Initial Certificate Balance and Class II A-2 Initial Certificate Balance that
would be outstanding after each of the dates shown at the indicated percentages
of the Prepayment Model.
S-48
<PAGE>
Percent of the Class II A-1 Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 200% 250% 300% 350%
- ----------------- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage.................................... 100 100 100 100 100 100
May 2001.............................................. 98 87 83 79 75 72
May 2002.............................................. 97 72 64 56 49 42
May 2003.............................................. 96 57 46 35 25 15
May 2004.............................................. 94 44 30 17 5 0
May 2005.............................................. 93 32 16 2 0 0
May 2006.............................................. 91 21 3 0 0 0
May 2007.............................................. 89 10 0 0 0 0
May 2008.............................................. 87 1 0 0 0 0
May 2009.............................................. 84 0 0 0 0 0
May 2010.............................................. 81 0 0 0 0 0
May 2011.............................................. 77 0 0 0 0 0
May 2012.............................................. 74 0 0 0 0 0
May 2013.............................................. 69 0 0 0 0 0
May 2014.............................................. 64 0 0 0 0 0
May 2015.............................................. 59 0 0 0 0 0
May 2016.............................................. 52 0 0 0 0 0
May 2017.............................................. 45 0 0 0 0 0
May 2018.............................................. 37 0 0 0 0 0
May 2019.............................................. 28 0 0 0 0 0
May 2020.............................................. 18 0 0 0 0 0
May 2021.............................................. 6 0 0 0 0 0
May 2022.............................................. 0 0 0 0 0 0
Weighted Average Life (years)......................... 14.93 3.78 2.95 2.43 2.07 1.80
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
S-49
<PAGE>
Percent of the Class II A-2 Initial Certificate Balance at the
Respective Percentages of the Prepayment Model
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
-----------------------------------
Distribution Date 0% 150% 200% 250% 300% 350%
- ----------------- ----- ----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Initial Percentage.................................... 100 100 100 100 100 100
June 2001............................................. 100 100 100 100 100 100
June 2002............................................. 100 100 100 100 100 100
June 2003............................................. 100 100 100 100 100 100
June 2004............................................. 100 100 100 100 100 93
June 2005............................................. 100 100 100 100 86 73
June 2006............................................. 100 100 100 86 70 57
June 2007............................................. 100 100 90 72 57 44
June 2008............................................. 100 100 78 60 46 35
June 2009............................................. 100 91 68 50 37 27
June 2010............................................. 100 81 59 42 30 21
June 2011............................................. 100 72 51 35 24 16
June 2012............................................. 100 64 43 29 19 12
June 2013............................................. 100 57 37 24 15 10
June 2014............................................. 100 50 32 20 12 7
June 2015............................................. 100 44 27 16 10 6
June 2016............................................. 100 38 22 13 7 4
June 2017............................................. 100 33 19 11 6 3
June 2018............................................. 100 28 15 8 4 2
June 2019............................................. 100 23 12 7 3 2
June 2020............................................. 100 19 10 5 2 1
June 2021............................................. 100 15 8 4 2 1
June 2022............................................. 91 12 6 3 1 1
June 2023............................................. 72 9 4 2 1 *
June 2024............................................. 51 6 3 1 * *
June 2025............................................. 29 3 1 1 * *
June 2026............................................. 14 1 1 * * *
June 2027............................................. 4 * * * * *
June 2028............................................. 2 * * * * *
June 2029............................................. * * * * * *
June 2030............................................. 0 0 0 0 0 0
Weighted Average Life (years)......................... 24.24 15.04 12.46 10.47 8.95 7.76
</TABLE>
. All percentages listed in the table above are rounded to the nearest 1%.
. Use of a "*" in the table above denotes a value that is less than 0.5% but
greater than zero.
S-50
<PAGE>
Description of the Certificates
The Certificates will be issued pursuant to the Agreement. A copy of a
general form of the Agreement has been filed with the Securities and Exchange
Commission. A copy of the execution form of the Agreement, without certain
exhibits, will be filed with the Securities and Exchange Commission after the
initial issuance of the Certificates. The following description supplements the
description of the Agreement and the Certificates under the caption "Description
of the Certificates" in the prospectus and must be read together with the
prospectus. The following summaries describe certain terms of the Agreement, do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the provisions of the Agreement. When particular
provisions or terms used in the Agreement are referred to, the actual
provisions, including definitions of terms, are incorporated by reference.
General
The Class I Certificates and Class II A-1 Certificates will be issued in
fully registered form only, in denominations of $50,000 and integral multiples
of $1 in excess thereof. The Class II A-2 Certificates will be issued in fully
registered form only, in denominations of $25,000 and integral multiples of
$25,000 in excess thereof. Definitive Certificates, if issued, will be
transferable and exchangeable at the corporate trust office of the trustee. No
service charge will be made for any registration of exchange or transfer, but
the trustee may require payment of a sum sufficient to cover any tax or other
governmental charge.
The Trust Fund includes:
. the Contract Pool, including all rights to receive payments on the
Contracts received on or after the Cut-off Date;
. the amounts held from time to time in the Certificate Accounts;
. any property which initially secured a Contract and which is acquired in
the process of realizing thereon;
. the Letters of Credit;
. the Certificate Insurance Policy; and
. the proceeds of all insurance policies described in this prospectus
supplement.
The Seller will convey the Contracts to the trustee. See "The Contract
Pool" and "Description of the Certificates--Conveyance of Contracts" in this
prospectus supplement. The servicer will service the Contracts pursuant to the
Agreement. The Contract documents will be held for the benefit of the trustee
by the servicer or a third party custodian.
Distributions of principal, interest or both to the holders of the Offered
Certificates will be made on each Distribution Date beginning in June 2000 or
July 2000, as applicable, to the persons in whose names the Certificates are
registered on the Record Date.
Pass-Through Rates and Last Scheduled Distribution Dates
The Pass-Through Rate on any Distribution Date with respect to the Class I
A Certificates will be equal to the lesser of (a) 8.45% per annum or (b) the
related Net Funds Cap. The last scheduled Distribution Date for the Class I A
Certificates will be June 2031.
The Pass-Through Rate on any Distribution Date with respect to the Class I
M-1 Certificates will be equal to the lesser of (a) 9.01% per annum or (b) the
related Net Funds Cap. The last scheduled Distribution Date for the Class I M-1
Certificates will be June 2031.
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<PAGE>
The Pass-Through Rate on any Distribution Date with respect to the Class I
M-2 Certificates will be equal to the lesser of (a) 9.25% per annum or (b) the
related Net Funds Cap. The last scheduled Distribution Date for the Class I M-2
Certificates will be June 2031.
The Pass-Through Rate on any Distribution Date with respect to the Class I
B-1 Certificates will be equal to the lesser of (a) 9.25% per annum or (b) the
related Net Funds Cap. The last scheduled Distribution Date for the Class I B-1
Certificates will be February 2021.
The Pass-Through Rate on any Distribution Date with respect to the Class I
B-2 Certificates will be equal to the lesser of (a) 9.25% per annum or (b) the
related Net Funds Cap. The last scheduled Distribution Date for the Class I B-2
Certificates will be June 2031.
The Pass-Through Rate on any Distribution Date with respect to the Class II
A-1 Certificates will be a rate equal to the lesser of (a) LIBOR plus 0.27%, per
annum or (b) the related Net Funds Cap. The last scheduled Distribution Date
for the Class II A-1 Certificates will be December 2021.
The Pass-Through Rate on any Distribution Date with respect to the Class II
A-2 Certificates will be a rate equal to the lesser of (a) the Auction Rate or
(b) the related Net Funds Cap. The last scheduled Distribution Date for the
Class II A-2 Certificates will be June 2031.
Conveyance of Contracts
On the Closing Date, the Seller will convey to the trustee, without
recourse, all its right, title and interest in and to the Contracts, and all
rights under the standard hazard insurance policies on the related manufactured
homes. The conveyance of Contracts to the trustee will include a conveyance of
all rights to receive Scheduled Payments thereon that were due on or after the
Cut-off Date, even if received prior to the Cut-off Date, as well as all rights
to any payments received on or after the Cut-off Date, other than late receipts
of Scheduled Payments that were due prior to the Cut-off Date. The Contract
Schedule will include the principal balance of each Contract as of the Cut-off
Date, the amount of each Scheduled Payment due on each Contract as of the Cut-
off Date, the Contract Rate on each Contract, determined as of the Cut-off Date,
and the maturity date of each Contract. Prior to the conveyance of the
Contracts to the trustee, the operations department of GreenPoint will be
required to complete a review of all of the Contract Files confirming the
accuracy of the Contract Schedule delivered to the trustee. Any Contract
discovered not to agree with the Contract Schedule in a manner that is
materially adverse to the interests of the holders of the Offered Certificates
will be repurchased by the Seller, or replaced with another Contract, except
that if the discrepancy relates to the principal balance of a Contract, the
Seller may, under certain conditions, deposit cash in the Certificate Account in
an amount sufficient to offset the discrepancy. The trustee will not review the
Contract Files.
The servicer or if GreenPoint is replaced as servicer, a custodian or the
trustee, will hold, as custodian and agent on behalf of the trustee, the
original Contracts and copies of documents and instruments relating to each
Contract and the security interest in the manufactured home. See "Risk Factors-
- -Risks Relating to the Enforceability of the Contracts--Security Interests of
the Trust Fund in the Manufactured Homes" and "Certain Legal Aspects of the
Contracts--The Contracts (other than Land Home and Land-in-Lieu Contracts)--
Security Interests of GreenPoint in the Manufactured Homes" and "Land Home and
Land-in-Lieu Contracts" in the prospectus for discussion of the consequences of
the servicer maintaining possession of the original Contracts and the security
interest in the related manufactured homes and real property securing Contracts,
if any. In order to give notice of the trustee's right, title and interest in
and to the Contracts, a UCC-1 financing statement identifying the trustee as the
secured party and identifying all the Contracts as collateral will be filed in
the appropriate office in the appropriate states. The Contracts will be stamped
or otherwise marked to reflect their assignment to the trustee. To the extent
that the Contracts do not constitute "chattel paper", "general intangibles" or
"accounts" within the meaning of the UCC as in effect in the applicable
jurisdictions or to the extent that the Contracts do constitute chattel paper
and a subsequent purchaser is able to take physical possession of the
S-52
<PAGE>
Contracts without notice of the assignment to the trustee, the trustee's
interest in the Contracts could be defeated. See "Certain Legal Aspects of the
Contracts" in the prospectus.
The Seller will make certain representations and warranties to the trustee
with respect to each Contract sold by it, as of the Closing Date unless
expressly stated otherwise, including the following:
(a) as of the Cut-off Date, the Contract is not more than 59 days
delinquent;
(b) no provision of the Contract has been waived, altered or modified in
any respect, except by instruments or documents identified in the
related Contract File;
(c) the Contract is a legal, valid and binding obligation of the Obligor
and is enforceable in accordance with its terms, except as may be
limited by laws affecting creditors' rights generally or by general
equity principles;
(d) the Contract is not subject to any right of rescission, set-off,
counterclaim or defense;
(e) the Contract is covered by hazard insurance described under
"Description of the Certificates--Servicing Compensation and Payment
of Expenses; Certain Matters Regarding the Servicer--Hazard Insurance
Policies" in the prospectus;
(f) the Contract was either:
(1) originated by a manufactured housing dealer acting, to the
knowledge of the Seller, in the regular course of its business
and purchased on an individual basis by the Seller in the
ordinary course of its business;
(2) originated by the Seller in the ordinary course of its business;
(3) purchased in bulk from Bulk Sellers; or
(4) purchased by the Seller as part of bulk purchases of manufactured
housing contracts in connection with the Acquisition;
(g) the Contract was neither originated in nor is subject to the laws of
any jurisdiction whose laws would make the transfer of the Contract or
an interest therein to the trustee pursuant to the Agreement or
pursuant to the Certificates unlawful;
(h) the Contract complies with all requirements of law;
(i) the Contract has not been satisfied or subordinated in whole or in
part or rescinded and the manufactured home securing the Contract has
not been released from the lien of the Contract;
(j) the Contract creates a valid and enforceable, except as may be limited
by laws affecting creditors' rights generally, first-priority security
interest in favor of GreenPoint in the manufactured home and real
property securing the Contract, if any;
(k) the security interest has been assigned to the trustee, and, after the
assignment, the trustee has a valid and perfected first-priority
security interest in the manufactured home and real property securing
the Contract, if any;
(l) the Contract has not been sold, assigned or pledged to any other
person, and prior to the transfer of the Contracts to the trustee, the
Seller owned the Contract sold by it, free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest,
and it was the sole owner thereof and had full right to transfer the
Contract to the trustee;
(m) as of the Cut-off Date, there was no default, breach, violation or
event permitting acceleration under the Contract and no event which,
with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event permitting
acceleration, except payment delinquencies permitted by clause (a)
above, and the Seller has not waived any of the foregoing;
S-53
<PAGE>
(n) as of the Closing Date, there were, to the knowledge of the Seller, no
liens or claims which have been filed for work, labor or materials
affecting a manufactured home or real property securing the Contract,
if any, which are or may be liens prior to or equal with or
subordinate to the lien of the Contract;
(o) the Contract is a fully-amortizing loan;
(p) the Contract contains customary and enforceable provisions such as to
render the rights and remedies of the holder thereof adequate for
realization against the collateral of the benefits of the security;
(q) the information contained in the Contract Schedule with respect to the
Contract is true and correct;
(r) there is only one original of the Contract;
(s) the Contract did not have a loan-to-value ratio at origination greater
than 100%;
(t) the manufactured home related to the Contract is not considered or
classified as part of the real estate on which it is located under the
laws of the jurisdiction in which it is located, unless it is subject
to a Land-in-Lieu or Land Home Contract, and as of the Closing Date
the manufactured home is, to the knowledge of the Seller, free of
damage and in good repair;
(u) the Contract is a "qualified mortgage" under Section 860G(a)(3) of the
Code;
(v) the related manufactured home is a "manufactured home" within the
meaning of Section 5402(6) of Title 42 of the United States Code;
(w) the Contract is secured by a "single family residence" within the
meaning of Section 25(e)(10) of the Code;
(x) the Contract will be stamped to indicate its assignment to the trustee
within 60 days of the Closing Date;
(y) no Contract contained any provision providing for the payment of a
prepayment fee or penalty upon the prepayment of a portion or all of
the outstanding principal balance of that Contract;
(z) the Group I Contract with the lowest Contract Rate as of the Cut-off
Date has a Contract Rate of 6.750% and the Group I Contract with the
highest Contract Rate as of the Cut-off Date has a Contract Rate of
19.000%;
(aa) the Group II Contract with the lowest Contract Rate as of the Cut-off
Date has a Contract Rate of 6.750% and the Group II Contract with the
highest Contract Rate as of the Cut-off Date has a Contract Rate of
16.500%;
(bb) no Group II Contract is subject to the requirements in the Home
Ownership and Equity Protection Act of 1994 that apply to "high cost"
mortgages; and
(cc) no Group II Contracts had prepaid single-premium credit life insurance
policies associated therewith.
Under the terms of the Agreement, and subject to the Seller's option to
effect a substitution as described in the last paragraph under this subheading,
the Seller will be obligated to repurchase, at the price described below, within
90 days after the Seller becomes aware, or after the Seller's receipt of written
notice from the trustee or the servicer, of a breach of any representation or
warranty of the Seller in the Agreement that materially and adversely affects
the Trust Fund's interest in any Contract, unless the Seller's breach has been
cured.
Notwithstanding the previous paragraph, the Seller will not be required to
repurchase or substitute any Contract relating to a manufactured home and real
property securing the Contract, if any, located in any
S-54
<PAGE>
jurisdiction on account of a breach of the representation and warranty described
in clause (k) above solely on the basis of the failure by the Seller to cause a
notation to be made on any document of title relating to any such manufactured
home or to execute any transfer instrument relating to any such manufactured
home and real property securing the Contract, if any, other than a notation or
transfer instrument necessary to show the Seller as lienholder or legal title
holder, unless:
(a) a court of competent jurisdiction has adjudged that, because of the
failure to cause a notation, the trustee does not have a perfected
first-priority security interest in the related manufactured home; or
(b) (1) the servicer has received written advice of counsel to the effect
that a court of competent jurisdiction has held that, solely because
of a substantially similar failure on the part of a pledgor or
assignor of manufactured housing contracts who has perfected the
assignment or pledge of such manufactured housing contracts, a
perfected first-priority security interest was not created in favor of
the pledgee or assignee in a related manufactured home which is
located in the same jurisdiction and which is subject to the same laws
regarding the perfection of security interests therein applicable to
the manufactured homes located in the jurisdiction; and
(2) the servicer shall not have completed all appropriate remedial
action with respect to the manufactured home within 180 days after
receipt of the written advice of counsel.
Any advice of counsel described in (b)(2) above will be from counsel
selected by the servicer on a non-discriminatory basis from among the counsel
used by the servicer in its general business in the jurisdiction in question.
The servicer will have no ongoing obligation to seek advice with respect to the
matters described in clause (b) above. However, the servicer is required to
seek advice with respect to the matters described in clause (b) above whenever
information comes to the attention of its counsel which causes its counsel to
determine that a holding of the type described in clause (b)(1) might exist. If
any counsel selected by the servicer informs the servicer that no holding of the
type described in clause (b)(1) exists, the advice of counsel will be conclusive
and binding on the parties to the Agreement pursuant to which a trustee has an
interest in any Contracts in the applicable jurisdiction as of the applicable
date. If any holding described above which would give rise to a repurchase
obligation on the part of the Seller were to result from proceedings brought by
a bankruptcy trustee of the Seller, it is likely that the bankruptcy trustee
would also reject the resulting repurchase obligation.
The repurchase obligation described in the third paragraph of this section
"Conveyance of Contracts" generally constitutes the sole remedy available to the
trustee and the holders of the Offered Certificates for a breach of a
representation or warranty under the Agreement with respect to the Contracts.
The repurchase price for any Contract will be equal to the remaining principal
balance of the Contract as of the beginning of the month of repurchase, plus
accrued and unpaid interest from the Due Date with respect to which the Obligor
last made a payment to the Due Date occurring in the Collection Period during
which the Contract is repurchased.
In lieu of repurchasing a Contract as specified in the third paragraph of
this section "Conveyance of Contracts" during the two-year period following the
Closing Date, the Seller may, at its option, substitute an Eligible Substitute
Contract for the Replaced Contract. The Seller will be required to deposit in
the Certificate Account cash in the amount, if any, by which the Scheduled
Principal Balance of the Replaced Contract as of the beginning of the month in
which substitution takes place exceeds the Scheduled Principal Balance of the
Contract for which it is being substituted as of the beginning of the month.
Payments on the Contracts; the Certificate Accounts
The trustee will initially establish and maintain the Certificate Accounts
at an Eligible Institution. The funds in the Certificate Accounts are required
to be invested by the trustee in common trust funds, collective
S-55
<PAGE>
investment trusts or Eligible Investments that will mature not later than the
business day preceding the applicable Distribution Date.
All payments in respect of principal and interest on the Contracts received
during any Collection Period by the servicer, exclusive of Scheduled Payments
due prior to the Cut-off Date, including Liquidation Proceeds, net of
Liquidation Expenses, are required to be paid into the related Certificate
Account not later than the second business day following receipt thereof.
Amounts received as late payment fees, extension fees, assumption fees or
similar fees may be retained by the servicer as part of its servicing fees. See
"--Servicing Compensation; Certain Other Matters Regarding the Servicer" below.
In addition, the amount paid by the Seller for any Contract repurchased by it as
a result of a breach of a representation or warranty under the Agreement, and
amounts required to be deposited upon substitution of an Eligible Substitute
Contract because of a breach of a representation or warranty, which amounts will
be treated as partial principal prepayments, as described under "--Conveyance of
Contracts" above and amounts in respect of converted Contracts purchased by the
holder of the Class R Certificates, are required to be paid into the related
Certificate Account.
On each Determination Date, the servicer will determine the Available
Distribution Amount related to each Group and the amounts to be distributed on
the related Certificates for the following Distribution Date.
The trustee or its paying agent will withdraw funds from the Certificate
Accounts on each Distribution Date, but only to the extent of the applicable
Available Distribution Amount, to make payments to holders of the Offered
Certificates as specified under "--Distributions" below. From time to time, as
provided in the Agreement, the servicer will also withdraw funds from the
Certificate Accounts to make payments to it as permitted by the Agreement and
described in subclauses (1), (2), (4), (5) and (6) of clause (b) in the
definition of Available Distribution Amount.
Distributions
Distributions of principal and interest to holders of a Class of
Certificates will be made on each Distribution Date in an amount equal to the
respective Percentage Interests multiplied by the aggregate amount distributed
on the Class of Certificates on the related Distribution Date.
Each distribution with respect to a Book-Entry Certificate will be paid to
DTC, which will credit the amount of the distribution to the accounts of its
Participants in accordance with its normal procedures. Each Participant will be
responsible for disbursing the distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm will be responsible for disbursing funds to the Certificate Owners that it
represents. All credits and disbursements with respect to Book-Entry
Certificates are to be made by DTC and the Participants in accordance with DTC's
rules.
Interest Distributions
With respect to any Distribution Date and the Class I Certificates, the
"Interest Period" shall be the period from the first day of the calendar month
preceding the month of the related Distribution Date through the last day of
that calendar month on the basis of a 360-day year consisting of twelve 30-day
months. With respect to the Class II Certificates, the "Interest Period" shall
be the period from the preceding Distribution Date, or in the case of the first
Distribution Date, from the Closing Date, through the day immediately preceding
that Distribution Date based on the actual number of days elapsed during the
Interest Period and a 360-day year.
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<PAGE>
With respect to each Distribution Date, the "Interest Distribution Amount"
means with respect to any Class of Class A Certificates:
. interest accrued on that Class of Class A Certificates during the related
Interest Period at the then applicable Pass-Through Rate on the Certificate
Balance of that Class of Class A Certificates on the last day of the related
Interest Period;
. plus, any previously undistributed shortfalls in interest - other than any
Net Funds Cap Carryover Amounts - due to the holders of that Class of Class A
Certificates in respect of prior Distribution Dates;
. plus, to the extent legally permissible, interest accrued on any previously
undistributed shortfalls in interest - other than any Net Funds Cap Carryover
Amounts - during the related Interest Period at the then applicable Pass-
Through Rate.
With respect to each Distribution Date, the "Interest Distribution Amount"
means with respect to the Class I M Certificates and the Class I B Certificates:
. interest accrued on the Class of Certificates during the related Interest
Period at the then applicable Pass-Through Rate on the Adjusted Certificate
Balance of the Class of Certificates on the last day of the related Interest
Period;
. plus, any previously undistributed shortfalls in interest due to the holders
of the Class of Certificates in respect of prior Distribution Dates;
. plus, to the extent legally permissible, interest accrued on any previously
undistributed shortfalls during the related Interest Period at the then
applicable Pass-Through Rate.
Principal Distributions on the Class II A-2 Certificates
With respect to any Distribution Date and the Class II A-2 Certificates, so
long as there has not been a Deficiency Event with respect to Group II,
distributions of principal will be made in round lots of $25,000 and integral
multiples thereof and will be allocated to specific Class II A-2 Certificates in
accordance with the then-applicable established random lot procedures of DTC,
and the then-applicable established procedures of the Participants and Indirect
Participants, which may or may not be by random lot. Investors may ask
Participants or Indirect Participants which allocation procedures they use. On
any Distribution Date on which principal is to be distributed to the Class II A-
2 Certificates, one or more holders of a Class II A-2 Certificate may receive no
distributions of principal while other holders of Class II A-2 Certificates
receive distributions. In the event the principal amount of each Class II A-2
Certificate is less than $25,000 or the Class II A-2 Certificates are no longer
held in book-entry form, principal will be distributed pro rata among the Class
II A-2 Certificates.
If the amount described in "--Priority of Distributions" below otherwise
required to be applied as a payment of principal on the Class II A-2
Certificates either (1) is less than $25,000 or (2) exceeds an integral multiple
of $25,000, then, in the case of (1), such entire amount or, in the case of (2),
such excess amount, will not be paid as principal on the upcoming Distribution
Date, but will be retained in the Certificate Account until the amount therein
available for payment of principal on the Class II A-2 Certificates equals
$25,000 or any integral multiple thereof. In no event however, shall amounts
remain in the Certificate Account more than 13 months after the related payments
are deposited into the Trust Fund. The amount being distributed to the Class II
A-2 Certificates as principal will be allocated to the specific Certificates of
such Class which are selected prior to the related Distribution Date by lot or
such other manner as may be determined, which allocations will be made only in
amounts equal to $25,000 and integral multiples of $25,000 in excess thereof.
Priority of Distributions
A. On each Distribution Date, the Available Distribution Amount related to
Group I plus, with respect to clauses (10) and (11) below, the Class I B-2
Letter of Credit Draw Amount, and with respect to clauses (1), (2)
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<PAGE>
and (3) below, any amounts received from the Group II Certificate Account
pursuant to clause B.(7) below, in the Certificate Account related to Group I,
will be distributed in the following amounts and in the following order of
priority:
(1) to the Class I A Certificates, the Class I A Interest Distribution
Amount;
(2) to the Class I M-1 Certificates, the Class I M-1 Interest Distribution
Amount;
(3) to the Class I M-2 Certificates, the Class I M-2 Interest Distribution
Amount;
(4) to the Class I B-1 Certificates, the Class I B-1 Interest Distribution
Amount;
(5) to the Class I A Certificates, the Class I A Unpaid Certificate
Shortfall Amount, if any;
(6) to the Class I A Certificates, the Class I A Formula Principal
Distribution Amount;
(7) to the Class I M-1 Certificates, an amount equal to the sum of:
(a) the related Liquidation Loss Interest Amount, if any;
(b) the related Unpaid Liquidation Loss Interest Shortfall, if any;
(c) the related Unpaid Certificate Shortfall Amount, if any; and
(d) the Class I M-1 Formula Principal Distribution Amount until the
Class I M-1 Certificate Balance has been reduced to zero;
(8) to the Class I M-2 Certificates, an amount equal to the sum of:
(a) the related Liquidation Loss Interest Amount, if any;
(b) the related Unpaid Liquidation Loss Interest Shortfall, if any;
(c) the related Unpaid Certificate Shortfall Amount, if any;
(d) the Class I M-2 Formula Principal Distribution Amount until the
Class I M-2 Certificate Balance has been reduced to zero;
(9) to the Class I B-1 Certificates, an amount equal to the sum of:
(a) the related Liquidation Loss Interest Amount, if any;
(b) the related Unpaid Liquidation Loss Interest Shortfall, if any;
(c) the related Unpaid Certificate Shortfall Amount, if any; and
(d) the Class I B Formula Principal Distribution Amount until the
Class I B-1 Certificate Balance has been reduced to zero;
(10) to the Class I B-2 Certificates, the Class I B-2 Interest Distribution
Amount;
(11) to the Class I B-2 Certificates, an amount equal to the sum of:
(a) the related Liquidation Loss Interest Amount, if any;
(b) the related Unpaid Liquidation Loss Interest Shortfall, if any;
(c) the related Unpaid Certificate Shortfall Amount, if any;
(d) the Class I B Formula Principal Distribution Amount until the
Class I B-2 Certificate Balance has been reduced to zero;
(12) to GreenPoint Bank, an amount equal to any unreimbursed Class I B-2
Letter of Credit Draw Amount;
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<PAGE>
(13) to the Group II Certificate Account to the extent needed on that
Distribution Date to cover any Available Funds Shortfall on the Class
II Certificates; and
(14) any remaining available funds to the Class R Certificates.
On any Distribution Date, if the Class I A, Class I M-1 or Class I M-2
Formula Principal Distribution Amount exceeds the Certificate Balance of the
related Class of Certificates, less any Unpaid Certificate Principal Shortfall
with respect to such Class and Distribution Date, then the amount of such excess
will be added to the Formula Principal Distribution Amount of the next junior
Class of Certificates.
If the Available Distribution Amount related to Group I plus amounts
available from cross-collateralization, if any, for any Distribution Date are
not sufficient to distribute an amount equal to the full Formula Principal
Distribution Amount for that Distribution Date to the related Class I
certificateholders, in addition to current interest and interest shortfalls
distributable to those certificateholders, the aggregate Certificate Balance of
the Class I Certificates will be greater than the aggregate Scheduled Principal
Balance of the Group I Contracts. In such event, the amount of that deficiency
(the "Liquidation Loss Amount") will be allocated first to the Class I B-2
Letter of Credit in an amount equal to the lesser of the amount available under
the Class I B-2 Letter of Credit on that Distribution Date and the Liquidation
Loss Amount.
If GreenPoint Bank is in default under the Class I B-2 Letter of Credit,
any outstanding Liquidation Loss Amount will be allocated to reduce the Class I
B-2 Adjusted Certificate Balance (a "Class I B-2 Liquidation Loss Amount").
After the Class I B-2 Adjusted Certificate Balance has been reduced to
zero, any outstanding Liquidation Loss Amounts will be allocated to reduce the
Class I B-1 Adjusted Certificate Balance (a "Class I B-1 Liquidation Loss
Amount").
After the Class I B-1 Adjusted Certificate Balance has been reduced to
zero, any outstanding Liquidation Loss Amounts will be allocated to reduce the
Class I M-2 Adjusted Certificate Balance (a "Class I M-2 Liquidation Loss
Amount").
After the Class I M-2 Adjusted Certificate Balance has been reduced to
zero, any outstanding Liquidation Loss Amounts will be allocated to reduce the
Class I M-1 Adjusted Certificate Balance (a "Class I M-1 Liquidation Loss
Amount").
Any of the Class I M-1, Class I M-2, Class I B-1 or Class I B-2 Liquidation
Loss Amounts will be reduced on subsequent Distribution Dates to the extent that
the related Available Distribution Amounts are sufficient as described in this
prospectus supplement to permit the distribution of principal due on the
Certificates on prior Distribution Dates but not paid as reimbursement in
respect of those amounts. If the Adjusted Certificate Balance of a Class of
Subordinate Certificates is reduced by a Liquidation Loss Amount, interest
accruing on that Class will be calculated on the Adjusted Certificate Balance as
reduced. On each Distribution Date, holders of the Class I M-1 Certificates,
Class I M-2 Certificates, Class I B-1 Certificates and Class I B-2 Certificates
will be entitled to receive from the Available Distribution Amount related to
Group I for that Distribution Date, one month's interest at the related Pass-
Through Rate on the Adjusted Certificate Balance of that Class. Additionally,
those holders will be entitled to receive, prior to any distribution of
principal on the related Class of Certificates and each subordinate Class of
Certificates, one month's interest at the related Pass-Through Rate on the
Liquidation Loss Amount for that Class as of the immediately preceding
Distribution Date (each, a "Liquidation Loss Interest Amount") and one month's
interest at the related Pass-Through Rate on any Liquidation Loss Interest
Amount due on one or more prior Distribution Dates but not paid.
B. On each Distribution Date, the Available Distribution Amount for Group
II plus, any Credit Enhancement Amount related to Group II (provided that any
Enhancement Payment may only be used for the items listed in clauses (1) and (2)
below and any Letter of Credit Draw Amount may only be used for the items
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listed in clauses (1) through (3) below) and any amounts received from the Group
I Certificate Account pursuant to clause A.(13) above, in the Certificate
Account related to Group II will be distributed in the following amounts in the
following order of priority:
(1) concurrently to the Class II A-1 Certificates and the Class II A-
2 Certificates, the Class II A-1 Interest Distribution Amount and
the Class II A-2 Interest Distribution Amount; if the Available
Distribution Amount for Group II plus, any Credit Enhancement
Amount related to Group II and any amounts received from the
Group I Certificate Account pursuant to clause A.(13) above, is
not sufficient to distribute the full amount of interest due on
the Class II A-1 Certificates and the Class II A-2 Certificates,
the Available Distribution Amount plus, any Credit Enhancement
Amount related to Group II and any amounts received from the
Group I Certificate Account pursuant to clause A.(13) above, will
be distributed to such Classes of Certificates pro rata on the
basis of the interest due thereon;
(2) the Formula Principal Distribution Amount for Group II in the
following order of priority:
(a) to the Class II A-1 Certificates until the Class II A-1
Certificate Balance is reduced to zero; and
(b) to the Class II A-2 Certificates until the Class II A-2
Certificate Balance is reduced to zero;
(3) amounts, if any, required to be deposited into the Special
Account as established under and required by the Insurance
Agreement;
(4) to GreenPoint Bank, an amount equal to any unreimbursed Letter of
Credit Draw Amount;
(5) any remaining available funds up to the applicable Net Funds Cap
Carryover Amounts to the Class II A-1 certificateholders and the
Class II A-2 certificateholders pro rata on the basis of the
Class II A-1 Net Funds Cap Carryover Amount and Class II A-2 Net
Funds Cap Carryover Amount, respectively;
(6) to the Auction Agent, certain amounts that may be required to be
paid pursuant to the Agreement;
(7) to the Group I Certificate Account to the extent needed on that
Distribution Date to cover any Available Funds Shortfall on the
Class I Certificates; and
(8) any remaining available funds to the holder of the Class R
Certificates.
In addition, notwithstanding the prioritization of the distribution of the
Formula Principal Distribution Amount for Group II to the holders of the Class
II A-1 Certificates and Class II A-2 Certificates pursuant to clause (2) above,
on a Distribution Date, if any, in respect of which a Deficiency Event with
respect to Group II is in effect, the portion of the Formula Principal
Distribution Amount for Group II for such Distribution Date that would otherwise
be distributed sequentially to the holders of the Class II A-1 Certificates and
Class II A-2 Certificates pursuant to clause (2) above will instead be
distributed to the holders of the Class II A-1 Certificates and Class II A-2
Certificates pro rata based upon the Certificate Balance of each such Class
until the Certificate Balances of each of the Class II A-1 Certificates and
Class II A-2 Certificates have been reduced to zero.
Furthermore, notwithstanding the previous paragraph, if the Formula
Principal Distribution Amount allocable to the holders of the Class II A-1
Certificates on any Distribution Date pursuant to clause (2) above exceeds the
Class II A-1 Certificate Balance for such Distribution Date, such excess will be
distributed to the Class II A-2 certificateholders.
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In no event will the aggregate distributions of principal to any Class of
Certificates exceed the Initial Certificate Balance of such Class of
Certificates.
In certain limited circumstances, but only to the extent described in the
Agreement, a portion of the Monthly Servicing Fee may be subordinated to the
payments set forth in clauses B.(1), (2) and (3) above.
Cross-Collateralization Provisions
The Agreement provides for cross-collateralization through the application
of excess amounts generated by one Group to cover any Available Funds Shortfall
in the other Group, subject to certain prior requirements of such Group.
Therefore, as to any Distribution Date, the amount, if any, of the Available
Distribution Amount for Group I remaining after payment of all then applicable
prior requirements relating to the Class I Certificates will be used to fund any
Available Funds Shortfall related to Group II for that Distribution Date.
Likewise, as to any Distribution Date, the amount, if any, of the Available
Distribution Amount for Group II remaining after payment of all then applicable
prior requirements relating to the Class II Certificates will be used to fund
any Available Funds Shortfall related to Group I for that Distribution Date.
The payment of amounts in respect of cross-collateralization will be applied in
the order specified above under "--Priority of Distributions."
Additional funds resulting from the cross-collateralization provisions
described herein shall not be available to the Class II certificateholders to
pay the related Net Funds Cap Carryover Amount.
Subordination of the Class I M Certificates
The rights of the holders of the Class I M Certificates to receive
distributions of amounts collected on or in respect of the Group I Contracts
will be subordinated to the rights of the holders of the Class I A Certificates.
Further, the rights of the holders of the Class I M-2 Certificates to receive
distributions of amounts collected on or in respect of the Group I Contracts
will be subordinated to the rights of the holders of the Class I M-1
Certificates.
The protection afforded to the Class I A Certificates by means of the
subordination of the Class I M Certificates and the protection afforded the
Class I M-1 Certificates by means of the subordination of the Class I M-2
Certificates, will be accomplished (1) by the application of the Available
Distribution Amount for Group I in the order specified under "--Priority of
Distributions" above and (2) if the Available Distribution Amount for Group I on
any Distribution Date plus any related Credit Enhancement Amount and amounts
available from cross-collateralization, if any, are not sufficient to permit the
distribution of an amount equal to the entire portion of the Formula Principal
Distribution Amount for Group I, to the Class I A certificateholders or Class I
M-1 certificateholders, as applicable, the subordination feature will protect
the Class I A certificateholders or Class I M-1 certificateholders, as
applicable, by the right of those certificateholders to receive, until any
shortfall is distributed, if ever, a portion of the future distributions of the
related Available Distribution Amounts that would otherwise have been
distributable to the holders of the Class I M-1 Certificates, the Class I M-2
Certificates and, as described below, the Class I B Certificates or the Class R
Certificates. See "Summary--Subordination of the Subordinate Certificates" and
"--Subordination of the Class I B and Class R Certificates" below in this
prospectus supplement.
Subordination of the Class I B Certificates and Class R Certificates
The rights of the holders of the Class I B and Class R Certificates to
receive distributions of principal and interest will be subordinated, to the
extent described in this prospectus supplement, to the rights of the holders of
the Class I A and Class I M Certificates. Further, the rights of the holders of
the Class I B-2 Certificates to receive distributions of amounts collected on or
in respect of the Group I Contracts will be subordinated to the rights of the
holders of the Class I B-1 Certificates and the rights of the holders of the
Class R Certificates to receive distributions of amounts collected on or in
respect of the Contracts will be subordinated to the rights of the holders of
the Class I B-2 Certificates.
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This subordination is intended to enhance the likelihood of receipt by the
holders of the Class I A Certificates and Class I M Certificates of the full
amount of their monthly payments of principal and interest equal to the Class I
A Initial Certificate Balance or the aggregate Class I M Initial Certificate
Balance, as the case may be.
The protection afforded to the holders of Class I A and Class I M
Certificates by means of the subordination of the Class I B and Class R
Certificates and the protection afforded to the holders of Class I B-1
Certificates by means of the subordination of the Class I B-2 will be
accomplished by the application of the Available Distribution Amount for Group I
in the order specified under "--Priority of Distributions" above. In addition,
if the Available Distribution Amount for Group I on a Distribution Date plus any
related Credit Enhancement Amount and amounts available from cross-
collateralization, if any, are not sufficient to permit the distribution of an
amount equal to the entire specified portion of the Formula Principal
Distribution Amount for Group I to the Class A certificateholders or Class I M
certificateholders then entitled to such distribution, protection is afforded to
the applicable Class of Certificates by the right of the Class I A
certificateholders or Class I M certificateholders to receive, until any such
shortfall is distributed, if ever, a portion of future Available Distribution
Amounts for Group that would otherwise have been payable to the holders of the
Class I B Certificates or the Class R Certificates. Amounts that would
otherwise have been distributed to the Class R Certificates will, as described
under "--Priority of Distributions" above, generally equal interest collections
on or in respect of the Contracts in excess of the aggregate amount of interest
due to be distributed on the Certificates. On each Distribution Date before the
Class I A and Class I M Certificate Balances have been reduced to zero, the
holders of the Class I B Certificates will receive the amounts specified under
"--Priority of Distributions" above.
The rights of the holders of the Class R certificates to receive any
distributions will be subordinated to the rights of the holders of the Class I
B-2 certificates to receive distributions of principal and interest.
Losses on Liquidated Contracts
As described above, the distribution of principal to the holders of the
Offered Certificates in each Group is intended to include the Scheduled
Principal Balance of each Contract in the related Group that became a Liquidated
Contract during the Collection Period immediately preceding the month of such
distribution. If the Liquidation Proceeds, net of related Liquidation Expenses,
from that Liquidated Contract are less than the sum of:
. the Scheduled Principal Balance of that Liquidated Contract; and
. accrued and unpaid interest thereon;
then to the extent the deficiency is not covered by any excess interest
collections on non-defaulted Contracts and a Credit Enhancement Default has
occurred and is continuing, the deficiency may, in effect, be absorbed by some
of the Offered Certificates.
With respect to the Class I Certificates, on each Distribution Date, if
any, on or after the date on which a Deficiency Event with respect to Group I
occurs and the Class I B-2 Letter of Credit has been reduced to zero or is
otherwise insufficient or GreenPoint Bank is in default under the Class I B-2
Letter of Credit and the Adjusted Certificate Balances of the Class I M and
Class I B Certificates have been written down to zero, the Class I A
Certificates will receive only their respective percentage interest of
Liquidation Proceeds, net of Liquidation Expenses, realized in respect of
Liquidated Contracts in Group I, rather than the Scheduled Principal Balances
thereof, and will therefore bear all losses on Liquidated Contracts in Group I,
with no ability to recover the amount of any liquidation loss from future
principal collections on the Group I Contracts, and incur a loss on their
investment in the Class I A Certificates. See "Prepayment and Yield
Considerations" in this prospectus supplement.
If the Available Distribution Amount for Group I plus Class I B-2 Letter of
Credit Draw Amounts, if any, and amounts available from cross-collateralization,
if any, for any Distribution Date are not sufficient to cover, in
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addition to current interest and interest shortfalls distributable to the Class
I certificateholders, an amount equal to the entire specified portion of the
Formula Principal Distribution Amount distributable to the Class I
certificateholders then entitled to distributions on that Distribution Date,
then the aggregate Certificate Balance of all Class I Certificates will be
greater than the aggregate Scheduled Principal Balance of the Group I Contracts.
In that event, the amount of the deficiency will be allocated as Liquidation
Loss Amounts, and interest on the Subordinate Certificates at the related Pass-
Through Rate will accrue on the related Adjusted Certificate Balances, as
described in "--Priority of Distributions" above. To the extent that any
Liquidation Loss Amount is allocated to a Class of Subordinate Certificates on
any Distribution Date, such amount may be reduced on one or more subsequent
Distribution Dates to the extent that the Available Distribution Amount for
Group I plus Class I B-2 Letter of Credit Draw Amounts, as applicable, and
amounts available from cross-collateralization, if any, are sufficient to permit
the distribution of principal due on the Class I Certificates on prior
Distribution Dates but not paid.
With respect to the Class II Certificates, on each Distribution Date, if
any, on or after the date on which a Deficiency Event with respect to Group II
occurs and there has been a related Credit Enhancement Default and such default
is continuing, the Class II A-1 Certificates and Class II A-2 Certificates will
receive only their respective percentage interest of Liquidation Proceeds, net
of Liquidation Expenses, realized in respect of Liquidated Contracts in Group
II, rather than the Scheduled Principal Balances thereof, and will therefore
bear all losses on Liquidated Contracts in Group II, with no ability to recover
the amount of any liquidation loss from future principal collections on the
Group II Contracts, and incur a loss on their investment in the Class II
Certificates. Any losses as described in the previous sentence will be
allocated pro rata between the Class II A-1 Certificates and Class II A-2
Certificates. See "Prepayment and Yield Considerations" in this prospectus
supplement.
The Letters of Credit
The Class I B-2 Letter of Credit and the Class II Letter of Credit will be
assets of the Trust Fund and the trustee will maintain possession of and make
claims for payment pursuant to the Class I B-2 Letter of Credit and the Class II
Letter of Credit for the benefit of the Trust Fund.
The obligations of GreenPoint Bank under the Class I B-2 Letter of Credit
will be non-cancelable, irrevocable, primary, absolute and unconditional, except
as expressly provided therein, and neither the failure of the trustee,
GreenPoint, or any other person to perform any covenants or obligations in favor
of GreenPoint Bank, or otherwise, nor the failure or omission to make a demand
permitted thereunder, nor the commencement of any receivership, bankruptcy,
debtor or other insolvency proceeding by or against the trustee, GreenPoint, or
any other person shall in any way affect or limit GreenPoint Bank's obligations
under the Class I B-2 Letter of Credit. If an action or proceeding to enforce
the Class I B-2 Letter of Credit is brought, the trustee will be entitled to
recover from GreenPoint Bank, costs and expenses reasonably incurred, including
without limitation reasonable fees and expenses of counsel. The Class I B-2
Letter of Credit will only provide credit support for the Class I B-2
Certificates, up to an amount equal to $31,792,969, plus accrued but unpaid
interest on the Class I B-2 Certificates, as reduced from time to time as draws
are made thereunder. In no event will the amount of the Class I B-2 Letter of
Credit exceed the Certificate Balance of the Class I B-2 Certificates, plus
accrued but unpaid interest thereon. The Class I B-2 Letter of Credit will
remain outstanding until the date on which the Class I B-2 Certificates are
retired. The amount available under the Class I B-2 Letter of Credit may be
reduced from time to time pursuant to the terms of the Agreement, but only to
the extent acceptable to S&P and Fitch and such that the reduction in the amount
available under the Class I B-2 Letter of Credit will not cause the then current
rating of the Class I B-2 Certificate to be downgraded, withdrawn, or qualified.
The Class II Letter of Credit will be issued in an amount as determined by
MBIA and may be amended, replaced, substituted, reduced or cancelled at any time
by mutual agreement of MBIA and GreenPoint Bank, without the consent of the
Class II certificateholders, the seller, the servicer or the trustee.
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Under certain conditions (as determined by the mutual agreement of MBIA and
GreenPoint Bank), the trustee will make a draw of the full amount available
under the Class II Letter of Credit and deposit that amount into a spread
account. Thereafter, the trustee will withdraw from the spread account an
amount equal to the Class II Letter of Credit Draw Amount that would otherwise
have been drawn under the Class II Letter of Credit. After any draw of the full
amount available under the Class II Letter of Credit, amounts that would
otherwise have been available to reimburse GreenPoint Bank for previous
unreimbursed draws in respect of the Class II Letter of Credit will instead be
deposited in the spread account.
The Class II Letter of Credit will remain outstanding until the earlier of
(1) the date on which the Class II A-1 and Class II A-2 Certificates are retired
and (2) any date that the Class II Letter of Credit is cancelled by the mutual
agreement of MBIA and GreenPoint Bank.
The Certificate Insurance Policy
The Class II Certificates will be entitled to the benefit of the
Certificate Insurance Policy. As of any determination date, the aggregate
amount available under the Certificate Insurance Policy will be equal to the
aggregate Certificate Balance of the Class II Certificates plus interest
thereon. With respect to any Distribution Date, an Enhancement Payment will be
payable under the Certificate Insurance Policy equal to the amount by which the
aggregate amount distributable to the Class II A-1 and Class II A-2 Certificates
described in clauses B.(1) and (2) of "--Priority of Distributions" above
exceeds the sum of the Available Distribution Amount for such Certificates plus
the Class II Letter of Credit Draw Amount, if any, and any amounts received from
the Group I Certificate Account pursuant to clause A.(13) of "--Priority of
Distributions" above.
The Certificate Insurance Policy will be issued pursuant to the Insurance
Agreement.
The Special Account is not a part of the Trust Fund and, accordingly, the
holders of the Certificates will not have any rights to, and will not receive
amounts on deposit in, the Special Account.
The Certificate Insurance Policy will be an asset of the Trust Fund and the
trustee will maintain possession of and make claims for payment pursuant to the
Certificate Insurance Policy for the benefit of the Trust Fund.
The terms of the Certificate Insurance Policy will provide that MBIA will
waive and agree not to assert any and all rights to require the trustee to make
demand on or to proceed against any person, party or security prior to demanding
payment under the Certificate Insurance Policy. Under the Certificate Insurance
Policy, MBIA will also waive and agree not to assert any and all defenses, set-
offs and counterclaims of any kind available to it so as to deny payment of any
amount due under the Certificate Insurance Policy.
MBIA shall be subrogated to the rights of each Class II Certificateholder
to receive payments on the related Certificates to the extent of any payment by
MBIA under the Certificate Insurance Policy.
The Certificate Insurance Policy will provide that any rights of
subrogation acquired by MBIA as a result of any payment made under the
Certificate Insurance Policy shall, in all respects, be subordinate and junior
in right of payment to the prior indefeasible payment in full of all amounts due
the trustee on account of payments due under the Class II Certificates.
The obligations of MBIA under the Certificate Insurance Policy will be
irrevocable, primary, absolute and unconditional, except as expressly provided
therein, and neither the failure of the trustee, GreenPoint, or any other person
to perform any covenants or obligations in favor of MBIA, or otherwise, nor the
failure or omission to make a demand permitted thereunder, nor the commencement
of any receivership, bankruptcy, debtor or other insolvency proceeding by or
against the trustee, GreenPoint, or any other person shall in any way affect or
limit MBIA's obligations under the Certificate Insurance Policy. If an action
or proceeding to enforce the Certificate
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Insurance Policy is brought, the trustee will be entitled to recover from MBIA
costs and expenses reasonably incurred, including without limitation reasonable
fees and expenses of counsel.
There shall be no acceleration payment due under the Certificate Insurance
Policy unless such acceleration is at the sole option of MBIA.
Advances
For each Distribution Date, the servicer will be obligated to make Monthly
Advances to the extent it deems them recoverable. Instead of using its own
funds, the servicer may apply any Excess Contract Payments in the Certificate
Accounts to make all or a portion of a Monthly Advance, but must replace such
Excess Contract Payments to the extent required to make Scheduled Payments on
the related Contracts. In addition, upon the determination that a
Nonrecoverable Advance has been made in respect of a Contract, the servicer will
reimburse itself out of funds in the related Certificate Account for the amount
of that Nonrecoverable Advance.
In addition, since not all of the Contracts have Scheduled Payments due
during the initial Collection Period, on the first Distribution Date the
servicer will also advance amounts necessary to cover any resulting interest
shortfall on any Class of Certificates.
In making Monthly Advances, the servicer will be attempting to maintain a
regular flow of scheduled interest and principal to the holders of the Offered
Certificates rather than to guarantee or insure against losses.
The servicer will also be obligated to make advances, to the extent
recoverable out of Liquidation Proceeds, pursuant to the Agreement, in respect
of certain taxes and insurance premiums not paid by an Obligor on a timely
basis.
Reports to Certificateholders
The trustee will include with each distribution to each certificateholder a
statement as of the related Distribution Date setting forth, among other things:
(a) the aggregate amount distributed on the Class I A Certificates on that
Distribution Date;
(b) the amount of such distributions which constitute principal;
(c) the amount of such distributions which constitute interest;
(d) the remaining Certificate Balance of the Class I A Certificates;
(e) the aggregate amount distributed on each Class of Class I M
Certificates on that Distribution Date;
(f) the amount of such distributions which constitute principal;
(g) the amount of such distributions which constitute interest;
(h) the remaining Certificate Balance of each Class of Class I M
Certificates;
(i) the Adjusted Certificate Balance of each Class of Class I M
Certificates;
(j) the aggregate amount distributed on each Class of Class I B
Certificates on that Distribution Date;
(k) the amount of such distribution which constitutes principal;
(l) the amount of such distribution which constitutes interest;
(m) the remaining Certificate Balance of each Class of Class I B
Certificates;
(n) the Adjusted Certificate Balance of each Class of Class I B
Certificates;
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(o) the amount available under the Class I B-2 Letter of Credit;
(p) the Class I B-2 Letter of Credit Draw Amount, if any, for that
Distribution Date;
(q) the amount owed to GreenPoint Bank for reimbursement of previous draws
on the Class I B-2 Letter of Credit;
(r) the aggregate amount distributed on the Class II A-1 Certificates on
that Distribution Date;
(s) the amount of such distributions which constitute principal;
(t) the amount of such distributions which constitute interest;
(u) the remaining Certificate Balance of the Class II A-1 Certificates;
(v) the aggregate amount distributed on the Class II A-2 Certificates on
that Distribution Date;
(w) the amount of such distributions which constitute principal;
(x) the amount of such distributions which constitute interest;
(y) the remaining Certificate Balance of the Class II A-2 Certificates;
(z) the amount available under the Class II Letter of Credit;
(aa) the Class II Letter of Credit Draw Amount, if any, for that
Distribution Date;
(bb) the amount owed to GreenPoint Bank for reimbursement of previous draws
on the Class II Letter of Credit;
(cc) the Enhancement Payment, if any, for that Distribution Date;
(dd) the Class II A-1 Net Funds Cap Carryover Amount;
(ee) the Class II A-2 Net Funds Cap Carryover Amount;
(ff) the Group I cross-collateralization amount, if any, for that
Distribution Date;
(gg) the Group II cross-collateralization amount, if any, for that
Distribution Date;
(hh) the amount of the Monthly Servicing Fee;
(ii) the Pass-Through Rate of each Class of Offered Certificates;
(jj) the number of and aggregate unpaid principal balance of Contracts with
payments delinquent 31 to 59, 60 to 89 and 90 or more days,
respectively;
(kk) the Average Sixty-Day Delinquency Ratio;
(ll) the Current Realized Loss Ratio; and
(mm) the Cumulative Realized Losses.
In addition, within a reasonable period of time after the end of each
calendar year, the trustee will furnish a report to each certificateholder of
record at any time during such calendar year as to certain aggregate of amounts
for such calendar year.
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Optional Termination and Termination Auction
The Agreement provides that on or after the Distribution Date on which the
Pool Scheduled Principal Balance is less than 10% of the Cut-off Date Pool
Principal Balance, the servicer will have the option to purchase, upon giving
notice mailed no later than the 20th day of the month next preceding the month
of the exercise of such option, all outstanding Contracts at a price equal to
the greater of:
(a) the sum of:
(1) 100% of the Scheduled Principal Balance of each Contract (other
than any Contract as to which the related manufactured home has
been acquired and not yet disposed of and whose fair market value
is included pursuant to clause (2) below) as of the final
Distribution Date; and
(2) the fair market value of the acquired property described in
clause (1) above (as determined by the servicer), and
(b) the aggregate fair market value (as determined by the servicer) of all
of the assets of the Trust Fund;
plus, in the case of both clause (a) and (b), an amount sufficient to reimburse
certificateholders for any shortfall in interest due thereto in respect of prior
Distribution Dates and not previously distributed, provided, however, that if
any Letter of Credit Draw Amounts have been made but not yet reimbursed or any
Enhancement Payment has been made but not yet reimbursed, the servicer may only
exercise the option with the consent of GreenPoint Bank or MBIA, as applicable.
The Agreement will also provide that if the servicer does not exercise the
option to purchase or if MBIA does not give its consent if its consent is
required, that the holders of the Class R Certificates will have the option on
any Distribution Date after the Distribution Date on which the Pool Scheduled
Principal Balance is less than 10% of the Cut-off Date Pool Principal Balance,
to purchase, upon giving notice mailed no later than the 20th day of the month
next preceding the month of the exercise of such option, all outstanding
Contracts at a price equal to the greater of:
(a) the sum of:
(1) 100% of the Scheduled Principal Balance of each Contract (other
than any Contract as to which the related manufactured home has
been acquired and not yet disposed of and whose fair market value
is included pursuant to clause (2) below) as of the final
Distribution Date; and
(2) the fair market value of the acquired property described in
clause (1) above (as determined by the servicer); and
(b) the aggregate fair market value (as determined by the servicer) of all
of the assets of the Trust Fund;
plus, in the case of both clause (a) and (b), an amount sufficient to reimburse
certificateholders for any shortfall in interest due thereto in respect of prior
Distribution Dates and not previously distributed and an amount sufficient to
reimburse GreenPoint Bank (or a substitute letter of credit provider if one of
the Letters of Credit has been replaced) for any Letter of Credit Draw Amount
paid, but not yet reimbursed and an amount sufficient to reimburse MBIA for any
Enhancement Payment made, but not yet reimbursed.
Notwithstanding the foregoing, each option of the servicer or holder of the
Class R Certificates to purchase the Contracts then outstanding in the Trust
Fund shall not be exercisable if there will not be distributed to the holders of
the Offered Certificates an amount equal to the Certificate Balance of each
Class together with any shortfall in interest due to the holders of the Offered
Certificates in respect of prior Distribution Dates and not previously
distributed and one month's interest on the Certificate Balance, for each Class
of Certificates, at the
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applicable Pass-Through Rate. The amount described in the preceding sentence is
referred to as the "Minimum Termination Amount."
On any Distribution Date after the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, the servicer may also direct the trustee to conduct a Termination
Auction for the sale of all Contracts then outstanding in the Trust Fund, and in
any case the servicer shall be obligated to direct the trustee to conduct such a
Termination Auction within 90 days of the Distribution Date on which the Pool
Scheduled Principal Balance is less than 10% of the Cut-off Date Pool Principal
Balance, unless the servicer or the holder of the Class R Certificates has
exercised the purchase option described above. The servicer shall give notice
mailed no later than 10 days preceding the date on which the Termination Auction
is to occur. The trustee will solicit each certificateholder, the Seller and
one or more active participants in the asset-backed securities or manufactured
housing contract market that are not affiliated with GreenPoint to make a bid to
purchase the Contracts at the Termination Auction. The trustee will sell all
the Contracts to the highest bidder, subject, among other things, to the
requirements that:
. the highest bid equal or exceed the Minimum Termination Amount plus, an
amount sufficient to reimburse GreenPoint Bank (or a substitute letter
of credit provider if one of the Letters of Credit has been replaced)
for any Letter of Credit Draw Amount paid, but not yet reimbursed and an
amount sufficient to reimburse MBIA for any Enhancement Payment made,
but not yet reimbursed and any other amounts owing under the Insurance
Agreement, if any; and
. at least one bid be tendered by an active participant in the asset-
backed securities or manufactured housing contract market that is not
affiliated with GreenPoint.
If the foregoing requirements are satisfied, the successful bidder or
bidders shall deposit the aggregate purchase price for the Contracts in the
Certificate Account. If the foregoing requirements are not satisfied, the
purchase shall not occur and distributions will continue to be made on the
Certificates. Any sale and consequent termination of the Trust Fund as a result
of a Termination Auction must constitute a "qualified liquidation" of the Trust
Fund under Section 860F of the Code.
Termination of the Agreement
The Agreement will terminate upon the last action required to be taken by
the trustee on the final Distribution Date following the earlier of:
. the purchase by the servicer or the holder of the Class R Certificates
of all Contracts and all property acquired in respect of any Contract
remaining in the Trust Fund as described above under "--Optional
Termination and Termination Auction;"
. the final payment or other liquidation, or any advance with respect
thereto, of the last Contract remaining in the Trust Fund or the
disposition of all property acquired upon repossession of any
manufactured home; or
. the sale in a Termination Auction of all Contracts and all other
property acquired in respect of any Contract remaining in the Trust Fund
as described above under "--Optional Termination and Termination
Auction."
Upon presentation and surrender of the Offered Certificates, the trustee
shall cause to be distributed, to the extent of funds available, to such
certificateholders on the final Distribution Date in proportion to their
respective Percentage Interests an amount equal to the respective unpaid
Certificate Balances of the Offered Certificates, together with any unpaid
interest on such Certificates due on prior Distribution Dates and one month's
interest at the applicable Pass-Through Rates on such unpaid Certificate
Balances; provided that such funds will be distributed in the applicable order
of priority specified under "--Priority of Distributions" above. If the
Agreement is then being terminated, any amount which remains on deposit in the
Certificate Accounts, other than amounts retained to meet claims, after
distribution to the holders of the Offered Certificates, with respect to
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the Group I Certificate Account, will be distributed to GreenPoint Bank (or a
substitute letter of credit provider if the Class I B-2 Letter of Credit has
been replaced) for any Class I B-2 Letter of Credit Draw Amounts made, but not
yet reimbursed, and then any amount which remains will be distributed to the
Class R certificateholders and, with respect to the Group II Certificate
Account, will be distributed to the Special Account to the extent amounts are
owed to MBIA under the Insurance Agreement, any amount which remains will be
distributed to GreenPoint Bank (or a substitute letter of credit provider if the
Class II Letter of Credit has been replaced) for any Class II Letter of Credit
Draw Amounts made, but not yet reimbursed, and then any amount which remains
will be distributed to the Class R certificateholders.
Collection and Other Servicing Procedures
The servicer will administer, service and make collections on the
Contracts, exercising the degree of care that the servicer exercises with
respect to similar Contracts serviced by the servicer. GreenPoint reports on a
monthly basis the payment experience of each obligor under a Contract to the
credit repositories.
Subject to the requirements of applicable law, the servicer will be
required to commence repossession and other realization procedures with respect
to any defaulted Contract promptly after the servicer determines that such
Contract will not be brought current. The servicer may rescind, cancel or make
material modifications of the terms of a Contract, including modifying the
amounts and Due Dates of Scheduled Payments, in connection with a default or
imminent default thereunder.
Servicing Compensation; Certain Other Matters Regarding the Servicer
For its servicing of the Contracts, the servicer will be entitled to
receive a monthly servicing fee equal to the product of one-twelfth of 1.00%
(the "Monthly Servicing Fee Rate") of the Pool Scheduled Principal Balance for
the related Distribution Date (the "Monthly Servicing Fee"), whether or not the
related Scheduled Payments on the Contracts are received. The Available
Distribution Amount will be net of the Monthly Servicing Fee. See "--Payments
on the Contracts; the Certificate Accounts" above.
As part of its servicing fees, the servicer will also be entitled to
retain, as compensation for the additional services provided in connection
therewith, any fees for late payments made by Obligors, extension fees paid by
Obligors for the extension of Scheduled Payments and assumption fees for
permitted assumptions of Contracts by purchasers of the related manufactured
homes and real property securing such Contracts, if any.
Rights Upon an Event of Default
If an Event of Default has occurred, the trustee or holders of Certificates
evidencing interests in any Class of Certificates aggregating not less than 51%
may terminate all of the rights of the servicer under the Agreement. Upon such
termination of the servicer, all authority and power of the servicer under the
Agreement will pass to and be vested in the trustee or a successor servicer as
provided in the Agreement. So long as no MBIA Default has occurred or is
continuing, MBIA will exercise all of the rights of the Class II Certificates in
connection with an Event of Default.
In addition, MBIA may review the operations of the servicer in the event
that any of the following "servicing triggers" occur:
. losses on the Group II Contracts exceed the percentages and levels set
forth in the Agreement; or
. GreenPoint Bank, the ultimate parent of GreenPoint, defaults on certain
payment obligations; or
. GreenPoint Bank fails to maintain certain capital standards established
for financial institutions under the Federal Deposit Insurance
Corporation Improvement Act of 1991, as amended.
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MBIA, so long as no MBIA Default has occurred or is continuing, in its sole
discretion, may remove the servicer based upon such review. In the event that
MBIA removes the servicer, all authority and power of the servicer under the
Agreement will pass and be vested in the trustee or a successor servicer as
provided in the Agreement. Neither the trustee nor the certificateholders may
remove the servicer upon the occurrence of a "servicing trigger."
The Auction Agent
Bankers Trust Company, a New York banking corporation, will act as Auction
Agent with respect to the Class II A-2 Certificates pursuant to an auction agent
agreement, between the trustee and Bankers Trust Company.
The Trustee
The trustee, Bank One, National Association, has its corporate trust
offices at One North State Street, 9th Floor, Chicago, Illinois 60670. The
trustee may resign at any time, in which event the Seller will be obligated to
appoint a successor trustee. The Seller may also remove the trustee if the
trustee ceases to be eligible to continue as such under the Agreement or if the
trustee becomes insolvent. In such circumstances, the Seller will also be
obligated to appoint a successor trustee. 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.
Copies of the monthly report to certificateholders, as described in
"Reports to Certificateholders" in this prospectus supplement, will be made
available each month to certificateholders and other parties to the Agreement
via the trustee's internet website, which is presently located at
www.abs.bankone.com. Persons that are unable to use the above website are
entitled to have a paper copy mailed to them via First Class mail by calling the
trustee at (800) 524-9472. The trustee will have the right pursuant to the
Agreement to change the way the monthly report is distributed in order to make
the distribution more convenient and/or more accessible to the above parties and
to the certificateholders.
The Agreement requires the trustee to maintain, at its own expense, an
office or agency in New York City or Chicago where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the trustee and the certificate registrar in respect of the
Certificates pursuant to the Agreement may be served.
The trustee, or any of its affiliates, in its individual or any other
capacity, may become the owner or pledgee of Certificates with the same rights
as it would have if it were not trustee.
The trustee will also act as paying agent, Certificate registrar and
authenticating agent under the Agreement.
Registration of the Offered Certificates
The Offered Certificates will be book-entry certificates (the "Book-Entry
Certificates"). Persons acquiring beneficial ownership interests in the
Certificates ("Certificate Owners") will hold their Certificates through DTC in
the United States, or Clearstream, Luxembourg or the Euroclear System in Europe
if they are participants of those systems, or indirectly through organizations
which are participants in those systems. The Book-Entry Certificates will be
issued in one or more Certificates which equal the aggregate Certificate Balance
of the Certificates and will initially be registered in the name of Cede & Co.,
the nominee of DTC. Clearstream, Luxembourg and Euroclear will hold omnibus
positions on behalf of their participants through customers' securities accounts
in Clearstream, Luxembourg's and Euroclear's names on the books of their
respective depositaries which in turn will hold such positions in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank,
N.A. will act as depositary for Clearstream, Luxembourg and The Chase Manhattan
Bank will act as depositary for Euroclear (in such capacities, individually the
"Relevant Depositary" and
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collectively the "European Depositaries"). Except as described below, no person
acquiring a Book-Entry Certificate (each, a "Beneficial Owner") will be entitled
to receive a physical Certificate representing such Certificate (a "Definitive
Certificate"). Unless and until Definitive Certificates are issued, it is
anticipated that the only "certificateholder" of the Certificates will be Cede &
Co., as nominee of DTC. Certificate Owners will not be certificateholders as
that term is used in the Agreement. Certificate Owners are only permitted to
exercise their rights indirectly through Participants and DTC.
The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded in the
records of DTC (or of a participating firm that acts as agent for the Financial
Intermediary, whose interest will in turn be recorded on the records of DTC, if
the beneficial owner's Financial Intermediary is not a Participant and on the
records of Clearstream, Luxembourg or Euroclear, as appropriate).
Certificate Owners will receive all distributions of principal of and
interest on the Certificates from the trustee through DTC and Participants.
While the Certificates are outstanding (except under the circumstances described
below), 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 Certificates and
is required to receive and transmit distributions of principal of, and interest
on, the Certificates. Participants and Indirect Participants with whom
Certificate Owners have accounts with respect to Certificates are similarly
required to make book-entry transfers and receive and transmit such
distributions on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess Certificates representing their
respective interests in the Certificates, the Rules provide a mechanism by which
Certificate Owners will receive distributions and will be able to transfer their
interest.
Certificateholders will not receive or be entitled to receive Certificates
representing their respective interests in the Certificates, except under the
limited circumstances described below. Unless and until Definitive Certificates
are issued, certificateholders who are not Participants may transfer ownership
of Certificates only through Participants and Indirect Participants by
instructing such Participants and Indirect Participants to transfer
Certificates, by book-entry transfer, through DTC for the account of the
purchasers of such Certificates, which account is maintained with their
respective Participants. Under the Rules and in accordance with DTC's normal
procedures, transfers of ownership of Certificates will be executed through DTC
and the accounts of the respective Participants at DTC will be debited and
credited. Similarly, the Participants and Indirect Participants will make
debits or credits, as the case may be, on their records on behalf of the selling
and purchasing certificateholders.
Because of time zone differences, credits of securities received in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a
Participant will be made during subsequent securities settlement processing and
dated the business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Euroclear or Clearstream, Luxembourg customers on such business
day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales
of securities by or through a Clearstream, Luxembourg customer or Euroclear
Participant (as defined below) to a DTC Participant will be received with value
on the DTC settlement date but will be available in the relevant Clearstream,
Luxembourg or Euroclear cash account only as of the business day following
settlement in DTC. For information with respect to tax documentation procedures
relating to the Certificates, see "Federal Income Tax Consequences--Taxation of
Regular Certificates--Taxation of Certain Foreign Investors" and "--Backup
Withholding" in the prospectus and "Global Clearance, Settlement and Tax
Documentation Procedures--Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I to this prospectus supplement.
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Transfers between Participants will occur in accordance with DTC rules.
Transfers between Clearstream, Luxembourg customers and Euroclear Participants
will occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream,
Luxembourg customers or Euroclear Participants, on the other, will be effected
in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the Relevant Depositary; however, such cross-
market transactions will require delivery of instructions to the relevant
European international clearing system by a counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Clearstream, Luxembourg customers and Euroclear Participants may not
deliver instructions directly to the European Depositaries.
DTC, which is a New York-chartered limited purpose trust company, performs
services for its Participants, some of which, and/or their representatives, own
DTC. In accordance with its normal procedures, DTC is expected to record the
positions held by each Participant in the Book-Entry Certificates, whether held
for its own account or as a nominee for another person. In general, beneficial
ownership of Book-Entry Certificates will be subject to the Rules, as in effect
from time to time.
Clearstream, Luxembourg was incorporated in 1970 as "Cedel S.A.," a company
with limited liability under Luxembourg law, or a societe anonyme. Cedel S.A.
subsequently changed its name to Cedelbank. On January 10, 2000, Cedelbank's
parent company, Cedel International, societe anonyme ("CI") merged its clearing,
settlement and custody business with that of Deutsche Borse Clearing AG ("DBC").
The merger involved the transfer by CI of substantially all of its assets and
liabilities (including its shares in CB) to a new Luxembourg company, New Cedel
International, societe anonyme ("New CI"), which is 50% owned by CI and 50%
owned by DBC's parent company Deutsche Borse AG. The shareholders of these two
entities are banks, securities dealers and financial institutions. CI currently
has 92 shareholders, including U.S. financial institutions or their
subsidiaries. No single entity may own more than 5 percent of CI's stock.
Further to the merger, the Board of Directors of New CI decided to re-name
the companies in the group in order to give them a cohesive brand name. The new
brand name that was chosen is "Clearstream." Effective January 14, 2000 New CI
has been renamed "Clearstream International, societe anonyme." On January 18,
2000, Cedelbank was renamed "Clearstream Banking, societe anonyme," and Cedel
Global Services was renamed "Clearstream Services, societe anonyme."
On January 17, 2000 DBC was renamed "Clearstream Banking AG." This means
that there are now two entities in the corporate group headed by Clearstream
International which share the name "Clearstream Banking," the entity previously
named "Cedelbank" and the entity previously named "Deutsche Borse Clearing AG."
Clearstream, Luxembourg holds securities for its customers and facilitates
the clearance and settlement of securities transactions between Clearstream,
Luxembourg customers through electronic book-entry changes in accounts of
Clearstream, Luxembourg customers, thereby eliminating the need for physical
movement of certificates. Transactions may be settled by Clearstream,
Luxembourg in any of 36 currencies, including United States Dollars.
Clearstream, Luxembourg provides to its customers, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream, Luxembourg
also deals with domestic securities markets in over 30 countries through
established depository and custodial relationships. Clearstream, Luxembourg is
registered as a bank in Luxembourg, and as such is subject to regulation by the
Commission de Surveillance du Secteur Financier, CSSF', which supervises
Luxembourg banks. Clearstream, Luxembourg's customers are world-wide financial
institutions including
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underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Clearstream, Luxembourg's U.S. customers are limited to
securities brokers and dealers, and banks. Currently, Clearstream, Luxembourg
has approximately 2,000 customers located in over 80 countries, including all
major European countries, Canada, and the United States. Indirect access to
Clearstream, Luxembourg is available to other institutions that clear through or
maintain a custodial relationship with an account holder of Clearstream,
Luxembourg. Clearstream, Luxembourg has established an electronic bridge with
Morgan Guaranty Trust Company of New York as the Operator of the Euroclear
System (MGT/EOC) in Brussels to facilitate settlement of trades between
Clearstream, Luxembourg and MGT/EOC.
Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
Certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
Contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a tangible basis with
attribution of specific Certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Certificates will be made on each
Distribution Date by the trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable Participants in
accordance with DTC's normal procedures. Each Participant will be responsible
for disbursing such payments to the beneficial owners of the Book-Entry
Certificates that it represents and to each Financial Intermediary for which it
acts as agent. Each such Financial Intermediary will be responsible for
distributing funds to the beneficial owners of the Book-Entry Certificates that
it represents.
Under a book-entry format, beneficial owners of the Book-Entry Certificates
may experience some delay in their receipt of payments, since such payments will
be forwarded by the trustee to Cede. Distributions with respect to Certificates
held through Clearstream, Luxembourg or Euroclear will be credited to the cash
accounts of Clearstream, Luxembourg customers or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Federal Income Tax Consequences--Taxation of Regular Certificates--Taxation
of Certain Foreign Investors" and "--Backup
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Withholding" in the prospectus. Because DTC can only act on behalf of Financial
Intermediaries, the ability of a beneficial owner to pledge Book-Entry
Certificates to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such Book-Entry Certificates, may be
limited due to the lack of physical Certificates for such Book-Entry
Certificates. In addition, issuance of the Book-Entry Certificates in the book-
entry form may reduce the liquidity of such Certificates in the secondary market
since certain potential investors may be unwilling to purchase Certificates for
which they cannot obtain physical Certificates.
Monthly and annual reports on the Trust Fund will be provided to Cede, as
nominee of DTC, and may be made available by Cede to beneficial owners upon
request, in accordance with the rules, regulations and procedures creating and
affecting DTC, and to the Financial Intermediaries to whose DTC accounts the
Book-Entry Certificates of such beneficial owners are credited.
DTC has advised the trustee that, unless and until Definitive Certificates
are issued, DTC will take any action permitted to be taken by the holders of the
Book-Entry Certificates under the Agreement only at the direction of one or more
Financial Intermediaries to whose DTC accounts the Book-Entry Certificates are
credited, to the extent that such actions are taken on behalf of Financial
Intermediaries whose holdings include such Book-Entry Certificates.
Clearstream, Luxembourg or the Euroclear Operator, as the case may be, will take
any other action permitted to be taken by a certificateholder under the
Agreement on behalf of a Clearstream, Luxembourg customer or Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to the ability of the Relevant Depository to effect such actions on its
behalf through DTC. DTC may take actions, at the direction of the related
Participants, with respect to some Certificates which conflict with actions
taken with respect to other Certificates.
Definitive Certificates will be issued to beneficial owners of the Book-
Entry Certificates, or their nominees, rather than to DTC, only if (a) DTC or
GreenPoint advises the trustee in writing that DTC is no longer willing,
qualified or able to discharge properly its responsibilities as nominee and
depository with respect to the Book-Entry Certificates and GreenPoint or the
trustee is unable to locate a qualified successor, (b) GreenPoint, at its sole
option, with the consent of the trustee, elects to terminate a book-entry system
through DTC or (c) after the occurrence of an event of default under the
Agreement, beneficial owners having Percentage Interests aggregating not less
than 51% of the Book-Entry Certificates advise the trustee and DTC through the
Financial Intermediaries and the 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 beneficial owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global Certificate or
Certificates representing the Book-Entry Certificates and instructions for re-
registration, the trustee will issue Definitive Certificates, and thereafter the
trustee will recognize the holders of such Definitive Certificates as
certificateholders under the Agreement.
Although DTC, Clearstream, Luxembourg and Euroclear have agreed to the
foregoing procedures in order to facilitate transfer of Certificates among
participants of DTC, Clearstream, Luxembourg and Euroclear, they are under no
obligation to perform or continue to perform such procedures and such procedures
may be discontinued at any time.
Neither the Seller or the servicer nor the trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Certificates held by
Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
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Federal Income Tax Consequences
Orrick, Herrington & Sutcliffe llp, special counsel to the Seller, is of
the opinion that, assuming (1) the making of appropriate elections and (2)
compliance by the Seller, the servicer and the trustee with all of the
provisions of the related Agreements:
. the electing portion of the Trust Fund will qualify, for federal income
tax purposes, as a real estate mortgage investment conduit (a "REMIC")
within the meaning of Sections 860A through 860G of the Code (the "REMIC
Provisions");
. the Offered Certificates evidence the "regular interests" in such REMIC
and will be treated as debt instruments for purposes of Chapter 1 of the
Code (generally relating to the calculation of a certificateholder's tax
liability);
. the Class R Certificates are the sole class of "residual interests" in
such REMIC; and
. the REMIC represented by the Trust Fund will not be subject to federal
income tax as a separate entity except for:
(1) the tax on "prohibited transactions" imposed by Section 860F of the
Code;
(2) the tax on "contributions after startup date" imposed by Section
860G(d) of the Code; and
(3) the tax on "income on foreclosure property" imposed by Section
860G(c) of the Code, respectively, each within the meaning of the
REMIC Provisions in effect on the date of this prospectus
supplement.
However, continuing qualification as a REMIC requires ongoing compliance
with applicable provisions of the Code, including the REMIC provisions, and
related Treasury regulations all of which are subject to change.
The following are the currently applicable material federal income tax
consequences of the purchase, ownership and disposition of Certificates. In
addition to its opinions set forth above, Orrick, Herrington & Sutcliffe llp has
prepared or reviewed the statements in the prospectus and this prospectus
supplement under the headings "Federal Income Tax Consequences," and is of the
opinion that such statements in the prospectus and as supplemented by such
statements in this prospectus supplement are correct in all material respects.
Such statements are intended as an explanatory discussion of the possible
effects of the classification of the Trust Fund as a REMIC for federal income
tax purposes on investors generally and of related tax matters affecting
investors generally, but do not purport to furnish information in the level of
detail or with the attention to an investor's specific tax circumstances that
would be provided by an investor's own tax advisor. Accordingly, each investor
is urged to consult its own tax advisors with regard to the tax consequences to
it of investing in the Offered Certificates.
The Offered Certificates will be Regular Certificates as defined in the
prospectus under "Federal Income Tax Consequences--REMIC Certificates." As such,
the Offered Certificates will be treated as debt instruments for purposes of
calculating a certificateholder's federal income tax liability. Holders of
Offered Certificates will be required to report income with respect to such
Certificates under the accrual method of accounting, regardless of their normal
tax accounting method.
Because the prices of the Class I B-1 and Class I B-2 Certificates have not
been determined at this time, it is possible that the Class I B-1 and Class I B-
2 Certificates may be issued with "original issue discount." Assuming in each
case that a substantial amount of a Class of Offered Certificates, other than
the Class I B-1 and Class I B-2 Certificates, is sold at the price for that
Class stated on the cover of this prospectus supplement, and subject to the
uncertainties concerning the determination of "original issue discount"
discussed in "Federal Income Tax Consequences--Taxation of Regular Certificates-
- -Original Issue Discount" in the prospectus, the Offered Certificates, other
than the Class I B-1 and Class I B-2 Certificates, will not be issued with
"original issue discount."
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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 Contracts will prepay at a rate equal to 200%
of the Prepayment Model with respect to the Group I Contracts and 250% of the
Prepayment Model with respect to the Group II Contracts. No representation is
made that the Contracts will prepay at that rate or at any other rate. See
"Federal Income Tax Consequences--Taxation of Regular Certificates--Original
Issue Discount" and "--Premium" 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 holder
of an Offered Certificate, the amount of "original issue discount" allocable to
that period would be zero and the related certificateholder will be permitted to
offset the negative amount only against future "original issue discount," if
any, attributable to those Certificates.
In certain circumstances IRS regulations relating to "original issue
discount" 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 REMIC administrator in preparing reports to the
certificateholders and the IRS.
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 Offered 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 tax advisors regarding the possibility of
making an election to amortize such premium. See "Federal Income Tax
Consequences--Taxation of Regular Certificates" and "--Premium" in the
prospectus.
The Offered Certificates will be treated as assets described in Section
7701(a)(19)(c) of the Code and "real estate assets" under Section 856(c)(4)(a)
of the Code generally in the same proportion that the assets of the Trust Fund
would be so treated. In addition, interest on the Offered Certificates will be
treated as "interest on obligations secured by mortgages on real property" under
Section 856(c)(3)(b) of the Code generally to the extent that such Certificates
are treated as "real estate assets" under Section 856(c)(4)(a) of the Code.
Moreover, the Certificates (other than the Residual Certificates) will be
"qualified mortgages" within the meaning of Section 860G(a)(3) of the Code if
transferred to another REMIC on its startup day in exchange for a regular or
residual interest therein. See "Description of the Certificates--Termination of
the Agreement" in this prospectus supplement and "Federal Income Tax
Consequences--REMIC Certificates" in the prospectus.
For further information regarding federal income tax consequences of
investing in the Offered Certificates, see "Federal Income Tax Consequences--
REMIC Certificates" in the prospectus.
ERISA Considerations
General
ERISA and Section 4975 of the Code impose certain restrictions on employee
benefit or other plans that are subject to ERISA and/or Section 4975 of the Code
("Plans") and on persons who are fiduciaries with respect to such Plans. See
"ERISA Considerations" in the prospectus.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption
(defined below) and other administrative exemptions under ERISA and the
potential consequences in their specific circumstances, prior to making an
investment in the Certificates. Moreover, each Plan fiduciary should determine
whether under the general fiduciary standards of investment
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prudence and diversification an investment in the Certificates is appropriate
for the Plan, taking into account the overall investment policy of the Plan and
the composition of the Plan's investment portfolio.
Class A Certificates
The U.S. Department of Labor ("DOL") has granted to the Underwriter a
prohibited transaction exemption (as amended by PTE 97-34, 62 Fed. Reg. 39021
(July 21, 1997), the "Exemption") from certain of the prohibited transaction
rules of ERISA. The Exemption exempts from the prohibitions of Sections 406(a)
and 407(a) of ERISA, and the related excise tax provisions of Section 4975 of
the Code, the purchase, holding and resale by Plans of pass-through certificates
representing interests in trusts that hold assets consisting primarily of
certain receivables, loans and other obligations that are secured and meet the
general conditions summarized below. The receivables covered by the Exemption
include manufactured housing installment sales contracts and installment loan
agreements secured by manufactured homes such as the Contracts.
Among the general conditions which must be satisfied for the Exemption to
apply to the acquisition, holding and resale by a Plan of the Class A
Certificates are the following:
(1) The acquisition of such Certificates by a Plan is on terms (including
the price for such Certificates) that are at least as favorable to the
Plan as they would be in an arm's-length transaction with an unrelated
party.
(2) The rights and interests evidenced by the Certificates acquired by the
Plan are not subordinated to the rights and interests evidenced by
other Certificates of the Trust Fund.
(3) The Certificates 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 Rating Services
("S&P"), Duff & Phelps Credit Rating Co. ("Duff & Phelps"), Moody's
Investors Service, Inc. ("Moody's") or Fitch IBCA, Inc. ("Fitch") (the
"Exemption Rating Agencies").
(4) The trustee is not an affiliate of the Underwriter, GreenPoint,
GreenPoint Bank, any Obligor with respect to Contracts included in the
Trust Fund constituting more than 5% of the aggregate unamortized
principal balance of the assets in the Trust Fund, or any affiliate of
such parties. (Such parties, and the trustee and its affiliates, are
sometimes referred to in this prospectus supplement collectively as
the "Restricted Group.") As of the date hereof, no Obligor with
respect to Contracts included in the Trust Fund is an Obligor with
respect to Contracts constituting more than 5% of the aggregate
unamortized principal balance of the assets of the Trust Fund.
(5) The sum of all payments made to and retained by the Underwriter in
connection with the distribution of the Certificates represents not
more than reasonable compensation for underwriting the Certificates.
The sum of all payments made to and retained by the Seller pursuant to
the sale of the Contracts to the Trust Fund represents not more than
the fair market value of such Contracts. The sum of all payments made
to and retained by GreenPoint, represents not more than reasonable
compensation for GreenPoint's services under the Agreement and
reimbursement of GreenPoint's reasonable expenses in connection
therewith.
(6) The Plan 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.
In addition, the Exemption exempts from the prohibitions of Sections
406(a), 406(b) and 407(a) of ERISA, and the related excise tax provisions of
Section 4975 of the Code, transactions undertaken in connection with the
servicing, management and operation of such a Trust Fund pursuant to a binding
pooling and servicing agreement, subject to the foregoing general conditions and
to certain additional requirements. The Seller believes
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that the Exemption will apply to such transactions undertaken with respect to
the Trust Fund and the Contracts and that all conditions of the Exemption other
than those within the control of the investors have been or will be met.
The Exemption also exempts from the prohibition of Sections 406(b)(1) and
406(b)(2) of ERISA, and the related excise tax provisions of Section 4975 of the
Code, the direct or indirect sale, exchange or transfer of the Class A
Certificates between the Seller or the Underwriters and a Plan when the person
who has discretionary authority or renders investment advice with respect to the
investment of the Plan's assets in such Certificates (the "Fiduciary") is (a) an
Obligor with respect to 5% or less of the fair market value of Contracts in the
Trust Fund or (b) an affiliate of any such person, subject to the general
conditions summarized above and to the following additional requirements:
(1) No member of the Restricted Group is a sponsor of the Plan.
(2) In connection with the initial issuance of such Certificates, at
least 50% in Percentage Interests of such Class of Certificates
is acquired by persons independent of the Restricted Group and at
least 50% of the aggregate interest in the Trust Fund is acquired
by persons independent of the Restricted Group.
(3) The Plan's investment in the Certificates does not exceed 25% in
Percentage Interests of any Class of such Certificates
outstanding at the time of acquisition.
(4) Immediately after the acquisition of such Certificates, no more
than 25% of the assets of a Plan with respect to which the
Fiduciary has discretionary authority or renders investment
advice are invested in Certificates representing an interest in a
Trust Fund containing assets sold or serviced by the same entity.
The Exemption also applies to the direct or indirect acquisition or
disposition of Class A Certificates by a Plan in the secondary market if certain
conditions are met and the continued holding of Class A Certificates acquired in
initial or secondary markets.
The Seller believes that the Exemption will apply to the acquisition and
holding of Class A Certificates by Plans and that all conditions of the
Exemption, other than those within the control of the investors, have been met.
In addition, as of the date hereof, no Obligor with respect to Contracts
included in the Trust Fund constitutes more than 5% of the aggregate unamortized
principal balance of the assets of the Trust Fund. Any Plan fiduciary who
proposes to cause a Plan to purchase such Certificates should consult with its
own counsel with respect to the potential consequences under ERISA and the Code
of the Plan's acquisition and ownership of Certificates. Assets of a Plan
should not be invested in Certificates unless it is clear that the Exemption
will apply and exempt all potential prohibited transactions. See "ERISA
Considerations" in the prospectus.
Subordinate Certificates
Because the exemptive relief afforded by the Exemption (or any similar
exemption that might be available) will not likely apply to the purchase, sale
or holding of the Subordinate Certificates, no Subordinate Certificate (or any
interest therein) may be acquired or held by any Plan, any trustee or other
person acting on behalf of any Plan, or any other person using "Plan Assets" to
effect such acquisition or holding (each, a "Plan Investor") unless (i) such
acquirer or holder is an insurance company, (ii) the source of funds used to
acquire or hold such Certificate (or interest therein) is an "insurance company
general account" (as defined in DOL Prohibited Transaction Class Exemption
("PTCE") 95-60), and (iii) the conditions set forth in Sections I and III of
PTCE 95-60 have been satisfied. Each beneficial owner of a Subordinate
Certificate (or any interest therein) shall be deemed to have represented, by
virtue of its acquisition or holding of such Certificate (or interest therein),
that either (i) it is not a Plan Investor or (ii) (1) it is an insurance
company, (2) the source of funds used to acquire or hold such Certificate (or
interest therein) is an "insurance company general account" (as such term is
defined in PTCE 95-60), and (3) the conditions set forth in Sections I and III
of PTCE 95-60 have been satisfied.
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If any Subordinate Certificate (or any interest therein) is acquired or
held in violation of the provisions of the preceding paragraph, the next
preceding permitted beneficial owner will be treated as the beneficial owner of
such Subordinate Certificate, retroactive to the date of transfer to the
purported beneficial owner. Any purported beneficial owner whose acquisition or
holding of any such Certificate (or interest therein) was effected in violation
of the provisions of the preceding paragraph shall indemnify and hold harmless
the seller, the trustee, the servicer, any subservicer and the Trust Fund from
and against any and all liabilities, claims, costs or expenses incurred by such
parties as a result of such acquisition or holding.
Investors in the Subordinate Certificates are urged to obtain from a
transferee of any such Certificate a certification of such transferee's
eligibility to purchase such Certificates in the form of the representation
letter attached hereto as Annex II.
Before purchasing a Certificate, a fiduciary of a Plan should make its own
determination as to the availability of the exemptive relief provided in the
Exemption or the availability of any other prohibited transaction exemptions,
and whether the conditions of any such exemption will be applicable to the
Certificate. Any fiduciary of a Plan considering whether to purchase an Offered
Certificate should also carefully review with its own legal advisors the
applicability of the fiduciary duty and prohibited transaction provisions of
ERISA and Section 4975 of the Code to such investment. See "ERISA
Considerations" in the prospectus.
Ratings
It is a condition to the issuance of the Class I Certificates that the
Class I A Certificates, Class I M-1 Certificates, Class I M-2 Certificates,
Class I B-1 Certificates and Class I B-2 Certificates be rated "AAA," "AA," "A,"
"BBB" and "BBB," respectively, by Standard & Poor's Ratings Service ("S&P") and
"AAA," "AA," "A," "BBB" and "BBB," respectively, by Fitch IBCA, Inc. ("Fitch").
It is a condition to the issuance of the Class II Certificates that the
Class II A-1 Certificates and Class II A-2 Certificates are required to receive
the ratings of "AAA" and "AAA," respectively, by S&P and "Aaa" and "Aaa,"
respectively, by Moody's Investors Service, Inc. ("Moody's" and, together with
S&P and Fitch, the "Rating Agencies").
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. The security ratings of the Offered Certificates should be evaluated
independently of similar security ratings assigned to other kinds of securities.
The ratings assigned by Moody's to pass-through certificates address the
likelihood of the receipt by the related certificateholders of their allocable
share of principal and/or interest on the underlying assets. The ratings
assigned by S&P to pass-through certificates address the likelihood that the
related certificateholder will receive its allocable share of timely payment of
interest and ultimate repayment of principal by the related Last Scheduled
Distribution Date. The ratings assigned by Fitch to pass-through certificates
address the likelihood that the related certificateholder will receive its
allocable share of timely payment of interest and ultimate repayment of
principal by the related Last Scheduled Distribution Date.
Fitch's, S&P's and Moody's ratings take into consideration the credit
quality of the related underlying assets, any credit support arrangements,
structural and legal aspects associated with such Certificates, and the extent
to which the payment stream on such underlying assets is adequate to make
payments required by such Certificates. Among other things, a reduction in the
rating of GreenPoint Bank's paying ability may result in a reduction of the
ratings of the Class I B-2 Certificates. Fitch's, S&P's and Moody's ratings on
such Certificates do not, however, constitute a statement regarding frequency of
prepayments on the underlying assets or as to whether yield may be adversely
affected as a result thereof. Additionally, ratings do not address whether or
not the Class II Certificates will receive any Net Funds Cap Carryover Amount or
the ability of the holder of the Class R Certificates to purchase any Group II
Contract that has been converted to a fixed rate Contract. An
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explanation of the significance of such ratings may be obtained from Fitch IBCA,
Inc., One State Street Plaza, New York, New York 10004, telephone (800) 753-
4824, Standard & Poor's Ratings Services, 55 Water Street, New York, New York
10041, telephone (212) 438-2000 and Moody's Investors Service, Inc., 99 Church
Street, 4th floor, New York, New York 10007, telephone (212) 553-0300.
The Seller has not requested ratings on the Offered Certificates by any
rating agency other than Fitch, S&P and Moody's. However, there can be no
assurance as to whether any other rating agency will rate any or all of the
Offered Certificates, or if it did, what ratings would be assigned to the
Offered Certificates by any such other rating agency. A rating on any or all of
the Offered Certificates by certain other rating agencies, if assigned at all,
may be lower than the rating assigned to such Certificates by Fitch, S&P or
Moody's.
Legal Investment
The Class A Certificates and the Class I M-1 Certificates will constitute
"mortgage related securities" under the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA") so long as they are rated in one of the two
highest categories by at least one nationally recognized statistical rating
organization and, as such, will constitute legal investments for certain types
of investors to the extent provided in SMMEA. The Class I M-2 Certificates,
Class I B-1 Certificates and Class I B-2 Certificates will not constitute
"mortgage related securities" under the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA") since they are not rated in one of the two
highest categories by at least one nationally recognized statistical rating
organization. Such institutions 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
Salomon Smith Barney Inc. (the "Underwriter") has agreed, subject to the
terms and conditions of the Underwriting Agreement, dated May 12, 2000, between
the Seller and the Underwriter ("Underwriting Agreement"), to purchase the
Offered Certificates from the Seller.
In the Underwriting Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all of the Certificates
offered hereby if any Certificates are purchased. The Underwriting Agreement
provides that the Seller will indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the Underwriter may be required to make in respect
thereof. The Underwriter will reimburse certain expenses of the Seller.
The Seller has been advised by the Underwriter that it proposes initially
to offer the Certificates to the public at the prices set forth in this
prospectus supplement, and to certain dealers at such prices, less the initial
concession not in excess of 0.141% of the Class I A Certificate Balance, 0.270%
of the Class I M-1 Certificate Balance, 0.330% of the Class I M-2 Certificate
Balance, 0.165% of the Class II A-1 Certificate Balance and 0.165% of the Class
II A-2 Certificate Balance. The Underwriter may allow dealers, and such dealers
may allow, a concession not in excess of 0.050% of the Class I A Certificate
Balance, 0.135% of the Class I M-1 Certificate Balance, 0.165% of the Class I M-
2 Certificate Balance, 0.135% of the Class II A-1 Certificate Balance and 0.135%
of the Class II A-2 Certificate Balance. After the initial public offering of
the Certificates, the public offering prices and such concessions may be
changed. GreenPoint estimates that it will incur expenses of $850,000 in
connection with this offering.
Each Class of Class I B Certificates may be offered by GreenPoint or one of
its affiliates from time to time directly or through one or more underwriters or
agents in one or more negotiated transactions, or otherwise, at varying prices
to be determined at the time of sale. However, there is currently no
underwriting arrangement in effect for these securities. Proceeds to GreenPoint
or one of its affiliates from any sale of a Class of Class I B
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Certificates will equal the purchase price paid by the purchaser, net of any
expenses payable by GreenPoint or one of its affiliates any compensation payable
to any underwriter or agent.
In connection with the sale of the Certificates, the Underwriter and other
persons participating in the sale may engage in transactions that stabilize,
maintain or otherwise affect the price of the Certificates. Specifically, the
Underwriter may over-allot in connection with the sale, creating a short
position in the Certificates for its own account. To cover over-allotments or
to stabilize the price of the Certificates, the Underwriter may bid for, and
purchase, Certificates in the open market. The Underwriter may also impose a
penalty bid whereby they may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the Certificates, if the Underwriter
repurchases previously distributed Certificates in transactions to cover its
short position, in stabilization transactions or otherwise. Finally, the
Underwriter may bid for, and purchase, Certificates in market making
transactions. These activities may stabilize or maintain the market price of
the Certificates above market levels that may otherwise prevail. The
Underwriter is not required to engage in these activities and may end any of
these activities at any time.
Use of Proceeds
Substantially all of the net proceeds to be received from the sale of the
Offered Certificates will be used by the Seller for general corporate purposes,
including the purchase of the Contracts and the payment of other expenses
connected with pooling the Contracts and issuing the Offered Certificates.
Legal Matters
Certain legal matters relating to the Offered Certificates, including legal
matters relating to material federal income tax consequences concerning the
Offered Certificates, will be passed upon for the Seller by Orrick, Herrington &
Sutcliffe llp, Los Angeles, California and for the Underwriter by Brown & Wood
llp, New York, New York.
Experts
The consolidated balance sheets of MBIA Insurance Corporation and
Subsidiaries as of December 31, 1999 and December 31, 1998 and the related
consolidated statements of income, changes in shareholder's equity and cash
flows for each of the three years in the period ended December 31, 1999,
incorporated by reference into this prospectus supplement, have been
incorporated in this prospectus supplement in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
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Glossary
Below are abbreviated definitions of significant capitalized terms used in
this prospectus supplement. Capitalized terms used in this prospectus
supplement but not defined in this prospectus supplement shall have the meanings
assigned to them in the accompanying prospectus. The Agreement (as defined
below) may contain more complete definitions of the terms used in this
prospectus supplement and reference should be made to the Agreement for a more
complete understanding of all such terms.
"Adjusted Certificate Balance" means, with respect to any Class of
Subordinate Certificates and a Distribution Date, its Certificate Balance less
any Liquidation Loss Amount allocated to such Class on such Distribution Date.
"Agreement" means that certain Pooling and Servicing Agreement, dated as of
May 1, 2000, by and between GreenPoint, as seller and servicer, and Bank One,
National Association, as trustee.
"Auction Rate" means, with respect to the first Distribution Date, the rate
as set by the Underwriter not later than May 17, 2000, which will not exceed the
Maximum Auction Rate (as defined in Annex III hereto). Thereafter, the "Auction
Rate" will be the Auction Rate (as defined in Annex III hereto) established for
the Class II A-2 Certificates for such Distribution Date based upon the Auction
Procedures described in Annex III hereto.
"Available Distribution Amount" for a Group, with respect to each
Distribution Date, is the sum of:
(a) the Monthly Advance (as defined under "Description of the
Certificates--Advances" in this prospectus supplement) relating to the
Contracts in that Group for the related Distribution Date; and
(b) the amount in the related Certificate Account on the close of business
on the last day of the immediately preceding Collection Period, less
the sum of:
(1) any repossession profits, of which there are expected to be a de
minimis amount;
(2) payments on Contracts in that Group that have been repurchased as
a result of a breach of a representation or warranty that are
received during or after the month of repurchase;
(3) Excess Contract Payments and any payments not required to be
distributed to the related certificateholders on the related
Distribution Date;
(4) Liquidation Expenses and certain taxes and insurance premiums
advanced by the servicer in respect of the manufactured homes in
that Group (as described under "Description of the Certificates--
Advances" in this prospectus supplement);
(5) reimbursements to the servicer for Nonrecoverable Advances and
Monthly Advances relating to the Contracts in that Group, to the
extent permitted by the Agreement (as described under
"Description of the Certificates--Advances" in this prospectus
supplement); and
(6) the portion of the Monthly Servicing Fee allocable to that Group.
"Available Funds Shortfall" for a Group, with respect to any Distribution
Date, means the amount, if any, by which the related Available Distribution
Amount, prior to giving effect to any Credit Enhancement Amount related to that
Group plus amounts available from cross-collateralization, if any, is less than
the amount required to be distributed to the Certificates related to that Group
on such Distribution Date in respect of principal and interest pursuant to
"Description of the Certificates--Priority of Distributions."
"Average Sixty-Day Delinquency Ratio" means, with respect to any
Distribution Date, the arithmetic average of the Sixty-Day Delinquency Ratios
for such Distribution Date and the two preceding Distribution
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Dates. The "Sixty-Day Delinquency Ratio" for a Distribution Date is the
percentage derived from the fraction, the numerator of which is the aggregate
Scheduled Principal Balance (as of the end of the preceding Collection Period)
of all Group I Contracts as to which a Scheduled Payment thereon is delinquent
60 days or more as of the end of the related Collection Period, and the
denominator of which is the aggregate Scheduled Principal Balance of all Group I
Contracts for such Distribution Date.
"Certificate Accounts" means, the Group I Certificate Account and the Group
II Certificate Account.
"Certificate Insurance Policy" means the unconditional and irrevocable
certificate insurance policy the issued by MBIA for the benefit of the Class II
Certificates.
"Certificate Shortfall" with respect to any Class of Certificates and a
Distribution Date will equal the excess of that portion of the amount equal to
the Formula Principal Distribution Amount due to such Class on such Distribution
Date over the actual amount of principal distributed to such Class on such
Distribution Date in respect of such amount for such Distribution Date.
"Class A Certificates" means the Class I A Certificates, Class II A-1
Certificates and Class II A-2 Certificates.
"Class I A Formula Principal Distribution Amount" means, with respect to
any Distribution Date, (1) prior to the Cross-over Date, the entire Formula
Principal Distribution Amount related to Group I, (2) on any Distribution Date
as to which the Principal Distribution Tests are not satisfied, the entire
Formula Principal Distribution Amount related to Group I and (3) on any other
Distribution Date, the Class I A Percentage of the Formula Principal
Distribution Amount related to Group I.
"Class I A Percentage" means, with respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than one), the
numerator of which will be the Class I A Certificate Balance and the denominator
of which will be the sum of the Class I A Certificate Balance and the Class I M-
1, Class I M-2, Class I B-1 and Class I B-2 Adjusted Certificate Balances, in
each case determined as of the immediately preceding Distribution Date (or as of
the Closing Date in the case of the first Distribution Date).
"Class I B Certificates" means the Class I B-1 Certificates and the Class I
B-2 Certificates.
"Class I B Formula Principal Distribution Amount" means with respect to any
Distribution Date, (1) so long as the Class I A, Class I M-1 and Class I M-2
Certificate Balances have not been reduced to zero and prior to the Cross-over
Date, zero, (2) on any Distribution Date as to which the Principal Distribution
Tests are not satisfied and the Class I A, Class I M-1 and Class I M-2
Certificate Balances have not been reduced to zero, zero, (3) on any
Distribution Date as to which the Principal Distribution Tests are not satisfied
and the Class I A, Class I M-1 and Class I M-2 Certificate Balances have been
reduced to zero, the entire Formula Principal Distribution Amount related to
Group I and (4) on any other Distribution Date, the Class I B Percentage of the
Formula Principal Distribution Amount related to Group I.
"Class I B Percentage" means, with respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than one), the
numerator of which will be the aggregate of the Class I B-1 Adjusted Certificate
Balance and the Class I B-2 Adjusted Certificate Balance and the denominator of
which will be the sum of the Class I A Certificate Balance and the Class I M-1,
Class I M-2, Class I B-1 and Class I B-2 Adjusted Certificate Balances, in each
case determined as of the immediately preceding Distribution Date (or as of the
Closing Date in the case of the first Distribution Date).
"Class I B-2 Letter of Credit" means the non-cancelable, unconditional and
irrevocable letter of credit issued by GreenPoint Bank to provide credit
enhancement for the benefit of the Class I B-2 certificateholders.
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"Class I B-2 Letter of Credit Draw Amount" means, with respect to any
Distribution Date and the immediately preceding Collection Period, the lesser of
(i) the remaining amount available on the Class I B-2 Letter of Credit and (ii)
the amount by which the aggregate amount distributable to Class I B-2
certificateholders described in "Description of the Certificates--Priority of
Distributions" in this prospectus supplement exceeds the aggregate Available
Distribution Amount for Group I plus amounts available from cross-
collateralization, if any, available for payment of that amount.
"Class I Certificates" means the Class I A Certificates, Class I M-1
Certificates, Class I M-2 Certificates, Class I B-1 Certificates and Class I B-2
Certificates relating to the Group I Contracts.
"Class I M Certificates" means the Class I M-1 Certificates and the Class I
M-2 Certificates.
"Class I M-1 Formula Principal Distribution Amount" means with respect to
any Distribution Date, (1) so long as the Class I A Certificate Balance has not
been reduced to zero and prior to the Cross-over Date, zero, (2) on any
Distribution Date as to which the Principal Distribution Tests are not satisfied
and the Class I A Certificate Balance has not been reduced to zero, zero, (3) on
any Distribution Date as to which the Principal Distribution Tests are not
satisfied and the Class I A Certificate Balance has been reduced to zero, the
entire Formula Principal Distribution Amount related to Group I and (4) on any
other Distribution Date, the Class I M-1 Percentage of the Formula Principal
Distribution Amount related to Group I.
"Class I M-1 Percentage" means, with respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than one), the
numerator of which will be the Class I M-1 Adjusted Certificate Balance and the
denominator of which will be the sum of the Class I A Certificate Balance and
the Class I M-1, Class I M-2, Class I B-1 and Class I B-2 Adjusted Certificate
Balances, in each case determined as of the immediately preceding Distribution
Date (or as of the Closing Date in the case of the first Distribution Date).
"Class I M-2 Formula Principal Distribution Amount" means with respect to
any Distribution Date, (1) so long as the Class I A and Class I M-1 Certificate
Balances have not been reduced to zero and prior to the Cross-over Date, zero,
(2) on any Distribution Date as to which the Principal Distribution Tests are
not satisfied and the Class I A and Class I M-1 Certificate Balances have not
been reduced to zero, zero, (3) on any Distribution Date as to which the
Principal Distribution Tests are not satisfied and the Class I A and Class I M-1
Certificate Balances have been reduced to zero, the entire Formula Principal
Distribution Amount related to Group I and (4) on any other Distribution Date,
the Class I M-2 Percentage of the Formula Principal Distribution Amount related
to Group I.
"Class I M-2 Percentage" means, with respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than one), the
numerator of which will be the Class I M-2 Adjusted Certificate Balance and the
denominator of which will be the sum of the Class I A Certificate Balance and
the Class I M-1, Class I M-2, Class I B-1 and Class I B-2 Adjusted Certificate
Balances, in each case determined as of the immediately preceding Distribution
Date, or as of the Closing Date in the case of the first Distribution Date.
"Class II Certificates" means the Class II A-1 Certificates and the Class
II A-2 Certificates relating to the Group II Contracts.
"Class II Letter of Credit" means the letter of credit issued by GreenPoint
Bank to provide credit enhancement for the benefit of the Class II
certificateholders (or any substitute letter of credit or similar credit
enhancement provided pursuant to the mutual agreement of MBIA and GreenPoint
Bank).
"Class II Letter of Credit Draw Amount" means, with respect to any
Distribution Date and the immediately preceding Collection Period, and for so
long as the Class II Letter of Credit remains in effect, the lesser of (1) the
remaining amount available under the Class II Letter of Credit and (2) the
Available Funds Shortfall related to Group II after giving effect to amounts
available from cross-collateralization, if any.
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"Clearstream, Luxembourg" means Clearstream Banking, societe anonyme, 67 Bd
Grande-Duchesse Charlotte, L-2967 Luxembourg.
"Closing Date" means May 18, 2000.
"Collection Period" means, with respect to the Class I Certificates and the
Class II A-1 Certificates and any Distribution Date, the calendar month
immediately preceding the month of the Distribution Date; and with respect to
the Class II A-2 Certificates and any Distribution Date, the second preceding
calendar month preceding the month of the Distribution Date.
"Credit Enhancement Amount" means, with respect to each Distribution Date,
the Class I B-2 Letter of Credit Draw Amount, Class II Letter of Credit Draw
Amount or Enhancement Payment, as applicable.
"Credit Enhancement Default" means one the following events have occurred:
. a Letter of Credit Default has occurred and is continuing or the Class
II Letter of Credit has been cancelled by the mutual agreement of MBIA
and GreenPoint Bank, without the consent of the seller, the servicer,
the trustee or the certificateholders and the Class II Letter of Credit
has not been replaced or the Class II Letter of Credit is insufficient;
or
. an MBIA Default has occurred and is continuing.
"Cross-over Date" means the later to occur of (1) the Distribution Date
occurring in June 2004 or (2) the first Distribution Date on which the
percentage equivalent of a fraction (which shall not be greater than one), the
numerator of which is the Adjusted Certificate Balance of the Subordinate
Certificates for that Distribution Date, and the denominator of which is the
aggregate Scheduled Principal Balance of the Group I Contracts on that
Distribution Date, equals or exceeds 1.5 times the percentage equivalent of a
fraction (which shall not be greater than one) the numerator of which is the
initial aggregate Adjusted Certificate Balance of the Subordinate Certificates,
and the denominator of which is the aggregate Scheduled Principal Balance of the
Group I Contracts on the Cut-off Date.
"Cumulative Realized Losses" for a Group means, with respect to any
Distribution Date, the amount of realized losses incurred in respect of
Liquidated Contracts in that Group from the Closing Date through the end of the
related Due Period.
"Current Realized Loss Ratio" for a Group means, with respect to any
Distribution Date, the annualized percentage derived from the fraction, the
numerator of which is the sum of the aggregate realized losses for that Group
for the three preceding Collection Periods and the denominator of which is the
arithmetic average of the aggregate Scheduled Principal Balance of the Contracts
in that Group for such Distribution Date and the preceding two Distribution
Dates.
"Cut-off Date" means, with respect to each Contract, the later of the close
of business on (1) April 30, 2000 or (2) the date of origination of that
Contract.
"Deficiency Event" means, with respect to each Group, any Distribution Date
as to which the aggregate Scheduled Principal Balances of the Contracts in that
Group are less than the aggregate Certificate Balances of the Class A
Certificates related to that Group.
"Determination Date" means the third business day prior to each
Distribution Date for the Class I Certificates.
"Distribution Date" means, with respect to the Class I Certificates and the
Class II A-1 Certificates, the 20th day of each month, or, if the 20th day is
not a business day, the next succeeding business day, beginning in June 2000;
and with respect to the Class II A-2 Certificates, the 8th day of each month or,
if the 8th day is not a business day, the next succeeding business day,
beginning in July 2000.
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"Enhancement Payment" means, with respect to any Distribution Date,
payments payable under the Certificate Insurance Policy equal to the amount by
which the aggregate amount distributable to the Class II A-1 and Class II A-2
Certificates described in paragraph B of "Description of the Certificates--
Priority of Distributions" exceeds the Available Distribution Amount for Group
II plus the Class II Letter of Credit Draw Amount, if any, plus any amounts
received from the Group I Certificate Account pursuant to clause A.(13) of
"Description of the Certificates--Priority of Distributions" in this prospectus
supplement.
"Excess Contract Payment" means a payment received on a Contract that is in
excess of the Scheduled Payment or, generally, an integral multiple thereof, on
the Contract, is not a partial principal prepayment or prepayment in full and is
not part of any Liquidation Proceeds. Excess Contract Payments will be held by
the trustee in the Certificate Account and may be applied as described under
"Description of the Certificates--Advances" in this prospectus supplement.
"Formula Principal Distribution Amount" for each Group means, with respect
to each Distribution Date, the sum of:
(1) all scheduled payments of principal due on each outstanding
Contract in that Group during the Collection Period preceding the
month in which the Distribution Date occurs;
(2) the Scheduled Principal Balance of each Contract in that Group
which, during the Collection Period preceding the month of such
Distribution Date, was purchased by GreenPoint pursuant to the
Agreement on account of certain breaches of its representations
and warranties or, with respect to the Group II Contracts,
purchased by the holder of the Class R Certificates pursuant to
the Agreement on account of any variable rate Contract which has
been converted to a fixed rate;
(3) all partial prepayments of principal on the Contracts in that
Group received during such preceding Collection Period;
(4) the Scheduled Principal Balance of each Contract in that Group
that was prepaid in full during such preceding Collection Period;
(5) the Scheduled Principal Balance of each Contract in that Group
that became a Liquidated Contract during such preceding
Collection Period;
(6) the aggregate of all non-cash reductions in the Scheduled
Principal Balance of the Contracts in that Group during such
proceeding Collection Period whether by bankruptcy or other
similar proceeding or other adjustment by the servicer in the
normal course of its servicing activities; and
(7) with respect to the Group II Contracts, any previously
undistributed shortfalls in the amounts in clauses (1) through
(6) above in respect of prior Distribution Dates, other than any
such shortfall with respect to which any Credit Enhancement
Amount has been paid to the related certificateholders.
"Group" means each of the two groups of contracts that are an asset of the
Trust Fund. Group I refers to the Group I Contracts and Group II refers to the
Group II Contracts.
"Group I Certificate Account" means the separate account, related to Group
I, created and initially maintained by the trustee at an Eligible Institution
pursuant to the Agreement for the benefit of the holders of the Class I
Certificates.
"Group II Certificate Account" means the separate account, related to Group
II, created and initially maintained by the trustee at an Eligible Institution
pursuant to the Agreement for the benefit of the holders of the Class II
Certificates.
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"Insurance Agreement" means that certain Master Insurance and Reimbursement
Agreement (as amended or supplemented from time to time), dated as of the
Closing Date, among GreenPoint, the initial holder of the Class R Certificates,
the trustee and MBIA.
"Letter of Credit Default" means the failure by GreenPoint Bank (or a
substitute letter of credit provider if the Class I B-2 Letter of Credit or
Class II Letter of Credit has been replaced) to make a required payment under
the Class I B-2 Letter of Credit or Class II Letter of Credit, as applicable, in
accordance with their respective terms.
"Letter of Credit Draw Amount" means the Class I B-2 Letter of Credit Draw
Amount or Class II Letter of Credit Draw Amount, as applicable.
"LIBOR" means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period) which appears on Telerate
Screen Page 3750 as of 11:00 a.m., London time, on such date. If such rate does
not appear on Telerate Screen Page 3750, the rate for that day will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a period equal to the
relevant Interest Period (commencing on the first day of such Interest Period).
On each LIBOR Determination Date, the trustee will determine LIBOR for the next
Interest Period for the Class II A-1 Certificates. The trustee will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that day will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a period equal to the relevant
Interest Period (commencing on the first day of such Interest Period).
"LIBOR Determination Date" means, with respect to any Interest Period, the
second London business day preceding the commencement of that Interest Period.
For purposes of determining LIBOR, a "London business day" is any day on which
dealings in deposits of United States dollars are transacted in the London
interbank market.
"Low Rate Period" means the period during which Step-Up Rate Contracts bear
interest at their initial Contract Rate.
"MBIA" means MBIA Insurance Corporation and its permitted successors and
assigns.
"MBIA Default" means the failure by MBIA to make a required payment under
the Certificate Insurance Policy in accordance with its terms.
"Monthly Advance" means an advance required by the servicer pursuant to the
Agreement equal to the lesser of:
. delinquent Scheduled Payments of principal and interest on the Contracts
that were due in the preceding Collection Period; or
. the amount, if any, by which scheduled distributions of principal and
interest due on the Certificates exceeds the amount specified in clause
(b) of the definition of the Available Distribution Amount on that
Distribution Date;
except to the extent, in the servicer's sole judgment, the advance would not be
recoverable from related late payments, Liquidation Proceeds or otherwise.
"Net Contract Rate" means, with respect to each Group I Contract, the
related Contract Rate on the first day of the related Collection Period minus
1.00%; and with respect to each Group II Contract, (a) for the first
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twelve Distribution Dates, the related Contract Rate on the first day of the
related Collection Period minus 1.00% and (b) for each Distribution Date
thereafter, the related Contract Rate on the first day of the related Collection
Period minus 1.50%.
"Net Funds Cap" means, with respect to a Group and any Distribution Date, a
per annum rate equal to the average of the Net Contract Rates of the Contracts
in that Group as of the first day of the related Collection Period, weighted on
the basis of the Scheduled Principal Balance of the Contracts in that Group on
the first day of the related Collection Period.
"Net Funds Cap Carryover Amount" means, with respect to the first
Distribution Date, zero. On each subsequent Distribution Date and with respect
to each of the Class II A-1 Certificates and Class II A-2 Certificates, the Net
Funds Cap Carryover Amount means the sum of:
(A) if on such Distribution Date, the applicable Pass-Through Rate for the
Class II A-1 Certificates or the Class II A-2 Certificates is based
upon the related Net Funds Cap, the excess of:
(1) the lesser of:
(a) the product of:
. the Weighted Average Maximum Cap; and
. the Class II A-1 Certificate Balance or Class II A-2
Certificate Balance, as applicable; and
(b) the amount of interest the Class II A-1 Certificates or Class
II A-2 Certificates, as applicable, would otherwise be
entitled to receive on such Distribution Date had such rate
been calculated at LIBOR plus 0.27% with respect to the Class
II A-1 Certificates or the Pass-Through Rate produced by the
Auction Procedures as described in Annex III hereto with
respect to the Class II A-2 Certificates, for such
Distribution Date; over
(2) the amount of interest payable on the Class II A-1 Certificates or
Class II A-2 Certificates, as applicable, at the related Net Funds
Cap for such Distribution Date; and
(B) the related Net Funds Cap Carryover Amount, together with accrued
interest thereon at the Class II A-1 Pass-Through Rate or Class II A-2
Pass-Through Rate, as applicable, in effect on that Distribution Date,
for all previous Distribution Dates not previously paid pursuant to
clause B.(5) under "Description of the Certificates--Priority of
Distributions" in this prospectus supplement.
"Nonrecoverable Advance" means a Monthly Advance or an advance made by the
servicer in respect of certain taxes and insurance premiums not paid by an
Obligor on a timely basis, in each case, that is subsequently deemed, in the
servicer's sole judgment, to be nonrecoverable from related late payments,
Liquidation Proceeds or otherwise.
"Offered Certificates" means the Class I Certificates and the Class II
Certificates.
"Percentage Interest" means the undivided percentage interest of a
Certificate in the distributions on the Class of Certificates to which it
relates which will be equal to the percentage obtained from dividing the
denomination of the Certificate by the Initial Certificate Balance of the Class
of Certificates to which it relates.
"Pool Scheduled Principal Balance" means, with respect to any Distribution
Date, the Cut-off Date Pool Principal Balance, less the aggregate of the Formula
Principal Distribution Amounts (exclusive of the amounts in clause (7) of the
definition thereof) for all prior Distribution Dates.
"Principal Distribution Tests" for Group I will be satisfied in respect of
a Distribution Date if the following conditions are met: (1) the Average Sixty-
Day Delinquency Ratio for Group I does not exceed 6.00%; (2) Cumulative Realized
Losses for Group I do not exceed certain specified percentages of the aggregate
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Scheduled Principal Balance of the Group I Contracts, which percentages will
depend on the year in which the related Distribution Date occurs; and (3) the
Current Realized Loss Ratio for Group I does not exceed 3.50%.
"Record Date" means, with respect to the Class I Certificates and each
Distribution Date, the close of business on the last business day of the
calendar month preceding the related Distribution Date and with respect to the
Class II Certificates and each Distribution Date, means the business day
preceding that Distribution Date.
"Reference Banks" means leading banks selected by the trustee and engaged
in transactions in Eurodollar deposits in the international Eurocurrency market.
"Special Account" means the account established and maintained in
accordance with the terms of the Insurance Agreement.
"Step-Up Rate Contracts" means Group I Contracts with a fixed Contract Rate
that will "step-up" to a pre-determined higher rate of interest set forth in
that Contract after a one year period and in some cases "step-up" a second time
pursuant to the terms of the applicable Contract.
"Subordinate Certificates" means the Class I M Certificates and the Class I
B Certificates.
"Telerate Screen Page 3750" means the display page so designated on the
Bridge Telerate Capital Markets Report, or such other page as may replace page
3750 on such service for the purpose of displaying London interbank offered
rates of major banks. If the rate does not appear on that page, or some other
page as may replace that page on such service, or if the service is no longer
offered, some other service for displaying LIBOR or comparable rates as may be
selected by the trustee after consultation with the servicer.
"Trust Fund" means all of the assets of the trust fund created by
GreenPoint to issue the GreenPoint Credit Manufactured Housing Contract Trust
Pass-Through Certificates, Series 2000-3.
"Twelve-Month LIBOR" means, the average of interbank offered rates for one
year U.S. dollar denominated deposits in the London market based on the
quotation of major banks listed as the "1-Year London Interbank Offered Rates
Index" found in the Wall Street Journal, Money & Investing section, under the
"Money Rates" table.
"Unpaid Certificate Shortfall Amount" with respect to any Class of
Certificates and a Distribution Date will equal the amount, if any, by which the
aggregate unreimbursed Certificate Shortfalls on such Class of Certificates for
one or more prior Distribution Dates exceeds the amount previously distributed
on such Class of Certificates in respect of Certificate Shortfalls on such prior
Distribution Dates.
"Unpaid Liquidation Loss Interest Shortfall" with respect to any Class of
Certificates and a Distribution Date will equal the amount, if any, by which the
aggregate unreimbursed Liquidation Loss Interest Amounts on such Class of
Certificates for one or more prior Distribution Dates exceeds the amount
previously distributed on such Class of Certificates in respect of Liquidation
Loss Interest Amounts on such prior Distribution Dates.
"Weighted Average Maximum Cap" means, with respect to any Distribution
Date, the weighted average of the Maximum Caps of the Group II Contracts on such
Distribution Date or with respect to any Group II Contract that has converted
from a variable rate to a fixed rate and has not been repurchased by the Class R
certificateholders, the applicable fixed rate, multiplied by a fraction, the
numerator of which is the actual number of days elapsed in the related Interest
Period and the denominator of which is 360.
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Annex I
Global Clearance, Settlement and
Tax Documentation Procedures
Except in certain limited circumstances, the globally offered GreenPoint
Manufactured Housing Contract Trust Pass-Through Certificates, Series 2000-3
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of DTC,
Clearstream, Luxembourg or Euroclear. The Global Securities will be tradable as
home market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Clearstream, Luxembourg and Euroclear will be conducted in the ordinary
way in accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream, Luxembourg or Euroclear
and Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Clearstream, Luxembourg and
Euroclear (in such capacity) and as Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
Initial Settlement for the Global Securities will be in immediately
available funds.
Investors electing to hold their Global Securities through DTC (other than
through accounts at Euroclear or Clearstream, Luxembourg) will follow the
settlement practices applicable to U.S. corporate debt obligations. The
securities custody accounts of investors will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Euroclear or
Clearstream, Luxembourg accounts will follow the settlement procedures
applicable to conventional Eurobonds in registered form. Global Securities will
be credited to the securities custody accounts of Euroclear and Clearstream,
Luxembourg holders on the business day following the settlement date against
payment for value on the settlement date.
Secondary Market Trading
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trading of any Global Securities where both the
purchaser's and seller's accounts are located to ensure that settlement can be
made on the desired value date.
Trading Between DTC Participants. Secondary market trading between
Participants (other than Morgan Guaranty Trust Company of New York ("Morgan")
and Citibank, N.A. ("Citibank") as depositories for Euroclear and Clearstream,
Luxembourg respectively) will be settled using the procedures applicable to U.S.
corporate debt obligations in same-day funds.
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Trading Between Euroclear Participants and/or Clearstream, Luxembourg
Customers. Secondary market trading between Euroclear Participants and/or
Clearstream, Luxembourg customers will be settled using the procedures
applicable to conventional eurobonds in same-day funds.
Trading Between DTC Seller and Euroclear or Clearstream, Luxembourg
Purchaser. When Global Securities are to be transferred from the account of a
Participant (other than Morgan and Citibank as depositories for Euroclear and
Clearstream, Luxembourg, respectively) to the account of a Euroclear Participant
or a Clearstream, Luxembourg customer, the purchaser must send instructions to
Clearstream, Luxembourg before settlement date 12:30. Euroclear or Clearstream,
Luxembourg, as the case may be, will instruct Morgan or Citibank respectively,
to receive the Global Securities against payment. Payment will then be made by
Morgan or Citibank as the case may be, to the Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Euroclear
Participants' or Clearstream, Luxembourg customers' accounts. Credit for the
Global Securities will appear on the next day (European time) and cash debit
will be back-valued to, and the interest on the Notes will accrue from the value
date (which would be the preceding day when settlement occurs in New York). If
settlement is not completed on the intended value date (i.e. the trade fails),
the Euroclear or Clearstream, Luxembourg cash debit will be valued instead as of
the actual settlement date.
Euroclear Participants and Clearstream, Luxembourg customers will need to
make available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Euroclear or Clearstream,
Luxembourg. Under this approach, they may take on credit exposure to Euroclear
or Clearstream, Luxembourg until the Global Securities are credited to their
accounts one-day later.
As an alternative, if Euroclear or Clearstream, Luxembourg has extended a
line of credit to them, participants/customers can elect not pre-position funds
and allow that credit line to be drawn upon to finance settlement. Under this
procedure, Euroclear Participants or Clearstream, Luxembourg customers
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the
value date. Therefore, in many cases, the investment income on Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges, although this result will depend on each
participant's/customer's particular cost of funds.
Because the settlement is taking place during New York business hours,
Participants can employ their usual procedures for sending Global Securities to
Morgan or Citibank for the benefit of Euroclear participants or Clearstream,
Luxembourg customers. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the Participant, a cross-market transaction will
settle no differently from a trade between two Participants.
Trading Between Euroclear or Clearstream, Luxembourg Seller and DTC
Purchaser. Due to time zone differences in their favor, Euroclear Participants
and Clearstream, Luxembourg customers may employ their customary procedures for
transactions in which Global Securities are to be transferred by the respective
clearing system, through Morgan or Citibank, to another Participant. The seller
must send instructions to Clearstream, Luxembourg before settlement date 12:30.
In these cases, Euroclear or Clearstream, Luxembourg will instruct Morgan or
Citibank, as appropriate, to credit the Global Securities to the Participant's
account against payment. The payment will then be reflected in the account of
the Euroclear Participant or Clearstream, Luxembourg customer the following
business day, and receipt of the cash proceeds in the Euroclear Participant's or
Clearstream, Luxembourg customers' account will be back-valued to the value date
(which would be the preceding day, when settlement occurs in New York). If the
Euroclear Participant or Clearstream, Luxembourg customer has a line of credit
with its respective clearing system and elects to draw on such line of credit in
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anticipation of receipt of the sale proceeds in its account, the back-valuation
may substantially reduce or offset any overdraft charges incurred over that one-
day period. If settlement is not completed on the intended value date (i.e.
the trade fails), receipt of the cash proceeds in the Euroclear Participant's or
Clearstream, Luxembourg customer's account would instead be valued as of the
actual settlement date.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
Clearstream, Luxembourg or Euroclear (or through DTC if the holder has an
address outside the U.S.) will be subject to the 30% U.S. withholding tax that
generally applies to payments of interest (including "original issue discount")
on registered debt issued by U.S. Persons, unless, under currently applicable
laws, (i) each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8 or Form W-8BEN). Beneficial
owners of Global Securities that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status) or Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding). If the information shown on Form W-8
or Form W-8BEN changes, a new Form W-8 must be filed within 30 days of such
change. After December 31, 2000, only Form W-8BEN will be acceptable.
Exemption for non-U.S. Persons with effectively connected income (Form 4224
or Form W-8ECI). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax
on Income Effectively Connected with the Conduct of a Trade or Business in the
United States) or Form W-8ECI (Certificate of Foreign Person's Claim for
Exemption from Withholding on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001 or Form W-8BEN). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate) or Form W-8BEN
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding). If Form 1001 is provided and the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Certificate Owner
or his agent. After December 31, 2000, only Form W-8BEN will be acceptable.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8, Form 1001 and Form 4224 are effective until
December 31, 2000. Form W-8BEN and Form -8ECI are effective until the third
succeeding calendar year from the date the form is signed. The term "U.S.
Person" means (i) a citizen or resident of the United States, (ii) a corporation
or partnership organized in or under the laws of the United States, any State
thereof or the District of Columbia, or (iii) an estate or trust the income of
which is includible in gross income for United States tax purposes, regardless
of its source. This summary does not deal with all aspects of U.S. Federal
income tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice
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concerning their holding and disposing of the Global Securities. Further, the
U.S. Treasury Department has recently finalized new regulations that will revise
some aspects of the current system for withholding on amounts paid to foreign
persons. Under these regulations, interest or "original issue discount" paid to
a nonresident alien would continue to be exempt from U.S. withholding taxes
(including backup withholding) provided that the holder complies with the new
certification procedures.
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Annex II
ERISA Representation Letter
[date]
GreenPoint Credit, LLC
10089 Willow Creek Road
San Diego, California 92131
Bank One, National Association
Global Corporate Trust Services
One North State Street, 9th Floor
Chicago, Illinois 60670
Re: GreenPoint Credit Manufactured Housing Contract Trust
Pass-Through Certificates, Series 2000-3--Class [ ] Certificates
Dear Ladies and Gentlemen:
[ ] (the "Purchaser") intends to purchase from [ ]
(the "Seller") $[ ] initial Certificate Balance of the above-
referenced certificates (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of May 1,
2000, among GreenPoint Credit, LLC, as seller and servicer ("GreenPoint") and
Bank One, National Association, as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement.
The Purchaser hereby certifies, represents and warrants to, and covenants
with GreenPoint and the Trustee that, either:
(a) The Purchaser is not an employee benefit or other plan subject to
the prohibited transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal
Revenue Code of 1986, as amended (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any Plan within the meaning of the U.S. Department of
Labor ("DOL") regulation at 29 C.F.R.(S)2510.3-101; or
(b) The Purchaser is an insurance company, the source of funds to be
used by which to purchase the Certificates is an "insurance company general
account" (as such term is defined in DOL Prohibited Transaction Class
Exemption ("PTCE") 95-60), and the conditions set forth in Sections I and
III of PTCE 95-60 have been satisfied.
In addition, the Purchaser hereby certifies, represents and warrants to,
and covenants with GreenPoint and the Trustee that the Purchaser will not
transfer the Certificates to any Plan or person unless such Plan or person meets
the requirements set forth in either (a) or (b) above.
Very truly yours,
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
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Annex III
Auction Procedures
The following description of the Auction Procedures applies to the Class II
A-2 Certificates. The term "Certificate," as used in this Annex, refers to the
Class II A-2 Certificates, and the term "Certificateholder" refers to
Certificateholders holding the Class II A-2 Certificates.
Definitions
Capitalized terms used in this Annex III and not otherwise defined have the
meanings ascribed to them in the accompanying prospectus supplement.
Additionally, the following terms have the meanings ascribed to them:
"All Hold Rate" means for any Interest Period ninety percent (90%) of LIBOR
for such period.
"Auction" means the implementation of the Auction Procedures on an Auction
Date.
"Auction Agent" means Bankers Trust Company, a New York banking
corporation, or any successor appointed under the Auction Agent Agreement.
"Auction Agent Agreement" means the Auction Agent Agreement, to be entered
into as of the Closing Date, among the trustee, the Auction Agent and GreenPoint
Bank, as holder of the Class R Certificates.
"Auction Agent Fee" means the fee paid to the Auction Agent pursuant to the
Auction Agent Agreement.
"Auction Date" means the Business Day immediately preceding the first day
of each Auction Period, commencing in July 2000, other than:
(1) each Auction Period commencing after the Certificates are no longer
Book-Entry Certificates;
(2) each Auction Period commencing after and during the continuance of an
MBIA Default; or
(3) each Auction Period commencing less than two Business Days after the
cure or waiver of an MBIA Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to the Auction Agent Agreement, as described in this
prospectus supplement.
"Auction Period" means the Interest Period for the Class II A-2
Certificates.
"Auction Procedures" means the procedures set forth in the Agreement, and
described in this prospectus supplement by which the Auction Rate is determined.
"Auction Rate" means the rate of interest per annum that results from the
implementation of the Auction Procedures.
"Authorized Denominations" means $25,000 and integral multiples of $25,000
in excess thereof.
"Broker-Dealer" means Salomon Smith Barney Inc. or any other broker or
dealer (each as defined in the Securities Exchange Act of 1934, as amended),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures that (a) is a
Participant (or an affiliate of a Participant), (b) has been appointed as such
by the servicer, with the consent of the Market Agent and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
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<PAGE>
"Broker-Dealer Agreement" means the Broker-Dealer Agreement, to be entered
into as of the Closing Date, among the Auction Agent, the Broker-Dealer and
GreenPoint Bank, as holder of the Class R Certificates and each other agreement
among the Auction Agent, the holder of the Class R Certificates and an eligible
Broker-Dealer, as from time to time, amended or supplemented.
"Broker-Dealer Fee" means the fee paid to the Broker-Dealer pursuant to the
Broker-Dealer Agreement.
"Business Day" means any day other than (i) a Saturday or Sunday or (ii) a
day on which the New York Stock Exchange or banking institutions in the States
of New York, Illinois or California are authorized or obligated by law or
executive order to be closed.
"Existing Certificateholder" means (i) with respect to and for the purpose
of dealing with the Auction Agent in connection with an Auction, a Person who is
a Broker-Dealer listed in the Existing Certificateholder Registry at the close
of business on the Business Day immediately preceding such Auction and (ii) with
respect to and for the purpose of dealing with the Broker-Dealer in connection
with an Auction, a Person who is a beneficial owner of any Certificate.
"Existing Certificateholder Registry" means the registry of Persons who are
owners of the Class II A-2 Certificates maintained by the Auction Agent as
provided in the Auction Agent Agreement.
"Market Agent" means Salomon Smith Barney Inc.
"Maximum Auction Rate" means (A) LIBOR plus 1.00% (if the ratings assigned
by the Rating Agencies to the Class II A-2 Certificates are "AAA" and "Aaa"),
(B) LIBOR plus 1.25% (if the ratings assigned by the Rating Agencies to the
Class II A-2 Certificates are "AA" and "Aa2" or better, unless the requirements
of (A) above are satisfied), (C) LIBOR plus 2.00% (if the ratings assigned by
the Rating Agencies to the Class II A-2 Certificates are "A" and "A2" or better,
unless the requirements of (A) or (B) above are satisfied) or (D) LIBOR plus
3.50% (if any one of the ratings assigned by the Rating Agencies to the Class II
A-2 Certificates is less than "A" or "A2"). For purposes of the Auction Agent
and the Auction Procedures, the ratings referred to in this definition shall be
the last rating of which the Auction Agent has been given notice pursuant to the
Auction Agent Agreement.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any such agency or political subdivision thereof.
"Potential Certificateholder" means any Person (including an Existing
Certificateholder that is (i) a Broker-Dealer when dealing with the Auction
Agent and (ii) a potential beneficial owner when dealing with a Broker-Dealer)
who may be interested in acquiring Class II A-2 Certificates (or, in the case of
an Existing Certificateholder thereof, an additional principal amount of Class
II A-2 Certificates).
"Rate Adjustment Date" means the date on which the Class II A-2 Pass-
Through Rate is effective and means, with respect to each Certificate, the date
of commencement of each Auction Period.
"Rate Determination Date" means the Auction Date, or if no Auction Date is
applicable, the Business Day immediately preceding the date of commencement of
an Auction Period.
"Reference Banks" means leading banks selected by the Auction Agent and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.
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<PAGE>
Existing Certificateholders and Potential Certificateholders
Participants in each Auction may include: (i) Existing Certificateholders
as of the close of business on the Business Day preceding each Auction Date
according to the records of the Auction Agent; and (ii) Potential
Certificateholders. See "--Broker-Dealer."
By purchasing a Class II A-2 Certificate, whether in an Auction or
otherwise, each prospective purchaser of the Class II A-2 Certificates or its
Broker-Dealer must agree and will be deemed to have agreed: (i) to participate
in Auctions on the terms described in this prospectus supplement; (ii) so long
as the beneficial ownership of the Class II A-2 Certificates is maintained in
book-entry form to sell, transfer or otherwise dispose of the Class II A-2
Certificates only pursuant to a Bid (as defined below) or a Sell Order (as
defined below) in an Auction, or to or through a Broker-Dealer, provided that in
the case of all transfers other than those pursuant to an Auction, the Existing
Certificateholder of the Class II A-2 Certificates so transferred, its
Participant or Broker-Dealer advises the Auction Agent of such transfer; (iii)
to have its beneficial ownership of the Class II A-2 Certificates maintained at
all times in book-entry form for the account of its Participant, which in turn
will maintain records of such beneficial ownership, and to authorize such
Participant to disclose to the Auction Agent such information with respect to
such beneficial ownership as the Auction Agent may request; (iv) that a Sell
Order placed by an Existing Certificateholder will constitute an irrevocable
offer to sell the principal amount of the Class II A-2 Certificate specified in
such Sell Order; (v) that a Bid placed by an Existing Certificateholder will
constitute an irrevocable offer to sell the principal amount of the Class II A-2
Certificates specified in such Bid if the rate specified in such Bid is greater
than, or in some cases equal to, the Class II A-2 Pass-Through Rate determined
as described in this prospectus supplement; and (vi) that a Bid placed by a
Potential Certificateholder will constitute an irrevocable offer to purchase the
amount, or a lesser principal amount, of the Class II A-2 Certificate specified
in such Bid if the rate specified in such Bid is, respectively, less than or
equal to the Class II A-2 Pass-Through Rate then in effect, determined as
described in this prospectus supplement.
The principal amount of the Class II A-2 Certificates purchased or sold may
be subject to proration procedures on the Auction Date. Each purchase or sale
of the Class II A-2 Certificates on the Auction Date will be made for settlement
on the first day of the Auction Period immediately following such Auction Date
at a price equal to 100% of the principal amount thereof, plus accrued but
unpaid interest thereon. The Auction Agent is entitled to rely upon the terms
of any Order submitted to it by a Broker-Dealer.
Auction Agent
Bankers Trust Company, a New York banking corporation, will be appointed as
Auction Agent to serve as agent for the Trust Fund in connection with Auctions.
The trustee will enter into the Auction Agent Agreement with Bankers Trust
Company as the Auction Agent. Any substitute Auction Agent ("Substitute Auction
Agent") will be (i) a bank, national banking association or trust company duly
organized under the laws of the United States of America or any state or
territory thereof having its principal place of business in the Borough of
Manhattan, New York, or such other location as approved by the trustee and the
Market Agent in writing and having a combined capital stock or surplus of at
least $50,000,000, or (ii) a member of the National Association of Securities
Dealers, Inc. having a capitalization of at least $50,000,000, and, in either
case, authorized by law to perform all the duties imposed upon it under the
Auction Agent Agreement and approved by MBIA in writing. The Auction Agent may
at any time resign by giving at least 90 days notice to the trustee, MBIA and
the Market Agent. The Auction Agent may be removed at any time by the trustee
upon the written direction of MBIA, or, with the consent of MBIA, the
Certificateholders holding 66-2/3% of the aggregate principal amount of the
Class II A-2 Certificates then outstanding, by an instrument signed by MBIA or
such Certificateholders or their attorneys and filed with the Auction Agent, the
trustee and the Market Agent upon at least 90 days notice. Neither resignation
nor removal of the Auction Agent pursuant to the preceding two sentences will be
effective until and unless a Substitute Auction Agent has been appointed, has
been approved in writing by MBIA and has accepted such appointment. If required
by MBIA, Certificateholders holding 66-2/3% of the aggregate principal amount of
the Class II A-2 Certificates then outstanding or by the Market Agent, a
substitute Auction Agent
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<PAGE>
Agreement shall be entered into with a Substitute Auction Agent. Notwithstanding
the foregoing, the Auction Agent may terminate the Auction Agent Agreement if,
within 25 days after notifying the trustee, MBIA and the Market Agent in writing
that it has not received payment of any Auction Agent Fee due it in accordance
with the Auction Agent Agreement, the Auction Agent does not receive such
payment.
If the Auction Agent should resign or be removed or be dissolved, or if the
property or affairs of the Auction Agent shall be taken under the control of any
state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, the trustee, with the consent of MBIA
(after receipt of a Certificate from the Market Agent confirming that any
proposed Substitute Auction Agent meets the requirements described in the
immediately preceding paragraph above), shall use its best efforts to appoint a
Substitute Auction Agent.
The Auction Agent is acting as agent for the Trust Fund in connection with
Auctions. In the absence of bad faith, negligent failure to act or negligence
on its part, the Auction Agent will not be liable for any action taken, suffered
or omitted or any error of judgment made by it in the performance of its duties
under the Auction Agent Agreement and will not be liable for any error of
judgment made in good faith unless the Auction Agent will have been negligent in
ascertaining (or failing to ascertain) the pertinent facts. Pursuant to the
Auction Agent Agreement, the holder of the Class R Certificates will pay the
Auction Agent the Auction Agent Fee. To the extent funds are available as
described in "Description of the Certificates--Priority of Distributions" in
this prospectus supplement, the Trust Fund will indemnify and hold harmless the
Auction Agent for and against any loss, liability or expense incurred without
negligence or bad faith on the Auction Agent's part, arising out of or in
connection with the acceptance or administration of its agency under the Auction
Agent Agreement and any Broker-Dealer Agreement, including the reasonable costs
and expenses (including the reasonable fees and expenses of its counsel) of
defending itself against any such claim or liability in connection with its
exercise or performance of any of its respective duties thereunder and of
enforcing this indemnification provision; provided that the Trust Fund will not
indemnify the Auction Agent as described in this paragraph for any fees and
expenses incurred by the Auction Agent in the normal course of performing its
duties under the Auction Agent Agreement and under any Broker-Dealer Agreement,
such fees and expenses being payable as described above.
Broker-Dealer
Existing Certificateholders and Potential Certificateholders may
participate in Auctions only by submitting orders (in the manner described
below) through a Broker-Dealer.
Each Broker-Dealer is entitled to a Broker-Dealer Fee, which is payable by
the holder of the Class R Certificates pursuant to the related Broker-Dealer
Agreement.
Auction Procedures
General
Pursuant to the Auction Agent Agreement, Auctions to establish the Auction
Rate for the Class II A-2 Certificates issued by the Trust Fund will be held on
each applicable Auction Date, except as described below, by application of the
Auction Procedures described in this prospectus supplement.
In the event the ownership of the Class II A-2 Certificates is no longer
maintained in book-entry form by DTC, no further Auctions will be held.
The Auction Agent will calculate the Maximum Auction Rate, the All Hold
Rate and LIBOR on each Auction Date. The trustee will calculate and, no later
than the Business Day preceding each Auction Date, will report to the Auction
Agent in writing, the Net Funds Cap. If the Class II A-2 Certificates are no
longer maintained in book-entry form, the trustee will calculate the Maximum
Auction Rate on the Business Day immediately preceding the first day of each
Auction Period. If an MBIA Default has occurred, the trustee will
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<PAGE>
calculate the Maximum Auction Rate on the Rate Determination Date for (i) each
Auction Period commencing after the occurrence and during the continuance of
such MBIA Default and (ii) any Auction Period commencing less than two Business
Days after the cure of any MBIA Default. The Auction Agent will determine LIBOR
for each Auction Period; provided, that if the ownership of the Certificates is
no longer maintained in book-entry form, or if an MBIA Default has occurred,
then the trustee will determine LIBOR for each such Auction Period. The
determination by the trustee or the Auction Agent, as the case may be, of LIBOR
will (in the absence of manifest error) be final and binding upon the
Certificateholders and all other parties. If calculated or determined by the
Auction Agent, the Auction Agent will promptly advise the trustee of LIBOR.
Submission of Orders
So long as the ownership of the Class II A-2 Certificates is maintained in
book-entry form, an Existing Certificateholder may sell, transfer or otherwise
dispose of Class II A-2 Certificates pursuant to a Bid or Sell Order (as
hereinafter defined) placed in an Auction only through a Broker-Dealer, provided
that, in the case of all transfers other than pursuant to Auctions, such
Existing Certificateholder, its Broker-Dealer or its Participant advises the
Auction Agent of such transfer. Auctions for the Class II A-2 Certificates will
be conducted on each applicable Auction Date, if there is an Auction Agent on
such Auction Date, in the following manner.
Prior to the "Submission Deadline" (defined as 1:00 p.m., eastern time, on
any Auction Date or such other time on any Auction Date by which Broker-Dealers
are required to submit Orders to the Auction Agent as specified by the Auction
Agent from time to time) on each Auction Date relating to a Certificate:
(a) each Existing Certificateholder may submit to a Broker-Dealer by
telephone or otherwise information as to: (i) the principal amount of Class II
A-2 Certificates held by such Existing Certificateholder which such Existing
Certificateholder desires to continue to hold without regard to the Class II A-2
Pass-Through Rate for the next succeeding Auction Period (a "Hold Order"); (ii)
the principal amount of Class II A-2 Certificates which such Existing
Certificateholder offers to sell if the Class II A-2 Pass-Through Rate for the
next succeeding Auction Period will be less than the rate per annum specified by
such Existing Certificateholder (a "Bid"); and/or (iii) the principal amount of
Class II A-2 Certificates held by such Existing Certificateholder which such
Existing Certificateholder offers to sell without regard to the Class II A-2
Pass-Through Rate for the next succeeding Auction Period (a "Sell Order"); and
(b) the Broker-Dealer may contact Potential Certificateholders to determine
the principal amount of Class II A-2 Certificates which each such Potential
Certificateholder offers to purchase, if the Class II A-2 Pass-Through Rate for
the next succeeding Auction Period will not be less than (and in some cases
equal to) the rate per annum specified by such Potential Certificateholder (also
a "Bid").
Each Hold Order, Bid and Sell Order will be an "Order." Each Existing
Certificateholder and each Potential Certificateholder placing an Order is
referred to as a "Bidder."
Subject to the provisions described below under "Validity of Orders," a Bid
by an Existing Certificateholder will constitute an irrevocable offer to sell:
(i) the principal amount of Class II A-2 Certificates specified in such Bid if
the Class II A-2 Pass-Through Rate will be less than the rate specified in such
Bid, (ii) such principal amount or a lesser principal amount of Class II A-2
Certificates to be determined as described below in "Acceptance and Rejection of
Orders," if the Class II A-2 Pass-Through Rate will be equal to the rate
specified in such Bid or (iii) such principal amount or a lesser principal
amount of the Class II A-2 Certificates to be determined as described below
under "Acceptance and Rejection of Orders," if the Class II A-2 Pass-Through
Rate is less than the rate specified in such Bid and Sufficient Bids (as defined
below) have not been made.
Subject to the provisions described below under "Validity of Orders," a
Sell Order by an Existing Certificateholder will constitute an irrevocable offer
to sell: (i) the principal amount of the Class II A-2 Certificate specified in
such Sell Order or (ii) such principal amount or a lesser principal amount of
Class II A-2 Certificate as described below under "Acceptance and Rejection of
Orders," if Sufficient Bids have not been made.
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<PAGE>
Subject to the provisions described below under "Validity of Orders," a Bid
by a Potential Certificateholder will constitute an irrevocable offer to
purchase (i) the principal amount of the Class II A-2 Certificate specified in
such Bid if the Class II A-2 Pass-Through Rate will be higher than the rate
specified in such Bid or (ii) such principal amount or a lesser principal amount
as described below in "Acceptance and Rejection of Orders," if the Class II A-2
Pass-Through Rate is equal to the rate specified in such Bid.
The Broker-Dealer will submit in writing to the Auction Agent prior to the
Submission Deadline on each Auction Date all Orders obtained by such Broker-
Dealer and will specify with respect to each such Order: (i) the name of the
Bidder placing such Order; (ii) the aggregate principal amount that is the
subject of such order; (iii) to the extent that such Bidder is an Existing
Certificateholder: (a) the principal amount of the Class II A-2 Certificates
subject to any Hold Order placed by such Existing Certificateholder; (b) the
principal amount subject to any Bid placed by such Existing Certificateholder
and the rate specified in such Bid; and (c) the principal amount subject to any
Sell Order placed by such Existing Certificateholder, and (iv) to the extent
such Bidder is a Potential Certificateholder, the rate specified in such
Potential Certificateholder's Bid.
If any rate specified in any Bid contains more than three figures to the
right of the decimal point, the Auction Agent will round such rate up to the
next highest one-thousandth (.001) of one percent.
If an Order or Orders covering the Class II A-2 Certificates held by any
Existing Certificateholder are not submitted to the Auction Agent prior to the
Submission Deadline, the Auction Agent will deem a Hold Order to have been
submitted on behalf of such Existing Certificateholder covering the principal
amount of Class II A-2 Certificates held by such Existing Certificateholder and
not subject to an Order submitted to the Auction Agent.
Neither the Seller, the trustee nor the Auction Agent will be responsible
for any failure of the Broker-Dealer to submit an Order to the Auction Agent on
behalf of any Existing Certificateholder or Potential Certificateholder.
An Existing Certificateholder may submit multiple Orders, of different
types and specifying different rates, in an Auction with respect to Class II A-2
Certificates then held by such Existing Certificateholder. An Existing
Certificateholder that offers to purchase additional Class II A-2 Certificates
is, for purposes of such offer, treated as a Potential Certificateholder.
Any Bid specifying a rate higher than the Maximum Auction Rate will (i) be
treated as a Sell Order if submitted by an Existing Certificateholder and (ii)
not be accepted if submitted by a Potential Certificateholder.
Validity of Orders
If any Existing Certificateholder submits through a Broker-Dealer to the
Auction Agent one or more Orders covering in the aggregate more than the
principal amount of the Class II A-2 Certificates held by such Existing
Certificateholder, such Orders will be considered valid as follows and in the
order of priority described below.
Hold Orders. All Hold Orders will be considered valid, but only up to the
aggregate principal amount of the Class II A-2 Certificates held by such
Existing Certificateholder.
Bids. Any Bid will be considered valid up to an amount equal to the excess
of the principal amount of the Class II A-2 Certificates held by such Existing
Certificateholder over the aggregate principal amount of the Class II A-2
Certificates subject to any Hold Orders referred to above. Subject to the
preceding sentence, if multiple Bids with the same rate are submitted on behalf
of such Existing Certificateholder and the aggregate principal amount of Class
II A-2 Certificates subject to such Bids is greater than such excess, such Bids
will be considered valid up to an amount equal to such excess. Subject to the
two preceding sentences, if more than one Bid with different rates is submitted
on behalf of such Existing Certificateholder, such Bids will be considered valid
first in the ascending order of their respective rates until the highest rate is
reached at which such excess exists and then
III-6
<PAGE>
at such rate up to the amount of such excess. In any event, the aggregate
principal amount of Class II A-2 Certificates, if any, subject to Bids not valid
under the provisions described above will be treated as the subject of a Bid by
a Potential Certificateholder at the rate therein specified.
Sell Orders. All Sell Orders will be considered valid up to an amount
equal to the excess of the principal amount of Class II A-2 Certificates held by
such Existing Certificateholder over the aggregate principal amount of
Certificates subject to valid Hold Orders and valid Bids as referred to above.
If more than one Bid for a Class II A-2 Certificate is submitted on behalf
of any Potential Certificateholder, each Bid submitted will be a separate Bid
with the rate and principal amount therein specified. Any Bid or Sell Order
submitted by an Existing Certificateholder covering an aggregate principal
amount of Class II A-2 Certificates not equal to an Authorized Denomination or
an integral multiple thereof will be rejected and will be deemed a Hold Order.
Any Bid submitted by a Potential Certificateholder covering an aggregate
principal amount of Class II A-2 Certificates not equal to an Authorized
Denomination or an integral multiple thereof will be rejected. Any Order
submitted in an Auction by the Broker-Dealer to the Auction Agent prior to the
Submission Deadline on any Auction Date will be irrevocable.
A Hold Order, a Bid or a Sell Order that has been determined valid pursuant
to the procedures described above is referred to as a "Submitted Hold Order," a
"Submitted Bid" and a "Submitted Sell Order," respectively (collectively,
"Submitted Orders").
Determination of Sufficient Bid and Bid Auction Rate
Not earlier than the Submission Deadline on each Auction Date, the Auction
Agent will assemble all valid Submitted Orders and will determine:
(a) the excess of the total principal amount of Class II A-2 Certificates
over the sum of the aggregate principal amount of such Certificates
subject to Submitted Hold Orders (such excess being in this prospectus
hereinafter referred to as the "Available Certificates");
(b) from such Submitted Orders whether the aggregate principal amount of
Class II A-2 Certificates subject to Submitted Bids by Potential
Certificateholders specifying one or more rates equal to or lower than
the Maximum Auction Rate exceeds or is equal to the sum of (i) the
aggregate principal amount of Class II A-2 Certificates subject to
Submitted Bids by Existing Certificateholders specifying one or more
rates higher than the Maximum Auction Rate and (ii) the aggregate
principal amount of Class II A-2 Certificates subject to Submitted Sell
Orders (in the event such excess or such equality exists other than
because all of the Class II A-2 Certificates are subject to Submitted
Hold Orders, such Submitted Bids by Potential Certificateholders above
will be in this prospectus hereinafter referred to collectively as
"Sufficient Bids"); and
(c) if Sufficient Bids exist, the "Bid Auction Rate," which will be the
lowest rate specified in such Submitted Bids such that if:
(i) each such Submitted Bid from Existing Certificateholders of such
Certificate specifying such lowest rate and all other Submitted
Bids from Existing Certificateholders of such Certificate
specifying lower rates were rejected (thus entitling such Existing
Certificateholders to continue to hold the principal amount of
Certificates subject to such Submitted Bids); and
(ii) each such Submitted Bid from Potential Certificateholders of such
Certificate specifying such lowest rate and all other Submitted
Bids from Potential Certificateholder specifying lower rates, were
accepted;
the result would be that such Existing Certificateholders described in
subparagraph (c)(i) above would continue to hold an aggregate principal amount
of Certificates which, when added to the aggregate principal amount of
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<PAGE>
Certificates to be purchased by such Potential Certificateholders described in
this subparagraph (c)(ii) would equal not less than the Available Certificates.
Determination of Auction Rate and Class II A-2 Pass-Through Rate, Notice
Promptly after the Auction Agent has made the determinations described
above, the Auction Agent is to advise the trustee of the Net Funds Cap, the
Maximum Auction Rate, the All Hold Rate and the components thereof on the
Auction Date, and based on such determinations, the Auction Rate for the next
succeeding Auction Period as follows:
(a) if Sufficient Bids exist, that the Auction Rate for the next succeeding
Auction Period will be equal to the Bid Auction Rate so determined;
(b) if Sufficient Bids do not exist (other than because all of the
Certificates are subject to Submitted Hold Orders), that the Auction
Rate for the next succeeding Auction Period will be equal to the
Maximum Auction Rate; or
(c) if all the Class II A-2 Certificates are subject to Submitted Hold
Orders, that the Auction Rate for the next succeeding Auction Period
will be equal to the All Hold Rate.
Promptly after the Auction Agent has determined the Auction Rate, the
Auction Agent will determine and advise the trustee of the Class II A-2 Pass-
Through Rate, which rate will be the lesser of (a) the Auction Rate and (b) the
Net Funds Cap.
At any time when a scheduled Auction is not being held for any reason, the
Auction Rate will be the Maximum Auction Rate for the applicable period.
Acceptance and Rejection of Orders
Existing Certificateholders will continue to hold the principal amount of
Class II A-2 Certificates that are subject to Submitted Hold Orders. If the Net
Funds Cap is equal to or greater than the Bid Auction Rate and if Sufficient
Bids, as described above under "Determination of Sufficient Bids and Bid Auction
Rate," have been received by the Auction Agent, the Bid Auction Rate will be the
Class II A-2 Pass-Through Rate, and Submitted Bids and Submitted Sell Orders
will be accepted or rejected and the Auction Agent will take such other action
as provided in the Auction Agent Agreement and described below under "Sufficient
Bids."
If the Net Funds Cap is less than the Auction Rate, the Class II A-2 Pass-
Through Rate will be the Net Funds Cap. If the Auction Agent has not received
Sufficient Bids as described above under "Determination of Sufficient Bids and
Bid Auction Rate" (other than because all of the Certificates are subject to
Submitted Holds Orders), the Class II A-2 Pass-Through Rate will be the lesser
of the Maximum Auction Rate or the Net Funds Cap. In any of the cases described
above in this paragraph, Submitted Orders will be accepted or rejected and the
Auction Agent will take such other action as described below under "Insufficient
Bids."
Sufficient Bids. If Sufficient Bids have been made with respect to the
Class II A-2 Certificates and the Net Funds Cap is equal to or greater than the
Bid Auction Rate (in which case the Class II A-2 Pass-Through Rate shall be the
Bid Auction Rate), all Submitted Sell Orders will be accepted and, subject to
the denomination requirements described below, Submitted Bids will be accepted
or rejected as follows in the following order of priority and all other
Submitted Bids will be rejected:
(a) Existing Certificateholders' Submitted Bids specifying any rate that is
higher than the Class II A-2 Pass-Through Rate will be accepted, thus
requiring each such Existing Certificateholder to sell the aggregate
principal amount of Class II A-2 Certificates subject to such Submitted
Bids;
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<PAGE>
(b) Existing Certificateholders' Submitted Bids specifying any rate that is
lower than the Class II A-2 Pass-Through Rate will be rejected, thus
entitling each such Existing Certificateholder to continue to hold the
aggregate principal amount of Certificates subject to such Submitted
Bids;
(c) Potential Certificateholders' Submitted Bids specifying any rate that
is lower than (or in some cases, equal to) the Class II A-2 Pass-
Through Rate will be accepted;
(d) Each Existing Certificateholder's Submitted Bid specifying a rate that
is equal to the Class II A-2 Pass-Through Rate will be rejected, thus
entitling such Existing Certificateholder to continue to hold the
aggregate principal amount of Class II A-2 Certificates subject to such
Submitted Bid, unless the aggregate principal amount of Class II A-2
Certificates subject to such Submitted Bids will be greater than the
principal amount of Class II A-2 Certificates (the "remaining principal
amount") equal to the excess of the Available Certificates over the
aggregate principal amount of Class II A-2 Certificates subject to
Submitted Bids described in subparagraphs (b) and (c) above, in which
event such Submitted Bid of such Existing Certificateholder will be
rejected in part and such Existing Certificateholder will be entitled
to continue to hold the principal amount of Class II A-2 Certificates
subject to such Submitted Bid, but only in an amount equal to the
aggregate principal amount of Class II A-2 Certificates obtained by
multiplying the remaining principal amount by a fraction, the numerator
of which will be the principal amount of Certificates held by such
Existing Certificateholder subject to such Submitted Bid and the
denominator of which will be the sum of the principal amount of Class
II A-2 Certificates subject to such Submitted Bids made by all such
Existing Certificateholders that specified a rate equal to the Class II
A-2 Pass-Through Rate; and
(e) Each Potential Certificateholder's Submitted Bid specifying a rate that
is equal to the Class II A-2 Pass-Through Rate will be accepted, but
only in an amount equal to the principal amount of Class II A-2
Certificates obtained by multiplying the excess of the aggregate
principal amount of Available Certificates over the aggregate principal
amount of Class II A-2 Certificates subject to Submitted Bids described
in subparagraphs (b), (c) and (d) above by a fraction, the numerator of
which will be the aggregate principal amount of Class II A-2
Certificates subject to such Submitted Bid and the denominator of which
will be the sum of the principal amount of Class II A-2 Certificates
subject to Submitted Bids made by all such Potential Certificateholders
that specified a rate equal to the Class II A-2 Pass-Through Rate.
Insufficient Bids. If Sufficient Bids have not been made with respect to
the Class II A-2 Certificates (other than because all of the Certificates are
subject to Submitted Hold Orders) or if the Net Funds Cap is less than the Bid
Auction Rate (in which case the Class II A-2 Pass-Through Rate shall be the Net
Funds Cap), subject to the denomination requirements described below, Submitted
Orders will be accepted or rejected as follows in the following order of
priority and all other Submitted Bids will be rejected:
(a) Existing Certificateholders' Submitted Bids specifying any rate that is
equal to or lower than the Class II A-2 Pass-Through Rate will be
rejected, thus entitling such Existing Certificateholders to continue
to hold the aggregate principal amount of Class II A-2 Certificates
subject to such Submitted Bids;
(b) Potential Certificateholders' Submitted Bids specifying any rate that
is equal to or lower than the Class II A-2 Pass-Through Rate will be
accepted, and specifying any rate that is higher than the Class II A-2
Pass-Through Rate will be rejected; and
(c) each Existing Certificateholder's Submitted Bid specifying any rate
that is higher than the Class II A-2 Pass-Through Rate and the
Submitted Sell Order of each Existing Certificateholder will be
accepted, thus entitling each Existing Certificateholder that submitted
any such Submitted Bid or Submitted Sell Order to sell such Class II A-
2 Certificates subject to such Submitted Bid or Submitted Sell Order,
but in both cases only in an amount equal to the aggregate principal
amount of Class II A-2 Certificates obtained by multiplying the
aggregate principal amount of Class II A-2 Certificates subject to
Submitted Bids described in subparagraph (b) above by a fraction, the
III-9
<PAGE>
numerator of which will be the aggregate principal amount of Class II
A-2 Certificates held by such Existing Certificateholder subject to
such Submitted Bid or Submitted Sell Order and the denominator of which
will be the aggregate principal amount of Class II A-2 Certificates
subject to all such Submitted Bids and Submitted Sell Orders.
All Hold Orders. If all Class II A-2 Certificates are subject to Submitted
Hold Orders, all Submitted Bids will be rejected.
Authorized Denominations Requirement. If, as a result of the procedures
described above under "Sufficient Bids" and "Insufficient Bids", any Existing
Certificateholder would be entitled or required to sell, or any Potential
Certificateholder would be entitled or required to purchase, a principal amount
of Class II A-2 Certificates that is not equal to an Authorized Denomination or
an integral multiple thereof, the Auction Agent will, in such manner as in its
sole discretion it will determine, round up or down the principal amount of
Class II A-2 Certificates to be purchased or sold by any Existing
Certificateholder or Potential Certificateholder so that the principal amount of
Class II A-2 Certificates purchased or sold by each Existing Certificateholder
or Potential Certificateholder will be equal to an Authorized Denomination or an
integral multiple in excess thereof. If, as a result of the procedures
described above under "Insufficient Bids", any Potential Certificateholder would
be entitled or required to purchase less than a principal amount of Class II A-2
Certificates equal to an Authorized Denomination or any integral multiple
thereof, the Auction Agent will, in such manner as in its sole discretion it
will determine, allocate Class II A-2 Certificates for purchase among Potential
Certificateholders so that only Class II A-2 Certificates in an Authorized
Denomination or any integral multiples in excess thereof are purchased by any
Potential Certificateholder, even if such allocation results in one or more of
such Potential Certificateholders not purchasing any Class II A-2 Certificates.
Based on the results of each Auction, the Auction Agent is to determine the
aggregate principal amount of Class II A-2 Certificates to be purchased and the
aggregate principal amount of Class II A-2 Certificates to be sold by Potential
Certificateholders and Existing Certificateholders on whose behalf the Broker-
Dealer submitted Bids or Sell Orders and to the extent that such aggregate
principal amount of the Class II A-2 Certificates to be sold differs from such
aggregate principal amount of Class II A-2 Certificates to be purchased,
determine to which other Broker-Dealer or Broker-Dealers acting for one or more
purchasers such Broker-Dealer will deliver, or from which Broker-Dealers acting
for one or more sellers such Broker-Dealer will receive, as the case may be,
Class II A-2 Certificates.
Any calculation by the Auction Agent (or the trustee, if applicable) of the
Class II A-2 Pass-Through Rate, LIBOR, the Maximum Auction Rate, the All Hold
Rate, the Net Funds Cap and the Maximum Auction Rate will, in the absence of
manifest error, be binding on all other parties.
Settlement Procedures
The Auction Agent is required to advise the Broker-Dealer of the Class II
A-2 Pass-Through Rate for the Class II A-2 Certificates for the next Auction
Period and, whether the Bids or Sell Orders were accepted or rejected, in whole
or in part by telephone not later than 3:00 p.m., eastern time, on the Auction
Date. The Broker-Dealer is required to then advise such Bidder of the
applicable Class II A-2 Pass-Through Rate for the next Interest Period and, if
such Order was a Bid or a Sell Order, whether such Bid or Sell Order was
accepted or rejected, in whole or in part, confirm purchases and sales with each
Existing Certificateholder or Potential Certificateholder, as the case may be,
purchasing or selling Class II A-2 Certificates as a result of the Auction and
advise each Existing Certificateholder or Potential Certificateholder, as the
case may be, purchasing or selling Class II A-2 Certificates as a result of the
Auction to give instructions to its Participant to pay the purchase price
against delivery of such Class II A-2 Certificates or to deliver such Class II
A-2 Certificates against payment therefor, as appropriate. Pursuant to the
Auction Agent Agreement, the Auction Agent is to record each transfer of Class
II A-2 Certificates on the Existing Certificateholders Registry to be maintained
by the Auction Agent.
III-10
<PAGE>
In accordance with DTC's normal procedures, on the Business Day after the
Auction Date, the transactions described above will be executed through DTC, so
long as DTC is the Relevant Depository, and the accounts of the respective
Participants at DTC will be debited and credited and the Class II A-2
Certificates delivered as necessary to effect the purchases and sales of the
Class II A-2 Certificates as determined in the Auction. Purchasers are required
to make payment through their Participants in same-day funds to DTC against
delivery through their Participants. DTC will make payment in accordance with
its normal procedures, which now provide for payment against delivery by its
Participants in immediately available funds.
If any Existing Certificateholder selling Class II A-2 Certificates in an
Auction fails to deliver such Certificates, the Broker-Dealer may deliver to any
person that was to have purchased Class II A-2 Certificates in such Auction a
principal amount of Class II A-2 Certificates that is less than the principal
amount of Class II A-2 Certificates that otherwise was to be purchased by such
person but in any event equal to an Authorized Denomination or any integral
multiple thereof. In such event, the principal amount of Class II A-2
Certificates to be delivered will be determined by the Broker-Dealer. Delivery
of such lesser principal amount of Class II A-2 Certificates will constitute
good delivery. Neither the trustee nor the Auction Agent will have any
responsibility or liability with respect to the failure of a Potential
Certificateholder, Existing Certificateholder or the Broker-Dealer or
Participant to deliver the principal amount of Class II A-2 Certificates or to
pay for the Class II A-2 Certificates purchased or sold pursuant to an Auction
or otherwise. For a further description of the settlement procedures, see
"Settlement Procedures" attached hereto as Annex IV.
Trustee Not Responsible for Auction Agent,
Market Agent and Broker-Dealers
The trustee shall not be liable or responsible for the actions of or
failure to act by the Auction Agent, Market Agent or the Broker-Dealer under the
Agreement, the Auction Agent Agreement, or any Broker-Dealer Agreement. The
trustee may conclusively rely upon any information required to be furnished by
the Auction Agent, the Market Agent or any Broker-Dealer without undertaking any
independent review or investigation of the truth or accuracy of such
information.
Changes in the Auction Date
The Market Agent may specify an earlier or later Auction Date (but in no
event more than five Business Days earlier or later) than the Auction Date that
would otherwise be determined in accordance with the definition of "Auction
Date" with respect to one or more specified Auction Periods, if, the Market
Agent determines (in its reasonable judgment) that such a change is necessary in
order to conform with then current market practice with respect to similar
securities or to accommodate economic and financial factors that may affect or
be relevant to the day of the week constituting an Auction Date and the interest
rate borne on the Class II A-2 Certificates. The Market Agent will provide
notice of its determination to specify an earlier or later Auction Date for one
or more Auction Periods by means of a written notice delivered at least 10 days
prior to the proposed changed Auction Date to the trustee, the Auction Agent and
MBIA. The changes in Auction terms described above may be made with respect to
any Authorized Denomination of Class II A-2 Certificates. In connection with
any change in Auction terms described above, the Auction Agent is to provide
such further notice to such parties as is specified in the Auction Agent
Agreement.
III-11
<PAGE>
Annex IV
Settlement Procedures
The following description of Settlement Procedures applies to the Class II
A-2 Certificates. Capitalized terms used in this prospectus supplement and not
otherwise defined have the meanings ascribed in Annex III and the accompanying
prospectus supplement.
(a) Not later than (1) 3:00 p.m. if the Class II A-2 Pass-Through Rate for
the Class II A-2 Certificates is the Auction Rate or (2) 4:00 p.m. if
the Class II A-2 Pass-Through Rate for the Class II A-2 Certificates is
the Net Funds Cap, the Auction Agent is to notify by telephone each
Broker-Dealer that participated in the Auction held on such Auction
Date and submitted an Order on behalf of an Existing Certificateholder
or Potential Certificateholder of:
(i) the Class II A-2 Pass-Through Rate fixed for the Class II A-2
Certificate for the next Auction Period;
(ii) whether there were Sufficient Bids in such Auction;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer") submitted Bids
or Sell Orders on behalf of an Existing Certificateholder,
whether such Bid or Sell Order was accepted or rejected, in whole
or in part, and the principal amount of Class II A-2
Certificates, if any, to be sold by such Existing
Certificateholder;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted a Bid
on behalf of a Potential Certificateholder, whether such Bid was
accepted or rejected, in whole or in part, and the principal
amount of Class II A-2 Certificates, if any, to be purchased by
such Potential Certificateholder;
(v) if the aggregate amount of Class II A-2 Certificates to be sold
by all Existing Certificateholders on whose behalf such Seller's
Broker-Dealer submitted Bids or Sell Orders exceeds the aggregate
principal amount of Class II A-2 Certificates to be purchased by
all Potential Certificateholders on whose behalf such Buyer's
Broker-Dealer submitted a Bid, the name or names of one or more
Buyer's Broker-Dealers and the name of the Participant, if any,
of each such Buyer's Broker-Dealer acting for one or more
purchasers of such excess principal amount of Class II A-2
Certificates and the principal amount of Class II A-2
Certificates to be purchased from one or more Existing
Certificateholders on whose behalf such Seller's Broker-Dealer
acted by one or more Potential Certificateholders on whose behalf
each of such Buyer's Broker-Dealers acted;
(vi) if the principal amount of Class II A-2 Certificates to be
purchased by all Potential Certificateholders on whose behalf
such Buyer's Broker-Dealer submitted a Bid exceeds the amount of
Class II A-2 Certificates to be sold by all Existing
Certificateholders on whose behalf such Seller's Broker-Dealer
submitted a Bid or a Sell Order, the name or names of one or more
Seller's Broker-Dealers (and the name of the Participant, if any,
of each such Seller's Broker-Dealer) acting for one or more
sellers of such excess principal amount of Class II A-2
Certificates and the principal amount of Class II A-2
Certificates to be sold to one or more Potential
Certificateholders on whose behalf such Buyer's Broker-Dealer
acted by one or more Existing Certificateholder on whose behalf
each of such Seller's Broker-Dealers acted; and
(vii) the Auction Date for the next succeeding Auction.
(b) On each Auction Date, each Broker-Dealer that submitted an Order on
behalf of any Existing Certificateholder or Potential Certificateholder
is to:
(i) advise each Existing Certificateholder and Potential
Certificateholder on whose behalf such Broker-Dealer submitted a
Bid or Sell Order in the Auction on such Auction Date whether
such Bid or Sell Order was accepted or rejected, in whole or in
part;
IV-1
<PAGE>
(ii) in the case of a Broker-Dealer that is a Buyer's Broker-Dealer,
advise each Potential Certificateholder on whose behalf such
Buyer's Broker-Dealer submitted a Bid that was accepted, in whole
or in part, to instruct such Potential Certificateholder's
Participant to pay to such Buyer's Broker-Dealer (or its
Participant) through DTC the amount necessary to purchase the
principal amount of the Class II A-2 Certificates to be purchased
pursuant to such Bid against receipt of such Class II A-2
Certificates together with accrued interest;
(iii) in the case of a Broker-Dealer that is a Seller's Broker-Dealer,
instruct each Existing Certificateholder on whose behalf such
Seller's Broker-Dealer submitted a Sell Order that was accepted,
in whole or in part, or a Bid that was accepted, in whole or in
part, to instruct such Existing Certificateholder's Participant
to deliver to such Seller's Broker-Dealer (or its Participant)
through DTC the principal amount of the Class II A-2 Certificates
to be sold pursuant to such Order against payment therefor;
(iv) advise each Existing Certificateholder on whose behalf such
Broker-Dealer submitted an Order and each Potential
Certificateholder on whose behalf such Broker-Dealer submitted a
Bid of the Class II A-2 Pass-Through Rate for the next Auction
Period;
(v) advise each Existing Certificateholder on whose behalf such
Broker-Dealer submitted an Order of the next Auction Date; and
(vi) advise each Potential Certificateholder on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in
part, of the next Auction Date.
(c) On the basis of the information provided to it pursuant to paragraph
(a) above, each Broker-Dealer that submitted a Bid or Sell Order in an
Auction is required to allocate any funds received by it in connection
with such Auction pursuant to paragraph (b)(ii) above, and any Class II
A-2 Certificates received by it in connection with such Auction
pursuant to paragraph (b)(iii) above, among the Potential
Certificateholders, if any, on whose behalf such Broker-Dealer
submitted Bids, the Existing Certificateholder, if any, on whose behalf
such Broker-Dealer submitted Bids or Sell Orders in such Auction, and
any Broker-Dealers identified to it by the Auction Agent following such
Auction pursuant to paragraph (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Certificateholder and Existing Certificateholder
with an Order in the Auction on such Auction Date will instruct
its Participant as provided in (b)(ii) or (b)(iii) above, as the
case may be:
(ii) each Seller's Broker-Dealer that is not a Participant of DTC will
instruct its Participant to deliver such Class II A-2
Certificates through DTC to a Buyer's Broker-Dealer (or its
Participant) identified to such Seller's Broker-Dealer pursuant
to (a)(v) above against payment therefor; and
(iii) each Buyer's Broker-Dealer that is not a Participant in DTC will
instruct its Participant to pay through DTC to Seller's Broker-
Dealer (or its Participant) identified following such Auction
pursuant to (a)(vi) above the amount necessary to purchase the
Class II A-2 Certificates to be purchased pursuant to (b)(ii)
above against receipt of such Certificates.
(e) On the Business Day following each Auction Date;
(i) each Participant for a Bidder in the Auction on such Auction Date
referred to in (d)(i) above will instruct DTC to execute the
transactions described under (b)(ii) or (b)(iii) above for such
Auction, and DTC will execute such transactions;
(ii) each Seller's Broker-Dealer or its Participant will instruct DTC
to execute the transactions described in (d)(ii) above for such
Auction, and DTC will execute such transactions; and
(iii) each Buyer's Broker-Dealer or its Participant will instruct DTC
to execute the transactions described in (d)(iii) above for such
Auction, and DTC will execute such transactions.
IV-2
<PAGE>
(f) If an Existing Certificateholder selling Class II A-2 Certificates in
an Auction fails to deliver such Certificates (by authorized book-
entry), a Broker-Dealer may deliver to the Potential Certificateholder
on behalf of which it submitted a Bid that was accepted a principal
amount of Class II A-2 Certificates that is less than the principal
amount of Class II A-2 Certificates that otherwise was to be purchased
by such Potential Certificateholder. In such event, the principal
amount of Class II A-2 Certificates to be so delivered will be
determined solely by such Broker-Dealer (but only in Authorized
Denominations).
Delivery of such lesser principal amount of Class II A-2 Certificates will
constitute good delivery. Notwithstanding the foregoing terms of this paragraph
(f), any delivery or nondelivery of Class II A-2 Certificates which will
represent any departure from the results of an Auction, as determined by the
Auction Agent, will be of no effect unless and until the Auction Agent will have
been notified of such delivery or nondelivery in accordance with the provisions
of the Auction Agent Agreement and the Broker-Dealer Agreements. Neither the
trustee nor the Auction Agent will have any responsibility or liability with
respect to the failure of a Potential Certificateholder, Existing
Certificateholder or their respective Broker-Dealer or Participant to take
delivery of or deliver, as the case may be, the principal amount of the
Certificates purchased or sold pursuant to an Auction or otherwise.
IV-3
<PAGE>
PROSPECTUS
GREENPOINT CREDIT, LLC
Seller and Servicer
Manufactured Housing Contract Trust Pass-Through Certificates
Consider GreenPoint Credit, LLC may periodically issue
carefully the certificates representing interests in a trust fund
risk factors that consists primarily of manufactured housing
beginning on page installment sales contracts and installment loan
4 in this agreements. The certificates will be issued in series,
prospectus and in and each series of certificates will represent
the related interests in a different trust fund established by
prospectus GreenPoint Credit, LLC.
supplement at
page S-9. Each trust fund will consist of:
A certificate . a pool of manufactured housing installment sales
will represent an contracts and installment loan agreements, described
interest only in in detail in the accompanying prospectus supplement;
the trust fund
created for that . related property and interests; and
series of
certificates. A . other property as described in the accompanying
certificate will prospectus supplement.
not represent an
interest in or an The certificates in a series:
obligation of
GreenPoint . may be divided into multiple classes of
Credit, LLC or certificates, and, if so specified in the related
any of its prospectus supplement, each class may:
affiliates.
-- receive a different fixed or variable rate of
This prospectus interest;
may be used to
offer and sell a -- be subordinated to other classes of certificates
series of in that series;
certificates only
if accompanied by -- represent interests in only certain of the assets
the prospectus of the trust fund;
supplement for
that series. -- receive principal at different times; and
-- have different forms of credit enhancement.
The certificates may be offered to the public through different methods as
described in "Method of Distribution" in this prospectus.
Neither the SEC nor any state securities commission has approved or disapproved
of these certificates or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
December 9, 1999
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail:
(1) this prospectus, which provides general information, some of which may
not apply to your series of certificates; and
(2) the accompanying prospectus supplement, which describes the specific
terms of your series of certificates.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus supplement provide the pages
on which these captions are located.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk Factors............................................................... 4
The Contract Pools......................................................... 11
The Pre-Funding Account.................................................. 14
The Seller................................................................. 14
The Acquisition.......................................................... 14
Loan Originations........................................................ 15
Underwriting Practices................................................... 15
Servicing................................................................ 19
Delinquency and Loan Loss/Repossession Experience........................ 20
Prepayment and Yield Considerations........................................ 21
Prepayment Considerations................................................ 21
Yield Considerations..................................................... 23
Description of the Certificates............................................ 25
General.................................................................. 25
Conveyance of Contracts.................................................. 26
Payments on Contracts.................................................... 27
Distributions on Certificates............................................ 27
Global Certificates...................................................... 30
DTC's Year 2000 Efforts.................................................. 31
Optional and Mandatory Repurchase of Certificates; Optional Termination
and Termination Auction................................................. 32
Termination of the Agreement............................................. 33
Collection and Other Servicing Procedures................................ 33
Servicing Compensation and Payment of Expenses; Certain Matters Regarding
the Servicer............................................................ 34
Amendment................................................................ 37
The Trustee.............................................................. 38
Indemnification.......................................................... 38
Credit and Liquidity Enhancement........................................... 39
Subordination............................................................ 39
Reserve Funds............................................................ 41
Credit Facilities........................................................ 42
Liquidity Facilities..................................................... 42
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Federal Income Tax Consequences........................................... 43
REMIC Elections......................................................... 45
REMIC Certificates...................................................... 45
Taxation of Regular Certificates........................................ 49
Treatment of Certificates Representing a REMIC Regular Interest Coupled
with a Swap or Cap Contract............................................ 59
Taxation of Residual Certificates....................................... 61
Non-REMIC Trusts........................................................ 71
Owner Trust Certificates or Notes....................................... 75
Treatment of the Owner Trust Certificates or Notes as Debt.............. 76
Treatment of the Owner Trust............................................ 76
Treatment of the Owner Trust Certificates or Notes...................... 77
Other Tax Consequences.................................................. 78
Restrictions on Transfer of REMIC Residual Certificates................. 78
Tax-Exempt Investors.................................................... 79
Legal Investment.......................................................... 79
ERISA Considerations...................................................... 80
Certain Legal Aspects of the Contracts.................................... 82
The Contracts (Other than Land Home and Land-in-Lieu Contracts)......... 82
Land Home and Land-in-Lieu Contracts.................................... 85
Certain Matters Relating to Insolvency.................................. 88
Consumer Protection Laws................................................ 88
Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer............................................................... 89
Applicability of Usury Laws............................................. 90
Ratings................................................................... 90
Method of Distribution.................................................... 91
Use of Proceeds........................................................... 92
Legal Matters............................................................. 92
Experts................................................................... 92
Glossary.................................................................. 93
</TABLE>
3
<PAGE>
Risk Factors
You should consider the following risk factors, in addition to the risk
factors reported in the prospectus supplement, in deciding whether to purchase
any of the certificates.
Due to Their Complexity the The offered certificates are not suitable
Offered Certificates Are Not investments for all investors. In particular,
Suitable for All Investors you should not purchase any class of offered
certificates unless you understand and are able
to bear the prepayment, credit, liquidity and
market risks associated with that class. The
offered certificates are complex securities and
it is important that you possess, either alone
or together with an investment advisor, the
expertise necessary to evaluate the information
contained in this prospectus and the
accompanying prospectus supplement in the
context of your financial situation.
The Lack of Secondary A secondary market for any series of
Markets May Limit the certificates may not develop. If a secondary
Ability to Resell market does develop, it might not continue or
Certificates it might not be sufficiently liquid to allow
you to resell any of your certificates. The
underwriters of a particular series of
certificates may decide to establish a
secondary market for that particular series of
certificates. If so, the prospectus supplement
for that series of certificates will indicate
this intention. However, no underwriter will be
obligated to do so. The certificates will not
be listed on any securities exchange.
The Lack of Physical There is a risk that the liquidity of any of
Certificates May Cause the offered certificates issued in book-entry
Difficulties in Pledging or form will be reduced in the secondary trading
Selling Your Certificates or market because many potential investors may
Cause Delays in the Payment beunwilling to purchase certificates unless
on Your Certificates they can obtain physical certificates. To the
extent transactions in certificates can be
effected only through DTC, participating
organizations, indirect participants and
certain banks, the ability of a holder of
offered certificates to pledge any offered
certificate to persons or entities that do not
participate in the DTC system, or otherwise to
take actions in respect of the offered
certificates, may be limited due to the lack of
physical certificates representing any offered
certificate. This may limit the holders of
offered certificates liquidity of investment.
To the extent any offered certificate is held
in book-entry form, the holder of the offered
certificate may experience some delay in their
receipt of distributions. Distributions will be
forwarded by the trustee to DTC and DTC will
credit the distributions to the accounts of its
participants, which will thereafter credit them
to the accounts of holder of the offered
certificate either directly or indirectly
through indirect participants. See "Description
of the Certificates--Global Certificates" in
the prospectus.
4
<PAGE>
You Bear the Risk of Certain General Economic Conditions. An investment in
Defaults on the Contracts certificates may be adversely affected by,
among other things, a downturn in national,
regional or local economic conditions. An
economic downturn in any region where a number
of obligors on the contracts are located might
cause higher delinquencies, defaults and losses
on the contracts. If delinquencies, defaults or
losses on the contracts are higher than
expected, the holders of the certificates may
not recoup their investment.
Depreciation in Value of manufactured home.
Manufactured housing generally depreciates in
value, regardless of its location. As a result,
the market value of a manufactured home may
decline faster that the outstanding principal
balance of the contract for that manufactured
home. Therefore, amounts received upon the sale
of any manufactured home repossessed by the
servicer may be less than the outstanding
amount of the contract.
Investors in the offered certificates may be
protected from losses resulting from economic
conditions or from the depreciation in the
value of a manufactured home by any of the
following:
. the amount, if any, by which the interest
collected on nondefaulted contracts during a
collection period exceeds interest
distributions due to the holders of the
offered certificates and, if so specified in
the related prospectus supplement, the
monthly servicing fee;
. second, any credit facility or reserve fund
that may support one or more classes of
certificates; and
. third, the subordination in interest of any
junior classes of certificates issued with a
class of certificates. See "Credit and
Liquidity Enhancement" in this prospectus
and the related prospectus supplement.
If losses on the contracts are not covered by
the excess interest on the contracts, a form of
credit enhancement or reserve fund or by a
junior class of certificates, the payments on
certificates will be delayed and losses will be
borne by the holders of the offered
certificates. To the extent that the offered
certificates have been designated as senior or
subordinate, the most junior certificates would
be the first to bear these delays or losses.
See "The Contract Pools" and "Credit and
Liquidity Enhancement" in this prospectus and
in the related prospectus supplement.
5
<PAGE>
The Certificates Are Not an The offered certificates will not represent
Obligation of GreenPoint interests in or obligations of GreenPoint
Credit, LLC or GreenPoint Financial Corp. The
offered certificates will not be insured or
guaranteed by any governmental agency or
instrumentality, the underwriter of the offered
certificates or any of its affiliates,
GreenPoint Credit, LLC, GreenPoint Financial
Corp. or any of their affiliates, except in the
case of a limited guaranty or other credit
enhancement if so specified in the related
prospectus supplement. The payments by the
obligors on the contracts included in the trust
fund and any credit enhancement will be the
sole source of the payments on the
certificates. If the payments by the obligors
on the contracts are insufficient to pay the
principal or interest on the certificates,
there is no other source of payments. The
seller of the Contracts and/or the servicer
will have limited obligations. These
obligations usually include:
. the obligation under certain circumstances
to repurchase a contract if there has been a
breach of representations and warranties;
and
. advancing payments to the extent described
in the prospectus supplement on contracts
when the obligor is delinquent if the
servicer believes that the advance is
recoverable.
Risks Relating to the Security Interests of the Trust Fund in the
Enforceability of the Manufactured Homes. If a security interest has
Contracts been effectively assigned in favor of the
trustee but is not perfected, the assignment of
the security interest to the trustee may not be
effective against creditors of GreenPoint
Credit, LLC or Bank of America, FSB, as the
case may be, or against a receiver or trustee
in bankruptcy for GreenPoint Credit, LLC or
Bank of America, FSB, as applicable.
Upon the initial issuance of the offered
certificates in any series, the seller will
convey the contracts securing the certificates
to a trust fund. The servicer of the contracts
will obtain and maintain physical possession of
the contract documents as custodian and agent
for the trustee of the trust fund. Each
contract is secured by a security interest in a
manufactured home and, in certain cases only,
the real estate on which the related
manufactured home is located. Perfection of
security interests in the manufactured homes
and enforcement of rights to realize upon the
value of the manufactured homes as collateral
for the contracts are subject to a number of
federal and state laws, including:
. Uniform Commercial Code as adopted in the
states in which the manufactured homes are
located;
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. certificate of title statutes as adopted in
the states in which the manufactured homes
are located; and
. and, if applicable, the real estate laws as
adopted in the states where the manufactured
homes are located.
Under federal and state laws, a number of
factors may limit the ability of the holder of
a perfected security interest in manufactured
homes to realize upon the related manufactured
homes or may limit the amount realized to less
than the amount due under the related contract.
See "Certain Legal Aspects of the Contracts--
Security Interests of GreenPoint in the
Manufactured Homes" and "Land Home and Land-in-
Lieu Contracts" in this prospectus.
. The seller of the contracts will not retitle
any certificates of title that are in the
name of Bank of America, FSB or BankAmerica
Housing Services, a division of Bank of
America, FSB relating to any contracts that
it has purchased from Bank of America, FSB
as described under "The Seller--The
Acquisition." Further, if so specified in
the related prospectus supplement, the
certificates of title for the manufactured
homes will show "Bank of America, FSB,"
"BankAmerica Housing Services, a division of
Bank of America, FSB" or "GreenPoint Credit,
LLC" as the lienholder and the UCC financing
statements, where applicable, will show
"Bank of America, FSB," "BankAmerica Housing
Services, a division of Bank of America,
FSB" or "GreenPoint Credit, LLC" as secured
party. Because it is not economically
feasible to amend the certificates of title,
GreenPoint Credit, LLC will not:
. amend the certificates of title to change
the lienholder specified therein to the
trustee at the time contracts are conveyed
to a trust fund;
. execute any transfer instrument, including,
among other instruments, UCC-3 assignments,
relating to any manufactured home in favor
of the trustee;
. deliver any certificate of title to the
trustee or make a notation on the
certificate of title of the trustee's
interest therein;
. record an assignment, except as required
under the related pooling and servicing
agreement upon the occurrence of certain
events if so specified in the related
prospectus supplement, to the trustee of the
mortgage, deed of trust or other instrument
securing any real estate.
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In some states, without complying with the
foregoing, the assignment to the trustee of the
security interest in the manufactured homes, or
the mortgage, deed of trust or other instrument
securing real estate, may not be effective to
grant or perfect a security interest.
Federal and State Consumer Numerous federal and state consumer protection
Protection Laws May Prevent laws could adversely affect the interest of any
the Enforceability of the trust fund in the contracts comprising the
Contracts related contract pool. In addition, other
federal and state consumer protection laws
impose requirements on lending under contracts.
An assignee of a contract could be liable for
the failure by the original lender under the
contract to comply with the requirements on
lending. These laws could apply to any trust
fund as assignee of the related contracts.
Pursuant to the pooling and servicing agreement
related to each series of certificates,
GreenPoint Credit, LLC will represent and
warrant that each contract complies with all
requirements of law and will generally be
required to repurchase, or substitute a new
contract, for any contract that does not comply
with all requirements of law if holders of the
certificates are adversely affected by
GreenPoint's breach of representation or
warranty.
Prepayment Considerations The prepayment experience on the contracts
underlying any series of certificates,
including prepayments due to liquidations of
defaulted contracts, will affect the average
life and the maturity of any series of
certificates. Prepayments on the contracts in
any contract pool may be influenced by a
variety of economic, geographic, social and
other factors, including repossessions, aging,
seasonality and interest rates. Other factors
affecting prepayment on the contracts include
changes in housing needs, job transfers and
unemployment. In addition, interest on
contracts that have been subject to a partial
prepayment or a prepayment in full will cease
to accrue on the prepaid amount as of the date
of prepayment. High prepayments on the
contracts during a collection period for any
trust fund could result in high interest
shortfalls. Therefore, the amount available for
distribution to the holders of the offered
certificates on the related distribution date
could be less than the amount of principal and
interest that would normally be distributable.
This would result in losses to the holders of
the offered certificates. To the extent that
the offered certificates have been designated
as senior or subordinate, the most junior
certificates would be the first to bear these
delays or losses. See "Prepayment and Yield
Considerations" in this prospectus and in the
related prospectus supplement.
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Insolvency or Bankruptcy of GreenPoint Credit, LLC intends that each
GreenPoint May Affect transfer of offered certificates to the related
Payments on the Certificates trust fund constitutes a sale, rather than a
pledge of the contracts to secure indebtedness
of GreenPoint Credit, LLC However, if
GreenPoint were to become a debtor under the
federal bankruptcy code, it is possible that a
creditor or trustee in bankruptcy of GreenPoint
Credit, LLC or GreenPoint Credit, LLC as
debtor-in-possession may argue that the sale of
the contracts by GreenPoint Credit, LLC could
be recharacterized as a borrowing secured by a
pledge of the contracts. An attempt by a
creditor or a trustee in bankruptcy to
recharacterize the transfer as a borrowing,
even if unsuccessful, could result in delays in
or reductions of distributions on the offered
certificates to the holders of the
certificates. To the extent that the offered
certificates have been designated as senior or
subordinate, the most junior certificates would
be the first to bear these delays or losses.
Bankruptcy of Servicer In the event of a bankruptcy of GreenPoint
Credit, LLC, the trustee-in-bankruptcy for
GreenPoint Credit, LLC could prevent the
termination of GreenPoint Credit, LLC, as
servicer of the contracts, if no event of
default under the applicable pooling and
servicing agreement exists other than the
bankruptcy of GreenPoint Credit, LLC This
prevention could result in a delay or possibly
a reduction in payments on the offered
certificates to the holders of the certificates
to the extent GreenPoint Credit, LLC received,
but did not deposit with the trustee, contract
collections before the date of bankruptcy. To
the extent that the offered certificates have
been designated as senior or subordinate, the
most junior certificates would be the first to
bear these delays or losses. See "Certain Legal
Aspects of the Contracts" in this prospectus.
Limited Operating History of GreenPoint Credit, LLC was incorporated on May
Seller and Servicer 8, 1998 for the purpose of acquiring the
manufactured housing contract business from
Bank of America, FSB as described under "The
Seller--The Acquisition" in this prospectus.
Accordingly, GreenPoint Credit, LLC has a
limited operating history, and no relevant
delinquency and loss experience is available.
Neither GreenPoint Credit, LLC nor any of its
affiliates were previously engaged in the
origination or servicing of manufactured
housing contracts prior to its purchase of
manufactured housing contracts from Bank of
America, FSB. Potential holders of offered
certificates are encouraged to evaluate the
risks associated with respect to the limited
operating history of GreenPoint Credit, LLC.
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Limited Guarantee of GFC If the related prospectus supplement so
specifies, certain classes of offered
certificates may be entitled to the benefits of
a limited guarantee of GreenPoint Financial
Corp. which would be an unsecured obligation of
GreenPoint Financial Corp. and would not be
supported by any letter of credit or other
enhancement arrangement.
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We have defined certain significant terms in the "Glossary" on page 93 of
this prospectus.
The Contract Pools
Each Contract contained in a Contract Pool will have been either:
. originated or purchased by the Seller, in each case on an individual
basis in the ordinary course of its business, and/or
. purchased from Bulk Sellers,
all as more particularly specified in the related prospectus supplement. Each
Contract will be secured by a new or used manufactured home and, in the case
of a Land Home or Land-in-Lieu Contract, by real property upon which the
manufactured home is located. If so specified in the related prospectus
supplement, the Contracts will not be insured by any governmental agency or
instrumentality. However, if so specified in the related prospectus
supplement, some or all of the Contracts and collections thereon will, subject
to the conditions described below, be partially insured by the Federal Housing
Administration or partially guaranteed by the Veterans Administration. If so
specified in the related prospectus supplement, the Contract Pool will include
modular homes, as described in the related prospectus supplement.
On the date of initial issuance of the Certificates of any Series,
GreenPoint will convey the Contracts comprising the related Contract Pool to
the related Trust Fund. GreenPoint, as servicer, will obtain and maintain
possession of all Contract documents, except in certain instances where the
trustee will obtain and maintain possession of the Contract documents relating
to Land Home Contracts and Land-in-Lieu Contracts.
If so specified in the applicable prospectus supplement, the Agreement
relating to each Contract Pool will require the related manufactured homes to
comply with the requirements of certain federal statutes which generally would
require the manufactured homes to have a minimum of 400 square feet of living
space and a minimum width of 102 inches and to be of a kind customarily used
at a fixed location. The statutes would also require the manufactured homes to
be transportable in one or more sections, built on a permanent chassis and
designed to be used as dwellings, with or without permanent foundations, when
connected to the required utilities. The statutes also would require that the
security interest in any manufactured home include the plumbing, heating, air
conditioning and electrical systems constituting a part of, or associated
with, the manufactured home.
Each Agreement will require the servicer to maintain hazard and flood
insurance policies with respect to each manufactured home in the amounts and
manner set forth in this prospectus under "Description of the Certificates--
Servicing Compensation and Payment of Expenses; Certain Matters Regarding the
servicer--Hazard Insurance Policies." Generally, no other insurance will be
required with respect to the manufactured homes, the Contracts or any Contract
Pool.
Each Contract Pool may contain Contracts bearing interest at a Step-Up Rate.
If a Contract Pool contains Contracts bearing interest at a Step-Up Rate, the
related prospectus supplement will specify the percentage of the Contract Pool
comprised of Step-Up Contracts, the period during which the Contract Rates for
Step-Up Contracts will be stepped up, the range of increases in the Contract
Rates for the Step-Up Contracts and the range of increases in the Scheduled
Payments for the Step-Up Contracts.
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The rate at which the Contracts in a particular Contract Pool bear interest
will be further described in the applicable prospectus supplement. If so
specified in the applicable prospectus supplement, each Contract will provide
for payments on a scheduled Due Date. The day of each month constituting the
Due Date will vary from Contract to Contract. Unless the Contracts bear
interest at a variable rate, the Scheduled Payment will be specified in the
Contract. The Scheduled Payments for fixed-rate Contracts will be constant
assuming no prepayments. If so specified in the applicable prospectus
supplement, the Scheduled Payments for Contracts bearing interest at a Step-Up
Rate will increase on the dates on which the Contract Rates are stepped up. In
addition, if so specified in the related prospectus supplement, the Contracts
may be prepaid in full or in part at any time.
If so specified in the applicable prospectus supplement, Scheduled Payments
whether for actuarial or simple interest Contracts, may be paid prior to their
Due Dates, whether in, or in months prior to, the months of their Due Dates.
Thus, the Obligor may, in June, pay the Scheduled Payments due in June, July
and August. In that event, no further payment will become due on the Contract
until the September Due Date. In the case of a simple interest Contract, the
Obligor would have to instruct the servicer to apply the payment as a pay-
ahead of future Scheduled Payments; otherwise the payment would be applied as
a partial principal prepayment. There is no limit to the number of Scheduled
Payments that may be paid ahead in this manner. The effect of paid-ahead
Scheduled Payments will be different for actuarial Contracts than for simple
interest Contracts, as further described below.
The Scheduled Payments for each actuarial Contract, whether a fixed rate
Contract or a Contract bearing interest at a Step-Up Rate, will fully amortize
the principal balance of the Contract over its term. The portion of each
Scheduled Payment allocable to principal is equal to the total amount thereof
less the portion allocable to interest. The portion of each Scheduled Payment
due in a particular month that is allocable to interest is a precomputed
amount equal to one month's interest, determined on the basis of a thirty-day
month and a 360-day calendar year, except in the state of Kansas where it is
determined on the basis of a 365/366-day calendar year and actual days
elapsed, on the principal balance of the Contract, which principal balance is
determined by reducing the initial principal balance by the principal portion
of all Scheduled Payments that were due in prior months, whether or not
Scheduled Payments were timely made, and all prior partial principal
prepayments. Thus, each Scheduled Payment will be applied to interest and to
principal in accordance with a precomputed allocation, whether or not the
Scheduled Payments are received in advance of or subsequent to their Due
Dates. If so specified in the applicable prospectus supplement, all payments
received in a Collection Period on an actuarial Contract in excess of the
related Obligor's Scheduled Payment, other than payments not allocated to
principal and interest such as late payment charges or payments sufficient to
pay in full the outstanding principal balance of and all accrued and unpaid
interest on the Obligor's Contract, are applied as a partial prepayment of
principal on the Contract, unless (1) the related Obligor notifies or confirms
with the servicer that its payments are to be applied to future Scheduled
Payments in the order of the Due Dates of its payments or (2) the amount of
any excess payment is approximately equal, subject to a variance of plus or
minus 10%, to the amount of a future Scheduled Payment.
If simple interest Contracts are to be included in the related Contract
Pool, the related prospectus supplement will describe the characteristics of
the simple interest Contracts in the Contract Pool.
If so specified in the related prospectus supplement, the Scheduled Payments
on variable rate Contracts will be allocated between principal and interest as
described above for actuarial Contracts based upon the Contract Rate in effect
when the Scheduled Payments on the Contracts are due. If so
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specified in the related prospectus supplement, the amounts of the Scheduled
Payments on variable rate Contracts will be adjusted, on the basis described
in the prospectus supplement, whenever the related variable rate is adjusted.
If so specified in the applicable prospectus supplement, the related
Contract Pool may contain Contracts which combine certain features of
actuarial and simple interest Contracts.
If specified in the related prospectus supplement, the Contract Pool may
contain Land Home and Land-in-Lieu Contracts. In certain jurisdictions, a
lender cannot obtain separate evidence of its lien on the manufactured home
securing a Land Home Contract and its lien on the property on which the
manufactured home is located. In those jurisdictions, the only evidence of
liens on the manufactured homes securing Land Home Contracts will be the deeds
of trust, mortgages or similar security instruments on the real estate on
which the manufactured homes are located. It is a policy of GreenPoint, to
obtain title insurance policies, where available, with respect to any Land
Home Contract that it originates insuring that the related manufactured home
is subject to the lien of the related mortgage. However, title policies may
not have been obtained with respect to Land Home Contracts acquired from Bulk
Sellers and some title insurers will not insure the manufactured home unless
it is permanently attached to the land. Generally, separate evidences of liens
on manufactured homes and the real property securing Land-in-Lieu Contracts
are obtained. However, no title insurance is obtained for Land-in-Lieu
Contracts. See "Certain Legal Aspects of the Contracts--Land Home and Land-in-
Lieu Contracts" in this prospectus.
A Contract Pool may include "staged-funding" Contracts which provide
multiple disbursements to an Obligor to finance the purchase of a manufactured
home or the acquisition or improvement of the real estate on which the
manufactured home will be located. The Obligor pays only the interest on the
disbursed amount of the loan or an additional origination fee which is
financed, in lieu of interest until the final disbursement, and, following the
final disbursement, pays both interest and principal. If so specified in the
related prospectus supplement, no Contract Pool will contain a "staged-
funding" Contract unless it has been fully disbursed.
The prospectus supplement relating to each Series of Certificates will
provide information as of the Cut-off Date for the related Series with respect
to, among other things:
. the number, the aggregate principal balance, and the range of
outstanding principal balances of the Contracts comprising the related
Contract Pool;
. the Weighted Average Contract Rate of the Contracts and the distribution
of Contract Rates;
. the weighted average original and remaining terms to maturity of the
Contracts and the distribution of remaining terms to maturity;
. the average outstanding principal balance of the Contracts;
. the geographical distribution of the related manufactured homes at
origination;
. the years of origination of the Contracts;
. the distribution of original principal balances of the Contracts;
. the percentage amount of Contracts secured by new or used manufactured
homes;
. the range of and weighted average loan-to-value ratios at origination;
and
. the month and year in which the final scheduled payment date for the
Contract with the latest maturity is scheduled to occur.
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Additionally, no more than a maximum of 5% of the Contracts, measured by
aggregate principal balance of the assets in the Contract Pool, as described
in this prospectus and the related prospectus supplement, as of the Cut-off
Date, may deviate from the characteristics of the assets in the Contract Pool
as of the Cut-off Date.
If a Contract Pool contains variable rate Contracts, the related prospectus
supplement will contain a description of the basis on which the variable rates
are determined, including any maximum or minimum rates and the frequency with
which any variable rate adjusts. The prospectus supplement relating to a
Series of Certificates also will contain certain information about Contracts
in the related Trust Fund that are Land Home Contracts, Land-in-Lieu Contracts
or Contracts that are partially guaranteed by the Veterans Administration or
partially insured by the Federal Housing Administration.
To the extent any Contracts in a Contract Pool were purchased by GreenPoint
from one or more Bulk Sellers, the applicable prospectus supplement will
contain a description of certain practices observed by the Bulk Seller or Bulk
Sellers, as the case may be, in connection with any such purchase.
In addition, to the extent GreenPoint's management believes additional
information concerning the related Contract Pool that is stored in the
electronic data processing system of GreenPoint to be material, the prospectus
supplement may also include the additional information.
The Pre-Funding Account
If the Trust Fund includes a Pre-Funding Account, as defined in the related
prospectus supplement, the prospectus supplement will specify:
(1) the term or duration of the Pre-Funding Account;
(2) the percentage of the related Series that may be represented by the
Pre-Funding Account;
(3) the types of investments that Pre-Funding Accounts may be invested in;
and
(4) the conditions that must be satisfied prior to any transfer of
Additional Contracts and/or Subsequent Contracts, as described in the
prospectus supplement, including the requisite characteristics of the
Additional Contracts and/or Subsequent Contracts.
The Seller
GreenPoint is a Delaware corporation and a wholly owned subsidiary of
GreenPoint Bank, a New York state chartered bank. GreenPoint Bank is a wholly
owned subsidiary of GFC, a publicly traded corporation whose shares are traded
on the New York stock exchange. As of December 31, 1998, GFC and its
consolidated subsidiaries had total deposits of $11,173.1 million, total
assets of $15,015.9 million and total stockholders' equity of $1,922.6
million. As of December 31, 1998, GreenPoint had total assets of $1,437.4
million, total liabilities of $1,378.1 million and total stockholders' equity
of $59.3 million. The headquarters of both GFC and GreenPoint Bank are located
in New York, New York.
The Acquisition
GreenPoint was formed in May 1998 as a Delaware corporation for the purpose
of acquiring the operating business of the BankAmerica Housing Services
division of Bank of America, FSB from Bank of America, FSB. The "Acquisition"
was consummated on September 30, 1998. The operating
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business of the BankAmerica Housing Services division consisted primarily of
originating, purchasing and servicing manufactured housing installment sale
contracts and installment loan agreements. GreenPoint also purchased
approximately $794,958,000 in aggregate principal balance of manufactured
housing installment sale contracts and installment loan agreements in the
Acquisition. The origination and underwriting practices of Bank of America,
FSB and its affiliates relating to the manufactured housing installment sale
contracts and installment loan agreements acquired by GreenPoint in the
Acquisition were substantially similar to those described under "--Loan
Originations" below.
Loan Originations
GreenPoint purchases and originates manufactured housing contracts on an
individual basis through 45 regional offices throughout the United States,
serving retailers and borrowers in the 48 contiguous states. In the states of
Mississippi and Minnesota, manufactured housing contracts are purchased and
originated through wholly owned subsidiaries of GreenPoint. These subsidiaries
are named GreenPoint Corp. of Mississippi and GreenPoint Corp. of Minnesota
respectively. Regional personnel of GreenPoint arrange to purchase
manufactured housing contracts originated by manufactured housing retailers
located throughout the United States. Generally, these purchases result from
GreenPoint regional office personnel contacting retailers located in their
regions and explaining GreenPoint's available financing plans, terms,
prevailing rates and credit and financing policies. If a retailer wishes to
make a financing available to its customers, the retailer would apply for
retailer approval. Upon satisfactory results of GreenPoint's investigation of
the retailer's creditworthiness and general business reputation, GreenPoint
and the retailer would enter into a retailer agreement. GreenPoint also
originates manufactured housing contracts and installment loan agreements
directly with customers and through brokers and correspondent lenders.
Underwriting Practices
With respect to each retail manufactured housing contract that was purchased
from a retailer, the general practice of GreenPoint has been that the retailer
submit the customer's credit application, manufacturer's invoice, if the
contract was for a new home, and certain other information relating to the
contract to the applicable regional office of GreenPoint. Personnel at the
regional office analyze the creditworthiness of the customer and certain other
aspects of the proposed transaction. If the creditworthiness of the customer
and other aspects of the transaction are approved by the regional office, the
customer and the retailer execute a contract on a form provided or approved in
advance by GreenPoint. After the manufactured home financed under the contract
is delivered and set up by the retailer, and the customer has moved in,
GreenPoint purchases the contract from the retailer.
Because manufactured homes generally depreciate in value, GreenPoint's
management believes that the creditworthiness of a potential obligor should be
the most important criterion in determining whether to approve the purchase or
origination of a contract. As a result, the underwriting guidelines of
GreenPoint generally require regional office personnel to examine each
applicant's credit history, residence history, employment history and debt-to-
income ratio. There is no minimum requirement for any of these criteria,
although GreenPoint has developed certain guidelines for employment history
and debt-to-income ratios. In the case of employment history, GreenPoint
generally requires its regional office personnel to consider whether the
applicant had worked continuously for the same employer for at least 24 months
and, if not, whether the applicant has worked in the same occupational field
for at least 24 months. The recommended debt-to-income ratio for a particular
credit application depends on the credit score recommendation generated for
that application. In general, the maximum
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debt-to-income ratio for each application that is approved by the credit
scoring system ranged from 70 percent to 53 percent, based on GreenPoint's
estimate of the applicant's after-tax income. Although GreenPoint has
guidelines for some of these criteria, GreenPoint's management does not
believe that an applicant's inability to satisfy some of these guidelines
warrants denial of credit in all cases. For example, if an applicant fails to
meet a guideline by a certain margin for one of the criteria mentioned above,
the applicant generally must exceed the threshold for one or more other
criteria by a compensating margin for the applicant's credit application to be
approved. In addition, in special cases, credit applications are approved even
if certain of the criteria are not met. For these reasons, management of
GreenPoint believe that the ultimate decision whether to approve or reject a
credit application should be made by regional office personnel. To assist
personnel in evaluating credit applications, GreenPoint utilizes a proprietary
credit scoring system, developed by Bank of America, FSB in conjunction with
Fair-Isaacs, implemented in July 1997. The credit scoring system generates a
recommendation to approve or deny a credit application based on certain
criteria established by GreenPoint. The underwriting guidelines of GreenPoint
allow the recommendation generated by the credit scoring system to be used by
regional personnel as a guide in determining whether to extend credit to an
applicant, but do not require regional personnel to make credit decisions
based solely on the system's recommendations. GreenPoint does not disclose the
criteria used by this credit scoring system either to regional personnel or to
the retailers assisting in the preparation of credit applications. The
criteria will be periodically reviewed by of GreenPoint, and modified as
necessary.
It is the policy of GreenPoint that one authorized person provide written
approval of credit applications for amounts up to or equal to certain limits
and that two authorized persons provide written approval of credit
applications for amounts over those limits. The credit limits established by
GreenPoint vary with each regional office. In addition, each person authorized
to make these credit decisions has to be either a regional manager or another
regional office employee to whom the authority to approve credit applications
has been delegated. Any delegated authority may be limited in that the person
to whom the authority was delegated may not have been authorized to approve
credit applications for contracts with initial principal amounts above certain
specified levels. The qualifications of all regional office personnel
authorized to approve or reject credit applications are reviewed and approved
by GreenPoint's senior management. Generally, both the retailer service
manager and the credit manager in each regional office, in addition to the
regional manager, have authority to approve credit applications. However, each
regional office may at various times have additional, or in some cases fewer,
personnel authorized to approve or reject credit applications. GreenPoint has
no set qualifications for regional managers or for other employees to whom
authority to approve credit applications may be delegated; rather, the
authority is given commensurate with regional manager's or other employee's
experience.
It is the policy of GreenPoint that each credit application be approved or
rejected within one to seven days after receipt. Thus, there is less time for
credit investigation than is the case, for example, with loans for site-built
homes. Although GreenPoint's management believes that the one to seven-day
period for approval or rejection of each credit application is consistent with
industry practice, no assurance can be given that any credit application that
was approved in one to seven days would have been approved if a longer period
had been provided for credit investigation.
The credit review and approval practices of each regional office are subject
to internal reviews and audits that, through sampling, examine the nature of
the verification of credit histories, residence histories, employment
histories and debt-to-income ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through each regional office by
rating the obligors on the underlying contracts according to their credit
histories, employment histories and debt-to-income
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ratios. Selection of underwriting files for review is generally made by the
personnel performing the examination, without prior knowledge on the part of
regional office personnel of the files to be selected for review. However,
GreenPoint has no requirement that any specific random selection procedures be
followed and no assurance can be given that the files reviewed in any
examination process are representative of the contract originations in the
related regional office.
With respect to new and used manufactured homes, Green Point's policy is to
finance no more than 95% of the total buyer's cost of any manufactured home,
including taxes and insurance premiums, plus 100% of the costs attributable to
prepaid finance charges and closing costs that are financed.
In the case of new manufactured homes, the maximum amount financed cannot
exceed:
. 130% of the manufacturer's invoice price, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and certain prepaid finance charges and closing
costs.
For used manufactured homes, the amount financed cannot exceed:
. the lesser of 95% of the total sales price or 95% of the retail value,
as specified in the NADA Mobile/Manufactured Housing Appraisal Guide or
the "Kelly Blue Book," plus
. taxes, insurance, certain retailer installed equipment, certain set-up
costs and certain prepaid finance charges and closing costs.
With respect to Land/Home Contracts involving new manufactured homes,
GreenPoint's policy is to finance no more than:
. the lesser of 95% of the value of the real property as determined by
appraisal subject to certain limitations or 95% of the purchase price of
the land subject to certain limitations or the payoff of the encumbered
land, plus
. 130% of the manufacturer's invoice, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and prepaid finance charges and closing costs, plus
. the cost of improvements to the land, subject to certain limitations.
With respect to Land/Home Contracts involving used manufactured homes,
GreenPoint's policy is to finance no more than the lesser of:
. 95% of the total sales price, or
. the sum of 95% of the appraised value of the land and 95% of the NADA
Mobile/Manufactured Housing Appraisal Guide or "Kelly Blue Book" retail
value of the home,
. and in either case, plus taxes, insurance, certain retailer installed
equipment, certain set-up costs, prepaid finance charges and closing
costs and the cost of improvements to the land, subject to certain
limitations.
With respect to Land/Home Contracts in which the manufactured home is
already on the land, GreenPoint's policy is to finance:
. the lesser of 95% of the total sales price or 95% of the appraised value
of the land and home, plus
17
<PAGE>
. taxes, fees, insurance and certain prepaid finance charges and closing
costs.
With respect to Land-in-Lieu Contracts involving new manufactured homes,
GreenPoint's policy is to finance:
. up to 140% of the manufacturer's invoice for the home depending on the
borrower's down payment, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and pre-paid finance charges and closing costs,
plus
. the costs of improvements to the land, subject to certain limitations.
With respect to Land-in-Lieu Contracts involving used manufactured homes,
GreenPoint's policy is to finance no more than the lesser of:
. 95% of the total sales price, or
. 95% of the retail value, as specified in the NADA Mobile/Manufactured
Housing Appraisal Guide or the "Kelly Blue Book,"
. and in either case, plus
-- taxes, insurance, certain retailer installed equipment, certain set-
up costs and prepaid finance charges and closing costs, and
-- the cost of improvements to the land, subject to certain
limitations.
In June 1999, GreenPoint initiated a marketing program for new manufactured
homes in which the maximum amount financed could not exceed:
. 140% of the manufacturer's invoice price, plus
. taxes, insurance, freight charges, certain retailer installed equipment,
certain set-up costs and prepaid finance charges and closing costs.
This marketing program is offered only to applicants who score in the
highest credit score recommendation given by GreenPoint's proprietary credit
scoring system (as described in the second paragraph of this section).
GreenPoint generally requires a down payment in the form of cash and/or the
trade-in value of a previously owned manufactured home and/or, in the case of
Land-in-Lieu Contracts, an estimated value of equity in real property pledged
as additional collateral. For previously owned homes, the trade-in allowance
accepted by the retailer must be consistent with the value of the owned home
determined by GreenPoint in light of current market conditions. The value of
real property pledged as additional collateral is estimated by regional
personnel, using tax assessed value, or appraisers who are familiar with the
area in which the property is located.
Underwriting policies and marketing programs for the origination or purchase
on an individual basis of manufactured housing contracts are established by
GreenPoint's management at its headquarters in San Diego and are subject to
change from time to time. Any material changes or conditions will be disclosed
in the prospectus supplement.
18
<PAGE>
The volume of Contracts originated by GreenPoint, acquired by GreenPoint in
the Acquisition, or purchased from dealers on an individual basis by
GreenPoint for the periods indicated below and certain other information at
the end of the periods below are as follows:
Contracts Originated or Purchased on an Individual Basis
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Principal Balance of Contracts Purchased...... $1,451,368 $715,413
Number of Contracts Purchased................. 38,010 18,597
Average Contract Size......................... $38.18 $38.47
Number of Regional Offices.................... 45 45
</TABLE>
The information in the table above includes only Contracts originated by
GreenPoint, acquired by GreenPoint in the Acquisition, or purchased from
dealers. The number of regional offices includes regional offices in the
United States originating or purchasing Contracts.
Servicing
GreenPoint, through its regional offices, services all of the manufactured
housing contracts that it purchases or originates, whether on an individual
basis or in bulk. Generally, whenever any contracts are sold, GreenPoint will
retain servicing responsibilities with respect to the sold contracts. In
addition, GreenPoint may make arrangements pursuant to which it services, or
would service, manufactured housing contracts owned by other entities. These
service contracts were not originated, and would not be purchased, by
GreenPoint. Servicing responsibilities include collecting principal and
interest payments, taxes, insurance premiums and other payments from obligors
and, when the contracts are not owned by GreenPoint, remitting principal and
interest payments to the owners thereof, to the extent the owners of the
serviced contracts are entitled thereto. Collection procedures include
repossession and resale of manufactured homes securing defaulted contracts and
foreclosure if land is involved and, if deemed advisable by GreenPoint,
entering into workout arrangements with obligors under certain defaulted
contracts. Although decisions as to whether to repossess any manufactured home
are made on an individual basis, GreenPoint's general policy is to institute
repossession procedures promptly after regional office personnel determine
that it is unlikely that a defaulted contract will be brought current, and
thereafter to diligently pursue the resale of repossessed manufactured homes.
Certain historical data relating to the delinquency and repossession
experience of the contracts serviced by Bank of America, FSB prior to the
Acquisition by GreenPoint is available. However, GreenPoint's management
believes that the information relating to Bank of America, FSB prior to the
Acquisition by GreenPoint is not relevant or informative since GreenPoint, and
not Bank of America, FSB, is now servicing the contracts set forth in the
information.
19
<PAGE>
The following table shows the size of the portfolio of Contracts serviced,
including contracts already in repossession, by GreenPoint, through the
manufactured housing regional office system, as of the dates indicated:
Size of Serviced Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of As of
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Unpaid Principal Balance of Contracts Being
Served...................................... $11,504,320 $11,718,576
Average Contract Unpaid Principal Balance.... $27.7 $28.1
Number of Contracts Being Serviced........... 415,373 417,423
</TABLE>
Delinquency and Loan Loss/Repossession Experience
The loss and delinquency information of Bank of America, FSB, in its
capacity as servicer of its manufactured housing installment sales contracts
and installment loan agreement portfolio, has been disclosed in various
filings made by Bank of America, FSB with the Securities and Exchange
Commission. These filings are publicly available to potential investors.
GreenPoint acquired the servicing personnel and approximately $794,958,000.00
in manufactured housing installment sales contracts and installment loan
agreements from Bank of America, FSB in the Acquisition. See "The Acquisition"
in this prospectus. Since October 1, 1998, GreenPoint has been the servicer of
all of the manufactured housing installment sales contracts and installment
loan agreements that had been serviced by Bank of America, FSB. GreenPoint
makes no representation or warranty with respect to the completeness or
accuracy of the loss and delinquency information contained in any filings made
by Bank of America, FSB with the Securities and Exchange Commission or any
filings made by Bank of America, FSB with any other public entity and
disclaims any liability with respect thereto. Further, the loss and
delinquency experience of Bank of America, FSB as servicer of manufactured
housing installment sales contracts and installment loan agreements may not be
reflective of the loss and delinquency experience that GreenPoint will
encounter as servicer of manufactured housing installment sales contracts and
installment loan agreements.
The following table sets forth the delinquency experience of manufactured
housing contracts serviced by GreenPoint since October 1998, other than
contracts already in repossession, as of the dates indicated:
Delinquency Experience
<TABLE>
<CAPTION>
As of As of
December 31, 1998 March 31, 1999
----------------- --------------
<S> <C> <C>
Number of Contracts Outstanding.............. 411,852 414,024
Number of Contracts Delinquent
30--59 days................................ 6,397 3,170
60--89 days................................ 1,753 1,016
90 days or more............................ 2,372 1,920
------- -------
Total Contracts Delinquent................... 10,522 6,106
======= =======
Delinquencies as a Percentage of Contracts
Outstanding................................. 2.55% 1.47%
======= =======
</TABLE>
The information contained in the table above is based on number of days
payments are contractually past due, assuming 30-day months. Consequently, a
payment due on the first day of a month is not 30 days delinquent until the
first day of the following month.
20
<PAGE>
Since GreenPoint has only been servicing the Contracts for a limited amount
of time, the delinquency experience reflected in the table above may not
necessarily be indicative of the actual performance of the Contracts over
time.
The following table sets forth the loan loss/repossession experience of
Contracts serviced through the manufactured housing regional office system of
GreenPoint, including Contracts already in repossession, as of the dates
indicated:
Loan Loss/Repossession Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended
March 31, 1999
--------------
<S> <C>
Number of Contracts Being Serviced............................... 417,423
Aggregate Principal Balance of Contracts Being Serviced.......... $11,718,576
Average Principal Recovery Upon Liquidation...................... 45.26%
Contract Liquidations............................................ 1.06%
Net Losses
Dollars........................................................ $73,593
Percentage....................................................... 0.63%
Contracts in Repossession........................................ 3,399
</TABLE>
The "Average Principal Recovery Upon Liquidation" in the table above is
shown as a percentage of the outstanding principal balance of Contracts that
were liquidated during the applicable period, based on the gross amounts
recovered upon liquidation, proceeds applied to unpaid interest accrued
through the date of liquidation and after the payment of repossession and
other liquidation expenses. Deficiency recoveries received subsequent to
liquidation date are also included net of collection expenses paid to third
parties.
The "Contract Liquidations" in the table above are shown as the number of
Contracts liquidated during the period as a percentage of the total number of
Contracts being serviced as of period end.
The calculation of "Net Losses" includes unpaid interest accrued through the
date of liquidation and all repossession and other liquidation expenses and is
reduced by deficiency recoveries received subsequent to liquidation date net
of collection expenses paid to third parties.
Prepayment and Yield Considerations
Prepayment Considerations
If so specified in the related prospectus supplement, the Contracts in any
Contract Pool may be prepaid in full or in part at any time. The prepayment
experience of the Contracts, including prepayments due to liquidations of
defaulted Contracts, will affect the average life and the maturity of the
related Certificates. A Contract Pool might include Contracts with Contract
Rates that are generally higher or lower, in absolute terms or in comparison
to prevailing rates, than the contract rates of the contracts from which are
derived certain historical statistical data set forth in the prospectus or
prospectus supplement. As a result, the prepayment performance of the
Contracts contained in that Contract Pool might be higher or lower than the
prepayment performance of the contracts reflected in the historical data. In
addition, GreenPoint's management is aware of limited publicly available
information relating to historical rates of prepayment on manufactured housing
contracts. However,
21
<PAGE>
GreenPoint's management believes that neither the prepayment experience of
other pools of manufactured housing contracts nor the historical rates of
prepayment for any other manufactured housing contracts will necessarily be
indicative of the rate of prepayment that may be expected to be exhibited by
the Contracts in any other Contract Pool. Nevertheless, GreenPoint's
management anticipates that a number of Contracts will be prepaid in full in
each year during which any related Certificates are outstanding. The amount of
prepayments on the Contracts, including prepayments due to liquidations of
defaulted Contracts, during any particular year may be influenced by a variety
of economic, geographic, social and other factors, including repossessions,
aging, seasonality, interest rates and the rate at which manufactured
homeowners sell their manufactured homes. Other factors affecting prepayments
on the Contracts include changes in Obligors' housing needs, job transfers,
unemployment and Obligors' net equity in manufactured homes. Because of the
depreciating nature of manufactured housing, which limits the possibilities
for refinancing, and because the terms of manufactured housing contracts are
generally shorter than the terms for mortgage loans secured by site-built
homes, and changes in interest rates have a correspondingly smaller effect on
the monthly payments on manufactured housing contracts as opposed to mortgage
loans secured by site-built homes, changes in interest rates may play a
smaller role in prepayment behavior of manufactured housing contracts than
they do in the prepayment behavior of loans secured by mortgages on site-built
homes. Conversely, local economic conditions and certain of the other factors
mentioned above are likely to play a larger role in the prepayment behavior of
manufactured housing contracts than they do in the prepayment behavior of
loans secured by mortgages on site-built homes.
Repurchases of Contracts on account of certain breaches of representations
and warranties as described in the applicable prospectus supplement also will
have the effect of prepaying the repurchased Contracts and therefore will
affect the average life of and yield on the Certificates. See "Description of
the Certificates--Conveyance of Contracts." In addition, most of the Contracts
contain provisions that prohibit the related owner from selling the
manufactured home without the prior consent of the holder of the related
Contract. These Contract provisions are similar to "due-on-sale" clauses and
may not be enforceable in certain states. See "Certain Legal Aspects of the
Contracts--Transfers of manufactured homes; Enforceability of Restrictions on
Transfer" in this prospectus. The servicer's policy is to permit most sales of
manufactured homes where the proposed buyer meets the servicer's then current
underwriting standards and enters into an assumption agreement.
To the extent provided in the related prospectus supplement, the servicer
under each Agreement, or any other party as may be designated in the related
prospectus supplement, will have the option to purchase all of the Contracts
in the related Contract Pool, at the price and under the conditions specified
in related prospectus supplement, when the aggregate Pool Principal Balance,
as defined in the related prospectus supplement, of the Contract Pool has been
reduced to 10%, or any other percentage as may be specified in the related
prospectus supplement, of its initial Pool Principal Balance. The exercise of
any option to repurchase the Contracts early will affect the average life of
and yield on the related Certificates. To the extent provided in the related
prospectus supplement, the trustee for the related Trust Fund shall solicit
bids for the purchase of the Contracts remaining in the Trust Fund at a
Termination Auction within ninety days following the Distribution Date as of
which the Pool Principal Balance for a Contract Pool is less than 10%, or any
other percentage as may be specified in the related prospectus supplement, of
the Contract Pool's Cut-off Date Pool Principal Balance. The sale and
consequent termination of the related Trust Fund pursuant to a Termination
Auction will affect the average life and yield on the related Certificates.
22
<PAGE>
The average life and maturity of the Certificates of any Class will also be
affected by the amount and timing of any Special Principal Distributions to
the holders of the Certificates. In addition, if any Certificate of a Class is
subject to mandatory repurchase, the occurrence of the Repurchase Date for the
Certificate subject to mandatory repurchase will have the same effect as the
maturation of the Certificate subject to mandatory repurchase, with the
repurchase price being equivalent to the amount due at maturity. See
"Description of the Certificates--Distributions on Certificates" and
"Description of the Certificates--Optional and Mandatory Repurchase of
Certificates; Optional Termination and Termination Auction" in this
prospectus. The prospectus supplement relating to any Class that is entitled
to Special Principal Distributions or is subject to mandatory repurchase will
contain a description of the conditions under which Special Principal
Distributions or mandatory repurchases will take place and a description of
some of the factors that might affect the rate of Special Principal
Distributions or the timing of any Repurchase Dates.
Information regarding the "Prepayment Model" to be defined in the related
prospectus supplement or any other rate of assumed prepayment, as applicable,
will be set forth in the prospectus supplement applicable to the relevant
Class or Classes of Certificates offered hereby.
Yield Considerations
To the extent that any credit enhancement or any advancing obligation of the
servicer described in the related prospectus supplement is insufficient to
protect the holders of any Class of Certificates from losses or delinquencies
on the related Contract Pool, the yield to the holders from their investment
in the Certificates will be adversely affected should losses or delinquencies
occur. In the absence of losses or delinquencies which are not covered by
credit enhancement or advances, respectively, on a Distribution Date, the
effective yield on the Certificates will depend upon, among other things, the
price at which the Certificates are purchased, the rate at which the Contracts
for the related Trust Fund liquidate or are prepaid and the amount and timing
of any Special Principal Distributions. If a purchaser of Certificates
purchases them at a discount (premium) and calculates its anticipated yield to
maturity based on an assumed rate of distributions of principal on the
purchased Certificates that is faster (slower) than the rate actually
realized, the purchaser's actual yield to maturity will be lower than the
yield so calculated by the purchaser. Losses which are covered by credit
enhancement, but on later than anticipated Distribution Dates, will have the
same effect on anticipated yield as prepayments that are made later than
anticipated, as just described, depending on whether the Certificates were
purchased at a discount or premium.
The yield to holders of any Class of Certificates may be below that
otherwise produced by the applicable Pass-Through Rate because, while, in the
absence of losses or delinquencies, one month's interest on the related
Contracts will be collected during each Collection Period, the portion of one
month's interest to which the holders of the related Certificates are entitled
will not be distributed until the first Distribution Date after the Collection
Period in which the interest was collected.
If a Certificate is subject to mandatory repurchase, the yield to the
Repurchase Date will be affected by, among other things, the applicable
repurchase price, the ability of any Liquidity Facility Provider to distribute
the repurchase price and the date, if any, on which the Repurchase Date
occurs. If, in connection with a mandatory repurchase, the repurchase price
for a Certificate is equal to its Percentage Interest of the then current
Certificate Balance, and the Certificate is purchased at a discount, and the
purchaser calculates its anticipated yield to the Repurchase Date based on an
assumed Repurchase Date that is earlier than the actual Repurchase Date, then
such purchaser's actual yield to maturity will be lower than it would have
been if a repurchase occurred on the assumed date.
23
<PAGE>
The payment features of the Contracts comprising any Contract Pool, as
described above under "The Contract Pools," may, under certain extraordinary
circumstances, cause the amounts collected thereon during particular
Collection Periods to be insufficient to fund all distributions of principal
and interest to the holders of some or all of the Certificates of the related
Series, even in the absence of losses or delinquencies. The circumstances
described in the preceding sentence could occur if a sufficiently large number
of partial or full prepayments, as a percentage of the then outstanding Pool
Principal Balance of the related Contract Pool, are received on Contracts in a
particular Collection Period, if those prepayments are made in advance of the
related Contracts' respective Due Dates during the particular Collection
Period. In that case, a non-default collection shortfall could occur because
interest that actually accrues on the related Contracts is less than interest
that would have accrued if the payments were paid on the Contracts' respective
Due Dates. A non-default collection shortfall could adversely affect the yield
to holders of any Class of Certificates to the extent the non-default
collection shortfalls are not covered by credit enhancement or advances.
24
<PAGE>
Description of the Certificates
Each Series of Certificates will be issued pursuant to a separate Agreement.
The following summaries describe only the material provisions expected to be
common to each Agreement and the related Certificates. GreenPoint recommends
that the investor read all of the provisions of the related Agreement and the
description set forth in the related prospectus supplement. Section references
contained in this prospectus refer to sections of the form of Agreement filed
as an exhibit to the Registration Statement. The prospectus supplement for
each Series will describe the specific material provisions of the Agreement
relating to the Series. Capitalized terms used and not otherwise defined in
this prospectus shall have the meanings assigned to them in the form of
Agreement filed as an exhibit to the Registration Statement.
General
The Certificates may be issued in one or more Classes. If the Certificates
of a Series are issued in more than one Class, the Certificates of all or less
than all of the Classes for that Series may be sold pursuant to this
prospectus, and there may be separate prospectus supplements relating to one
or more of such Classes so sold. Any reference in this prospectus to the
prospectus supplement relating to a Series comprised of more than one Class
should be understood as a reference to each of the prospectus supplements
relating to the Classes sold hereunder. Any reference in this prospectus to
the Certificates of a Class should be understood to refer to the Certificates
of a Class within a Series, the Certificates of a subclass within a Series or
all of the Certificates of a single-Class Series, as the context may require.
The Certificates will be issued in the denominations specified in the
related prospectus supplement. (Section 6.02.) The "Percentage Interest" of a
Certificate is the percentage obtained from dividing the original denomination
of the Certificate by the initial principal balance of all of the Certificates
of the same Class. Interest-only Certificates will have no Percentage
Interest. Certificates, if issued in registered form to beneficial owners of
the Certificates or nominees thereof, will be transferable and exchangeable at
the corporate trust office of the trustee or, if it so elects, at the office
of an agent in New York, New York. (Sections 6.02 and 9.11.) No service charge
will be made for any registration of exchange or transfer, but the trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge. (Section 6.02.)
The Certificates of each Series will evidence an interest, as specified in
the related prospectus supplement, in a Trust Fund. Each Trust Fund will
include:
(1) a Contract Pool, including certain rights to receive payments on
the Contracts comprising the Contract Pool on and after the Cut-off
Date;
(2) the amounts held from time to time in the "Certificate Account" as
described in the applicable prospectus supplement under "--Payment
on Contracts; Certificate Account," maintained by the trustee
pursuant to the Agreement;
(3) any property which initially secured a Contract and which is
acquired in the process of realizing thereon;
(4) the obligations of GreenPoint, under certain conditions, to
repurchase Contracts sold by it with respect to which certain
representations and warranties have been breached and not cured;
(5) certain contractual servicing obligations of the servicer;
25
<PAGE>
(6) the proceeds of all insurance policies described in this
prospectus; and
(7) if applicable, one or more forms of credit support.
If so specified in the related prospectus supplement, a limited guarantee of
GFC may exist and, if so specified in the related prospectus supplement, will
be a part of the Trust Fund.
GreenPoint will convey the Contracts to the trustee. See "The Contract
Pools" in this prospectus and "--Conveyance of Contracts" below. GreenPoint,
as servicer, will service the Contracts pursuant to the Agreement. If so
specified in the related prospectus supplement, the Contract documents will be
held for the benefit of the trustee by the servicer.
Conveyance of Contracts
On the date of initial issuance of the Certificates of a Series, GreenPoint
will sell to the trustee, without recourse, all of its right, title and
interest in and to the Contracts sold by it, and all rights under the standard
hazard insurance policies on the related manufactured homes. The conveyance of
the Contracts to the trustee will include a conveyance of all rights to
receive Scheduled Payments thereon that were due on or after the Cut-off Date,
even if received prior to the Cut-off Date, as well as all rights to any
payments received on or after the Cut-off Date other than late receipts of
Scheduled Payments that were due prior to the Cut-off Date. The Contracts will
be described on the Contract Schedule attached to the Agreement. The Contract
Schedule will include the principal balance of each Contract as of the Cut-off
Date, the amount of each Scheduled Payment due on each Contract as of the Cut-
off Date, the Contract Rate on each Contract as of the Cut-off Date and the
maturity date of each Contract. GreenPoint will be required to complete a
review of the Contract Files and confirm the accuracy of the Contract Schedule
delivered to the trustee within the time period set forth in the related
Agreement. Any Contract discovered not to agree with the Contract Schedule in
a manner that is materially adverse to the interests of the certificateholders
will be repurchased by GreenPoint, or replaced with another Contract, except
that if the discrepancy relates to the principal balance of a Contract
GreenPoint may, under certain conditions, deposit cash in the Certificate
Account in an amount sufficient to offset the discrepancy. The trustee will
not review the Contract Files. (Section 2.01.)
If so provided in the related prospectus supplement, the servicer will hold,
as custodian and agent on behalf of the trustee, the original Contracts and
copies of documents and instruments relating to each Contract and the security
interest in the manufactured home, and real property, if any, relating to each
Contract. In order to give notice of the trustee's right, title and interest
in and to the Contracts, a UCC-1 financing statement identifying the trustee
as the secured party and identifying all the Contracts as collateral will be
filed in the appropriate office in the appropriate states. The Contracts will
be stamped or otherwise marked to reflect their assignment to the trustee. To
the extent that the Contracts do not constitute "chattel paper" within the
meaning of the UCC as in effect in the applicable jurisdictions or to the
extent that the Contracts do constitute chattel paper and a subsequent
purchaser is able to take physical possession of the Contracts without notice
of the assignment to the trustee, the trustee's interest in the Contracts
could be defeated. See "Certain Legal Aspects of the Contracts--Security
Interests of GreenPoint in the Manufactured Homes" and "Land Home and Land-in-
Lieu Contracts" in this prospectus.
GreenPoint will make certain representations and warranties to the trustee
with respect to each Contract sold by it. The applicable prospectus supplement
will describe:
. the representations and warranties made by GreenPoint in connection with
the Contracts conveyed to the related Trust Fund,
26
<PAGE>
. the terms pursuant to which GreenPoint will be obligated to repurchase,
at the price specified in this prospectus, any Contract sold by it if
any representation and warranty has been breached, unless the breach has
been cured or otherwise is not required to be cured, and
. the terms pursuant to which GreenPoint may remedy any breach. (Section
3.05.)
Payments on Contracts
The applicable prospectus supplement will specify the arrangements pursuant
to which Contract collections are held pending distribution to
certificateholders. (Section 4.05.) Certain Contract collections will be
applied to pay the servicer's servicing compensation and to reimburse it for
certain expenses, as set forth in each prospectus supplement and as set forth
in this prospectus under "--Servicing Compensation and Payment of Expenses;
Certain Matters Regarding the servicer" below.
Distributions on Certificates
The Certificates of any Class will entitle the holders thereof to
distributions, on the Distribution Dates specified in the related prospectus
supplement, from amounts collected on the underlying Contracts. The
Certificates of a Class may entitle the holders thereof to:
. distributions of both principal and interest;
. distributions of principal only; or
. distributions of interest only.
The distributions described in the previous sentence will be made in
accordance with a formula described in the related prospectus supplement, and,
if so specified in the related prospectus supplement, the distributions will
be applied first to interest, if any, and second to principal, if any. To the
extent specified in the related prospectus supplement, the rights of the
holders of the Certificates of one or more Classes of a multiple Class Series
to receive distributions of principal or of interest or of both from amounts
collected on the Contracts may be subordinate to the rights of the holders of
Certificates of one or more other Classes. See "Credit and Liquidity
Enhancement" in this prospectus.
Distributions of Principal. If the Certificates of a Class entitle the
holders thereof to distributions of principal, the related prospectus
supplement will specify an initial aggregate Certificate Balance for the
Certificates of that Class and a method of computing the amount of principal,
if any, to be distributed to the holders of the Certificates of that Class on
each Distribution Date. If so specified in the related prospectus supplement,
principal distributions for the Certificates of a Class will be computed on
the basis of a formula which, on each Distribution Date, allocates all or a
portion of the Total Regular Principal Amount relating to that Distribution
Date to the Certificates of the applicable Class. See "The Contract Pools" and
"--Servicing Compensation and Payment of Expenses; Certain Matters Regarding
the servicer" in this prospectus. Distributions with respect to all or a
portion of the Total Regular Principal Amount are sometimes referred to in
this prospectus as distributions of "Regular Principal." The Total Regular
Principal Amount with respect to any Contract Pool and any Distribution Date
may be estimated in a manner specified in the related prospectus supplement.
If, due to liquidation losses or other circumstances adversely affecting the
collections on the underlying Contract Pool, the Contract collections
available on any Distribution Date to make
27
<PAGE>
distributions of Regular Principal to the holders of the Certificates of a
Class are less than the portion of the Total Regular Principal Amount
allocable to such Class, the deficiency may be made up from:
. Excess Interest; or
. funds available from one or more forms of credit support referred to
below, but only to the extent, if any, specified in the applicable
prospectus supplement.
See "Credit and Liquidity Enhancement" in this prospectus. If specified in
the applicable prospectus supplement, the Certificate Balance of the
Certificates of a Class will be reduced on each Distribution Date by the full
amount of the portion of the Total Regular Principal Amount allocable to such
Class even if, due to deficient Contract collections, a full distribution
thereof is not made.
The applicable distribution formula for each Class of a multiple-Class
Series may allocate the Total Regular Principal Amount among the various
Classes on a pro rata, sequential or other basis, as specified in the related
prospectus supplement. If specified in the related prospectus supplement, the
applicable distribution formula may entitle the holders of Certificates of a
particular Class to receive on certain Distribution Dates, distributions of
Regular Principal from particular sources of funds (e.g., one or more of the
forms of credit support referred to below) upon the occurrence of certain
losses or delinquencies, even if the holders of the Certificates of such Class
would not have been entitled to receive principal distributions on the related
Distribution Dates from amounts collected on the underlying Contracts in the
absence of losses or delinquencies.
If so specified in the applicable prospectus supplement, the Certificates of
a Class may entitle the holders thereof to "Special Principal Distributions"
on particular Distribution Dates that are unrelated to the Total Regular
Principal Amount for any such Distribution Date. Special Principal
Distributions may be made, under the circumstances set forth in the applicable
prospectus supplement, from interest collected on the underlying Contract
Pool, from funds available from one or more forms of credit support or from
any other source specified in the related prospectus supplement. The
Certificates of a Class having an initial Certificate Balance may entitle the
holders thereof to distributions of Regular Principal only, to distributions
of Regular Principal and to Special Principal Distributions or to Special
Principal Distributions only. However, if so specified in the related
prospectus supplement, the Certificates of a Class will not entitle the
holders thereof to aggregate principal distributions in excess of the initial
Certificate Balance for the Certificates in that Class.
Distributions of Interest. The distribution formula for a Class of
Certificates having an initial Certificate Balance may, but need not, also
specify a method of computing the interest, if any, to be distributed on
specified Distribution Dates, which may include all or less than all of the
Distribution Dates, to the holders of the Certificates of such Class. The
interest described in the previous sentence may be equal, subject to the
adjustments as may be described in the related prospectus supplement, to a
specified number of days' interest on the applicable Certificate Balance,
before giving effect to any reduction thereof on the related Distribution
Date, calculated at the Pass-Through Rate specified in the related prospectus
supplement. The Pass-Through Rate may be fixed or variable, and, if specified
in the related prospectus supplement, may shift from a variable rate to a
fixed rate under the conditions specified in the related prospectus
supplement. Variable Pass-Through Rates may vary from time to time based upon
changes in an index or other measure of certain market rates, all as more
fully described in the related prospectus supplement. In that case, the Rate
Period and the specific basis on which the Pass-Through Rate for each Rate
Period will be determined, including the particular market rates and measures
thereof relevant for determining the Pass-Through Rate for each Rate Period,
may remain constant or may change from time to time at the election of the
servicer or otherwise, all as
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specified in the related prospectus supplement. Variable Pass-Through Rates
may also vary from time to time, in the manner specified in the related
prospectus supplement, based upon changes in the weighted average of the
Contract Rates of the Contracts in the related Contract Pool or on any other
basis. To the extent set forth in the related prospectus supplement, variable
Pass-Through Rates may also have floor rates and/or ceiling rates which may be
fixed or subject to adjustment as set forth in the related prospectus
supplement. In addition, a variable Pass-Through Rate may be converted to a
fixed Pass-Through Rate at the election of the Seller or upon the occurrence
of certain conditions. In that event, the related prospectus supplement will
set forth the conditions under which the variable Pass-Through Rate may be
converted to a fixed Pass-Through Rate.
Rather than entitling the holders thereof to receive distributions of
interest based upon a Pass-Through Rate, the distribution formula for the
Certificates of a Class may entitle the holders thereof to distributions of
interest on specified Distribution Dates, which may include all or less than
all of the Distribution Dates, equal, in the case of any such Distribution
Date, to all or a portion, which portion will be determined as described in
the related prospectus supplement, of the interest payable on the related
Contracts during one or more Collection Periods occurring prior to the related
Distribution Date. Classes of Certificates that do not entitle the holders
thereof to receive distributions of principal may nevertheless entitle such
holders to receive interest distributions calculated on this basis.
If, due to liquidation losses or other circumstances adversely affecting the
collections on the underlying Contract Pool, the Contract collections
available to make distributions of interest to the holders of the Certificates
of a Class are less than the amount of interest computed as described above,
the deficiency may be made up from other sources, but only to the extent, if
any, specified in the applicable prospectus supplement. See "Credit and
Liquidity Enhancement" in this prospectus.
Each prospectus supplement will contain information relating to the full
amounts of principal and interest required to be distributed to the holders of
the related Class or Classes of Certificates, to the extent there are
sufficient Contract collections available therefor, sometimes referred to in
this prospectus as "full distributions", from amounts paid or payable on the
underlying Contracts.
Residual Interests. If specified in the related prospectus supplement, a
Class of Certificates sold hereunder may evidence the Residual Interest.
Certificates evidencing a Residual Interest will not have the features
described above. Rather, if so specified in the related prospectus supplement,
Certificates evidencing a Residual Interest will entitle the holders thereof
to receive distributions from amounts collected on the Contracts which would
not be needed to make distributions to the holders of other interests in the
Trust Fund or to pay expenses of the Trust Fund in the absence of liquidation
losses or other events resulting in deficient Contract collections. In
addition, if specified in the related prospectus supplement, any Certificates
evidencing a Residual Interest may also entitle the holders thereof to receive
additional distributions of assets of the related Trust Fund, to the extent
any assets remain after being applied to make distributions to the holders of
other interests in the Trust Fund or to pay expenses of the Trust Fund.
Further, if so specified in the related prospectus supplement, any amounts due
to the holders of a Residual Interest with respect to any Series may be
subordinated to amounts due to holders of Certificates of another Series to
the extent described in the related prospectus supplement. The Certificates
evidencing a Residual Interest may entitle the holders thereof to
distributions at various times throughout the life of the related Trust Fund
or only upon termination of the Trust Fund, all as more fully set forth in the
related prospectus supplement. If an election is made to treat the related
Trust Fund as a REMIC, the holders of a Residual Interest in such Trust Fund
will be subject to federal income taxation with respect to their ownership of
such Residual Interest as described in this prospectus under "Federal Income
Tax Consequences--REMIC Certificates--Taxation of Residual Certificates."
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Global Certificates
If so specified in the applicable prospectus supplement, the Certificates of
a Series, or of one or more Classes within a Series, will be issuable in the
form of Global Certificates.
The Depository Trust Company is a limited-purpose trust company organized
under the laws of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC accepts securities for deposit from
its Participants and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of Participants, thereby eliminating the need for physical movement
of certificates. Indirect access to the DTC system is also available to the
Indirect Participants.
Unless and until Definitive Certificates are issued, beneficial owners of
the Certificates who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Certificates may do so only through
Participants. In addition, beneficial owners of the Certificates will receive
all distributions of principal of, and interest on, the Certificates from the
trustee through DTC and Participants. Beneficial owners of the Certificates
will not receive or be entitled to receive certificates representing their
respective interests in the Certificates, except under the limited
circumstances described below. In addition, if some or all of the Certificates
of a Series are issued in the form of one or more Global Certificates, certain
monthly and annual reports prepared by the servicer under the related
Agreement will be sent on behalf of the related Trust Fund to DTC and not to
the beneficial owners of the Certificates.
Unless and until Definitive Certificates are issued, it is anticipated that
the only "certificateholder" of the Certificates will be Cede & Co., as
nominee of DTC. Beneficial owners of the Certificates will not be
certificateholders as that term is used in the Agreement. beneficial owners of
the Certificates are only permitted to exercise the rights of
certificateholders indirectly through Participants and DTC.
If so specified in the related prospectus supplement, while the Certificates
are outstanding, under the rules, regulations and procedures creating and
affecting DTC and its operations, the "DTC Rules," Participants are required
to make book-entry transfers through DTC's facilities with respect to the
Certificates, and DTC as the sole holder of the Certificates is required to
receive and transmit distributions of principal of, and interest on, the
Certificates. Unless and until Definitive Certificates are issued, beneficial
owners of the Certificates who are not Participants may transfer ownership of
Certificates only through Participants by instructing its Participants to
transfer Certificates, by book-entry transfer, through DTC for the account of
the purchasers of the Certificates, which account is maintained with their
respective Participants. Under the DTC Rules and in accordance with DTC's
normal procedures, transfers of ownership of Certificates will be executed
through DTC, and the accounts of the respective Participants at DTC will be
debited and credited.
Definitive Certificates will be issued to beneficial owners of the
Certificates, or their nominees, rather than to DTC, only if:
. the servicer advises the trustee in writing that DTC is no longer
willing or qualified to discharge properly its responsibilities as
nominee and depository with respect to the Certificates and the servicer
or the trustee is unable to locate a qualified successor;
. the Seller, at its option, elects to terminate the book-entry system
through DTC; or
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. after the occurrence of an Event of Default, beneficial owners of the
Certificates having a majority in Percentage Interests of each Class of
the Certificates advise the trustee and DTC through the Participants, in
writing, that the continuation of a book-entry system through DTC or a
successor thereto to the exclusion of any physical certificates being
issued to beneficial owners of the Certificates is no longer in the best
interests of beneficial owners of the Certificates. See "--Servicing
Compensation and Payment of Expenses; Certain Matters Regarding the
servicer--Events of Default" below.
Upon issuance of Definitive Certificates to beneficial owners of the
Certificates, the Definitive Certificates will be transferable directly and
not exclusively on a book-entry basis and registered holders will deal
directly with the trustee with respect to transfers, notices and
distributions.
Except as otherwise specified in the related prospectus supplement, unless
and until Definitive Certificates are issued, DTC will take any action
permitted to be taken by a certificateholder under the Agreement only at the
direction of one or more Participants to whose DTC accounts the Certificates
are credited. DTC will take such action with respect to any Percentage
Interests of the Certificates only at the direction of and on behalf of its
Participants to whose DTC accounts the Certificates are credited with respect
to the Percentage Interests of the Certificates. DTC may take actions, at the
direction of the related Participants, with respect to some Certificates which
conflict with actions taken with respect to other Certificates.
DTC's Year 2000 Efforts
DTC management is aware that some computer applications, systems, and the
like for processing data, the "Systems" that are dependent upon calendar
dates, including dates before, on, and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its Participants and other members of
the financial community, the "Industry" that it has developed and is
implementing a program so that its Systems, as the same relate to the timely
payment of distributions, including principal and income payments, to
securityholders, book-entry deliveries, and settlement of trades within DTC,
"DTC Services" continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC license software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service
providers, among others. DTC has informed the Industry that it is contacting
(and will continue to contact) third party vendors from whom DTC acquires
services to:
. impress upon them the importance of services being Year 2000 compliance;
and
. determine the extent of their efforts for Year 2000 remediation and, as
appropriate, testing for their services.
In addition, DTC is in the process of developing contingency plans as it deems
appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended
to serve as a representation, warranty, or contract modification of any kind.
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Optional and Mandatory Repurchase of Certificates; Optional Termination and
Termination Auction
Optional Repurchase. If so specified in the applicable prospectus
supplement, the servicer for any Trust Fund, or other parties as designated in
the related prospectus supplement, will have the option to repurchase, upon
giving notice mailed no later than the Distribution Date next preceding the
month of the exercise of the option to repurchase, all outstanding Contracts
after the first Distribution Date on which the Pool Scheduled Principal
Balance is less than 10% or other percentage as may be specified in the
related prospectus supplement of the initial Pool Principal Balance on the
Cut-off Date. The price at which the servicer for the related Trust Fund may
repurchase the related Contracts will equal, after deductions of related
advances by the servicer, the greater of:
(1) the sum of:
(a) 100% of the Pool Scheduled Principal Balance of each Contract,
other than any Contract as to which the related manufactured home
has been acquired and not yet disposed of and whose fair market
value is included pursuant to clause (b) below, as of the final
Distribution Date; and
(b) the fair market value of the acquired property as determined by the
servicer; and
(2) the aggregate fair market value as determined by the servicer of all of
the assets of the related Trust Fund, plus
in the case of both clause (1) and (2), an amount sufficient to reimburse
certificateholders for each outstanding Class for any shortfall in interest
due thereto in respect of prior Distribution Dates and, if so specified in the
related prospectus supplement, any amounts owing to the Credit Facility
Provider. The servicer's option shall not be exercisable if there will not be
distributed to the certificateholders the Minimum Termination Amount. The
related prospectus supplement will specify whether losses suffered on the
Contracts in the normal course will be allocated to the holders of
Certificates when realized or upon the termination of the related Trust Fund
and whether an adjustment to the Minimum Termination Amount will be made. In
no event, will losses be recognized until a liquidation of the collateral
securing any defaulted Contract has been liquidated. See "Description of the
Certificates--Optional Termination" in the related prospectus supplement.
(Section 10.01.)
Mandatory Repurchase. Some or all of the Certificates of a Class may be
subject to repurchase by or on behalf of the Seller at the option of the
holders thereof and/or at the option of the Seller, but only to the extent, at
the prices, on the dates and under the conditions specified in the related
prospectus supplement. In addition, some or all of the Certificates of a Class
may be subject to mandatory repurchase by or on behalf of the Seller to the
extent, at the prices, on the dates and under the conditions specified in the
related prospectus supplement. On the Repurchase Date, the holder of the
Certificate to be repurchased will cease to be entitled to any benefit of the
Certificate or the related Agreement and will be entitled only to receive from
the trustee the repurchase price of the Certificate upon surrender thereof at
the office or agency designated by the trustee. To the extent specified in the
related prospectus supplement, the funds necessary to distribute the
repurchase price of any Certificate subject to mandatory or optional
repurchase as described therein will be provided under a certificate purchase
agreement or other Liquidity Facility as described in "Credit and Liquidity
Enhancement" in this prospectus.
Optional or Mandatory Termination Auction. If specified in the applicable
prospectus supplement, on any Distribution Date after the Distribution Date on
which the Pool Scheduled Principal Balance is less than 10% or other
percentage as may be specified in the related prospectus
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supplement of the Cut-off Date Pool Principal Balance, the servicer, or other
parties as designated in the related prospectus supplement, will, in addition
to the option to repurchase the Contracts discussed above, have the option to
direct the trustee to solicit bids for a Termination Auction. Unless the
servicer, or other party as designated in the prospectus supplement, has
either exercised the option to repurchase the Contracts or directed the
trustee to conduct a Termination Auction within 90 days of the Distribution
Date on which the Pool Scheduled Principal Balance is less than 10% or other
percentage as may be specified in the related prospectus supplement of the
Cut-off Date Pool Principal Balance, the servicer shall, to the extent
specified in the related prospectus supplement, be obligated to direct the
trustee to conduct a Termination Auction. In any Termination Auction, the
servicer shall give notice as specified in the applicable prospectus
supplement before the date on which the Termination Auction is to occur. The
trustee will solicit each certificateholder, the Seller and one or more active
participants in the asset-backed securities or manufactured housing contract
market that are not affiliated with GreenPoint to make a bid to purchase the
Contracts at the Termination Auction. The trustee will sell all the Contracts
to the highest bidder, subject, among other things, to:
. the requirement that the highest bid equal or exceed the Minimum
Termination Amount; and
. the requirement that at least one bid be tendered by an active
participant in the asset-backed securities or manufactured housing
contract market that is not affiliated with GreenPoint.
If the foregoing requirements are satisfied, the successful bidder or bidders
shall deposit the aggregate purchase price for the Contracts in the
Certificate Account. If the foregoing requirements are not satisfied, the
purchase shall not occur and distributions will continue to be made on the
Certificates. Any sale and consequent termination of the Trust Fund as a
result of a Termination Auction must constitute a "qualified liquidation" of
the Trust Fund under Section 860F of the Code. (Section 10.1)
Termination of the Agreement
The Agreement will terminate upon the last action required to be taken by
the trustee on the final Distribution Date following the earlier of:
. the purchase or sale of all Contracts and all property acquired in
respect of any Contract remaining in the Trust Fund as described above
under "--Optional and Mandatory Repurchase of Certificates; Termination
Auction;" or
. the final payment or other liquidation or any advance with respect
thereto of the last Contract remaining in the relevant Trust Fund,
including the disposition of all property acquired upon repossession of
any manufactured home. (Section 10.01.)
In the event of the termination of any Agreement, the holders of
Certificates of any Class of the related Series will be entitled to receive,
upon presentation and surrender of their Certificates at the office or agency
designated by the trustee, a final distribution in an amount computed as
described in the related prospectus supplement.
Collection and Other Servicing Procedures
Except as otherwise provided in the related Agreement, the servicer may
rescind, cancel or make material modifications of the terms of a Contract,
including modifying the amounts and Due Dates of Scheduled Payments, in
connection with a default or imminent default thereunder. However, if so
specified in the related prospectus supplement and unless required by the
applicable law or to bring Contracts into conformity with the representations
and warranties contained in the Agreement, the
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servicer may not rescind, cancel or materially modify any Contract unless the
servicer obtains an opinion of counsel to the effect that such action will not
have certain adverse federal income tax consequences. (Section 4.07.)
Servicing Compensation and Payment of Expenses; Certain Matters Regarding the
Servicer
The Monthly Servicing Fee and any additional servicing compensation with
respect to the Contracts underlying a Series of Certificates will be specified
in the applicable prospectus supplement. (Section 1.01.)
If so specified in the related prospectus supplement, if GreenPoint is
acting as servicer, GreenPoint may subordinate the Monthly Servicing Fee for a
Series with respect to all, or a portion of, the amounts due to the related
certificateholders on the terms and conditions set forth in the related
prospectus supplement.
The Monthly Servicing Fee provides compensation for customary manufactured
housing contract third-party servicing activities to be performed by the
servicer for the Trust Fund and for additional administrative services
performed by the servicer on behalf of the Trust Fund. Customary servicing
activities include:
. collecting and recording payments,
. communicating with Obligors,
. investigating payment delinquencies,
. providing billing and tax records to Obligors, and
. maintaining internal records with respect to each Contract.
Administrative services performed by the servicer on behalf of the Trust
Fund include calculating distributions to certificateholders and providing
related data processing and reporting services for certificateholders and on
behalf of the trustee. If so specified in the applicable prospectus
supplement, expenses incurred in connection with servicing the Contracts and
paid by the servicer from its Monthly Servicing Fee include, without
limitation:
. payment of fees and expenses of accountants,
. payment of all fees and expenses incurred in connection with the
enforcement of Contracts, except liquidation expenses and certain other
expenses, and
. payment of expenses incurred in connection with distributions and
reports to certificateholders.
The servicer will be reimbursed out of the liquidation proceeds from a
defaulted Contract for all reasonable, out-of-pocket liquidation expenses
incurred by it in realizing upon the related manufactured home as well as for
advances of taxes and insurance premiums previously made with respect to any
such Contract, to the extent not previously recovered.
If so specified in the related prospectus supplement, as part of its
servicing fees, the servicer will also be entitled to retain, as compensation
for the additional services provided in connection therewith:
. any fees for late payments made by Obligors,
. any fees charged in connection with checks returned for non-sufficient
funds,
. conversion fees relating to variable rate Contracts,
. a fee associated with the enforcement of deficiency amounts on
Liquidated Contracts if deficiency amounts are recoverable under the
laws of the applicable jurisdiction,
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. extension fees paid by Obligors for the extension of scheduled payments,
and
. assumption fees for permitted assumptions of Contracts by purchasers of
the related manufactured homes. (Sections 4.15 and 5.03.)
To the extent specified in the related prospectus supplement, the servicer
will also be entitled to use payments of principal and interest, including
Liquidation Proceeds net of Liquidation Expenses, for its own benefit, without
an obligation to pay interest or any other investment return thereon, until
the related Distribution Date.
If so specified in the applicable prospectus supplement, any person with
which the servicer is merged or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the servicer is a party,
or any person succeeding to the business of the servicer, will be the
successor to the servicer under the Agreement, so long as such successor has a
net worth of at least $50 million and has serviced at least $100 million of
manufactured housing contracts for at least one year. The servicer may assign
its rights and delegate its duties under the Agreement, whereupon it will no
longer be liable for the obligations of the servicer under the Agreement,
provided that, among other conditions, any rating assigned to the Certificates
will not be reduced because of the assignment and delegation. (Sections 7.04,
7.06 and 7.07.)
Hazard Insurance Policies. If so specified in the related prospectus
supplement, the servicer will be obligated to cause to be maintained one or
more hazard insurance policies with respect to each manufactured home in an
amount at least equal to the lesser of its actual cash value or the principal
amount due from the Obligor under the related Contract. The hazard insurance
policies will, at a minimum, provide fire and extended coverage on terms and
conditions customary in manufactured housing hazard insurance policies. If a
manufactured home is located within a federally designated flood area, the
servicer will, to the extent required by applicable law or regulation, also be
obligated to cause flood insurance to be maintained in an amount equal to the
lesser of the amounts described above or the maximum amount available for such
manufactured home under the federal flood insurance programs. The hazard
insurance policies may provide for customary deductible amounts. Coverage
thereunder will be required to be sufficient to avoid the application of any
co-insurance provisions. The hazard insurance policies will be required to
contain a standard loss payee clause in favor of the servicer and its
successors and assigns. In general, the servicer will not be obligated to
cause to be obtained and maintained hazard insurance policies that provide
earthquake coverage. If earthquake coverage is required with respect to
Contracts in a particular Trust Fund, that fact will be disclosed in the
related prospectus supplement.
If so specified in the related prospectus supplement, all amounts collected
by the servicer under a hazard or flood insurance policy will be applied
either to the restoration or repair of the manufactured home or against the
remaining principal balance of the related Contract upon repossession of the
manufactured home, after reimbursing the servicer for amounts previously
advanced by it for such purposes. The servicer may satisfy its obligation to
maintain hazard and flood insurance policies with respect to each manufactured
home by maintaining a blanket policy insuring against hazard and flood losses
on the related Obligor's interest in the manufactured home. The blanket policy
may contain a deductible clause, in which case the servicer will be required
to make payments to the related Trust Fund in the amount of any deductible
amounts in connection with insurance claims on repossessed manufactured homes.
If so specified in the related prospectus supplement, if the servicer
repossesses a manufactured home on behalf of the trustee, the servicer is
required to either maintain a hazard insurance policy
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with respect to the repossessed manufactured home meeting the requirements set
forth above, or to indemnify the Trust Fund against any damage to the
repossessed manufactured home prior to resale or other disposition. (Section
4.09.)
Evidence as to Compliance. If so specified in the related prospectus
supplement, the servicer will be required to deliver to the trustee each year
an officer's certificate executed by an officer of the servicer stating: (1)
that a review of the activities of the servicer during the preceding calendar
year and of performance under the Agreement has been made under the
supervision of such officer, and (2) that to the best of such officer's
knowledge, the servicer has fulfilled all its obligations under the Agreement
throughout the applicable year, or, if there has been a default in the
fulfillment of any obligation, specifying each default known to such officer
and the nature and status thereof. Such officer's certificate will 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 Contracts under the Agreement or, at the
servicer's option, the Contracts and other contracts being serviced by the
servicer under agreements similar to the Agreement, conducted in accordance
with generally accepted auditing standards, the servicer's servicing has been
conducted in compliance with the provisions of the Agreement or other
agreements similar to the Agreement, except (1) such exceptions as such firm
believes to be immaterial and (2) such other exceptions as may be set forth in
such statement. (Sections 4.20 and 4.21.)
Events of Default. Servicer events of default under the Agreement will
consist of, among other events:
(1) any failure by the servicer to make any deposit or payment required of
it under the Agreement which continues unremedied for five days after
the giving of written notice;
(2) any failure by the servicer duly to observe or perform in any material
respect any of its other covenants or agreements in the Agreement which
continues unremedied for 30 days after the giving of written notice of
such failure; and
(3) certain events of insolvency, readjustment of debt, marshaling of
assets and liabilities or other similar proceedings regarding the
servicer.
If so specified in the related prospectus supplement, "notice" as used in this
paragraph means notice to the servicer by the trustee, the Seller or, if
applicable, the Credit Facility Provider, or to the servicer, the trustee and
the Seller by the holders of Certificates evidencing Fractional Interests
that, in the aggregate, equal at least 25% of the principal balance of all
outstanding Certificates, excluding Certificates held by the Seller or any of
its affiliates. (Section 8.01.)
Rights Upon Event of Default. If so specified in the related prospectus
supplement so long as an event of default remains unremedied, the trustee may,
but only with the consent of the Credit Facility Provider, if any, if the
Credit Facility has not expired or if the Credit Facility has expired or been
terminated and the Credit Facility Provider has not been reimbursed for all
amounts due it, and at the written direction of the holders of Certificates
evidencing Fractional Interests aggregating not less than 51% shall, terminate
all of the rights and obligations of the servicer under the Agreement and in
and to the related Contracts, whereupon, subject to applicable law regarding
the trustee's ability to make monthly advances, the trustee or a successor
servicer under the Agreement will succeed to all the responsibilities, duties
and liabilities of the servicer under the Agreement and will be entitled to
similar compensation arrangements. If the trustee is obligated to succeed the
servicer but is unwilling or unable so to act, it may appoint or petition a
court of competent jurisdiction for the appointment of a
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servicer. Pending the appointment of a servicer, the trustee is obligated to
act as servicer. The trustee and the successor servicer may agree upon the
servicing compensation to be paid, which in no event may be greater than a
monthly amount specified in the Agreement. (Sections 7.07 and 8.01.)
If so specified in the related prospectus supplement, no certificateholder
will have any right under the Agreement to institute any proceeding with
respect to the Agreement unless the certificateholder previously has given to
the trustee written notice of default and unless the holders of Certificates
evidencing Fractional Interests aggregating not less than 25% have requested
the trustee in writing to institute a proceeding in its own name as trustee
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
will be under no obligation to take any action or institute, conduct or defend
any litigation under the Agreement at the request, order or direction of any
of the holders of Certificates, unless the requesting certificateholders have
offered to the trustee reasonable security or indemnity against the costs,
expenses and liabilities which the trustee may incur. (Sections 8.01 and
11.08.)
Amendment
If so specified in the related prospectus supplement, the Agreement may be
amended by the Seller, the servicer and the trustee without the consent of the
certificateholders, but only with the consent of the Credit Facility Provider,
if any, if the Credit Facility has not expired or if the Credit Facility has
expired or been terminated and the Credit Facility Provider has not been
reimbursed for all amounts due it:
(1) to cure any ambiguity;
(2) to correct or supplement any provision therein that may be inconsistent
with any other provision therein;
(3) to add to the duties or obligations of the servicer;
(4) to obtain a rating from a nationally recognized rating agency or to
maintain or improve the ratings of any Class of the Certificates then
given by any rating agency, it being understood that, after obtaining
the rating of the Certificates from the rating agencies specified in
the related Agreement, none of the trustee, the Seller or the servicer
is obligated to obtain, maintain or improve any rating assigned to the
Certificates; or
(5) to make any other provisions with respect to matters or questions
arising under the related Agreement, provided that such action will
not, as evidenced by an opinion of counsel, adversely affect in any
material respect the interests of the certificateholders.
The Agreement may also be amended, by the Seller, the servicer, the trustee
and, if so specified in the related prospectus supplement, the Credit Facility
Provider, with the consent of at least 51% of the holders of Certificates of
each Class affected thereby for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Agreement or of modifying in any manner the rights of the certificateholders;
provided, however, that no such amendment shall:
(1) reduce in any manner the amount of, or delay the timing of, any
distributions on any Certificate, without the consent of the Holder of
such Certificate as the case may be;
(2) adversely affect in any material respect the interests of the Holders
of any Class of Certificates in a manner other than as described in
(1), without the consent of the Holders of Certificates of such Class
evidencing, as to such Class, Percentage Interests aggregating 66%; or
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(3) reduce the aforesaid percentage of Certificates the holders of which
are required to consent to any such amendment, without the consent of
the holders of all Certificates then outstanding, and no such amendment
shall adversely affect the status of the Trust Fund as a REMIC.
If so specified in the applicable prospectus supplement, the Agreement may
also be amended from time to time, without the consent of any
certificateholders, by the Seller, the trustee and the servicer to modify,
eliminate or add to the provisions of the Agreement to:
(1) maintain the qualification of the Trust Fund as a REMIC under the Code
or avoid, or minimize the risk of, the imposition of any tax on the
Trust Fund under the Code that would be a claim against the Trust Fund
assets, provided that an opinion of counsel is delivered to the trustee
to the effect that such action is necessary or appropriate to maintain
the qualification of the Trust Fund or avoid any such tax or minimize
the risk of its imposition; or
(2) prevent the Trust Fund from entering into any "prohibited transaction"
as defined in Section 860F of the Code, provided that an opinion of
counsel is delivered to the trustee to the effect that such action is
necessary or appropriate to prevent the Trust Fund from entering into
the prohibited transaction. (Section 11.01.)
The Agreement may otherwise be subject to amendment without the consent of
any certificateholders and, under certain circumstances, without the consent
of the trustee, if and to the extent specified in the related prospectus
supplement.
The Trustee
The trustee with respect to a Series will be identified in the applicable
prospectus supplement. If so specified therein, the trustee may resign at any
time, in which event the Seller will be obligated to appoint a successor
trustee. The Seller may also remove the trustee if the trustee ceases to be
eligible to continue as trustee under the related Agreement or if the trustee
becomes insolvent. If the Seller removes the trustee, the Seller will also be
obligated to appoint a successor trustee. 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. (Section 9.07.)
If so specified in the related prospectus supplement, the Agreement for any
Series will require the trustee to maintain, at its own expense, an office or
agency in New York City where the Certificates for such Series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the trustee and the Certificate Registrar in respect of
such Certificates pursuant to the related Agreement may be served.
If so specified in the related prospectus supplement, the trustee, or any of
its affiliates, in its individual or any other capacity, may become the owner
or pledgee of the Certificates of any Series with the same rights as it would
have if it were not trustee.
If so specified in the related prospectus supplement, the trustee will act
as Paying Agent, Certificate Registrar and Authenticating Agent for the
related Series of Certificates.
Indemnification
If so specified in the applicable prospectus supplement, each Agreement will
provide that neither the servicer nor any of its directors, officers,
employees or agents will be under any liability to the
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trustee or the certificateholders for any action taken or for refraining from
the taking of any action in good faith pursuant to the related Agreement, or
for errors in judgment; provided, however, that such provision shall not
protect the servicer or any of its directors, officers, employees or agents
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence. The servicer shall not be under
any obligation to appear in, prosecute or defend any legal action which arises
under an Agreement, other than in connection with the enforcement of any
Contract in accordance with the Agreement, and which in its opinion may
involve it in any expenses or liability; provided, however, that the servicer
may in its discretion undertake any other legal action which it may deem
necessary or desirable in respect of the Agreement and the rights and duties
of the parties thereto. In the event the servicer decides to take any other
legal action, the legal expenses and costs of such other legal action and any
liability resulting therefrom shall be expenses, costs and liabilities payable
from the Trust Fund and the servicer shall be entitled to be reimbursed
therefor from amounts collected on the Contracts. (Section 7.05.)
Credit and Liquidity Enhancement
To the extent specified in the related prospectus supplement, a Class of
Certificates may be entitled to the benefit of one or more of the following
forms of credit and liquidity enhancement:
Subordination
The Senior Certificates may afford the holders thereof a right to receive
distributions of principal or of interest or of both on each Distribution Date
from amounts collected on the related Contract Pool that is prior to the right
to receive distributions afforded by the Subordinate Certificates. If so
specified in the related prospectus supplement, this prior right will result
from one or both of the two features described in the next two succeeding
paragraphs.
The Senior Certificates will entitle the holders thereof to receive on some
or all Distribution Dates, prior to any distribution of principal or of
interest or of both, as specified in the related prospectus supplement, being
made to the holders of the Subordinate Certificates on any related
Distribution Date, a full distribution of principal or of interest or of both
principal and interest, as specified in the related prospectus supplement,
from amounts collected on the Contracts during the related Collection
Period(s). To the extent that Contract collections during the related
Collection Period(s) would, in the absence of liquidation losses or other
circumstances adversely affecting Contract collections, have been applied to
make distributions to the holders of the Subordinate Certificates, this
feature will enhance the likelihood of timely receipt by the holders of the
Senior Certificates of full distributions of principal or of interest or of
both in accordance with the applicable distribution formula.
The distribution formula for the Senior Certificates, other than interest-
only Certificates, will entitle the holders thereof to receive, on some or all
Distribution Dates, all or a disproportionate share of the Total Regular
Principal Amount until the Certificate Balance of the Senior Certificates has
been reduced to zero. See "Description of Certificates--Distributions on
Certificates--Distributions of Principal" above. This feature, in effect, will
provide the holders of the Senior Certificates, other than holders of
interest-only Certificates, with a prior right to receive the principal
collected on the Contracts until the Certificate Balance of the Senior
Certificates has been reduced to zero. The degree of priority will depend on
the share of the Total Regular Principal Amount to which the holders of the
Senior Certificates, other than holders of interest-only Certificates, are
entitled on particular
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Distribution Dates. If the holders of the Senior Certificates, other than
holders of interest-only Certificates, are entitled to receive all of the
Total Regular Principal Amount on each Distribution Date, to the extent of the
Contract collections available to make distributions of Regular Principal on
the related Distribution Date, then the holders of the Senior Certificates,
other than holders of interest-only Certificates, will, in effect, have a
right to receive all principal collected on the Contracts that is absolutely
prior to the right of the holders of the Subordinate Certificates to receive
any principal collected on the Contracts. If, however, the holders of the
Senior Certificates, other than holders of interest-only Certificates, are
entitled to receive only a disproportionate share of the Total Regular
Principal Amount, or are entitled to receive all or a disproportionate share
of the Total Regular Principal Amount only on certain Distribution Dates, then
the prior right of the holders of the Senior Certificates, other than holders
of interest-only Certificates, to receive distributions of principal collected
on the Contracts will, to that extent, be limited. The prior right to receive
distributions of principal collections described above will enhance the
likelihood that the holders of the Senior Certificates, other than holders of
interest-only Certificates, will ultimately receive distributions of principal
in an aggregate amount equal to the initial Certificate Balance of the Senior
Certificates. It will not, however, enhance the likelihood of timely receipt
by the holders of the Senior Certificates of full distributions of the amounts
to which they would have been entitled in the absence of liquidation losses or
other circumstances adversely affecting Contract collections.
If specified in the related prospectus supplement, the features described
above may be characteristic of different Classes within a multiple-Class
Series. Thus, Certificates which constitute Senior Certificates under the
criteria described in the second preceding paragraph may constitute
Subordinate Certificates under the criteria described in the next preceding
paragraph, and Certificates which constitute Senior Certificates under the
criteria described in the next preceding paragraph may constitute Subordinate
Certificates under the criteria described in the second preceding paragraph.
In general, the splitting of the features described above among two separate
Classes of a multiple-Class Series will undercut the protection against loss
afforded by each of such features. The particular effects of any splitting as
described in the previous sentence will be discussed in the applicable
prospectus supplement. The following discussion is based on the assumption
that the features described above will not be characteristic of different
Classes within a multiple-Class Series.
The degree of protection against loss provided to the holders of the Senior
Certificates at any time by either of the subordination features described
above will be determined primarily by the degree to which the Pool Principal
Balance exceeds the Certificate Balance of the Senior Certificates. The Senior
Certificates are also given a degree of protection against loss, to a lesser
extent, if the holders of the Senior Certificates also have a prior right to
receive interest, by the degree to which the interest payable on the
Contracts, net of the portions thereof used to pay the servicing fee of the
servicer, if such servicing fee is payable prior to distributions of interest
to the holders of the Senior Certificates, and other expenses of the Trust
Fund, exceeds the interest distributable to the holders of the Senior
Certificates. The relative levels of the Certificate Balance of the Senior
Certificates and the related Pool Principal Balance, and hence the degree of
protection against loss afforded by the subordination features described
above, may change over time depending on, among other things, the formula by
which principal is distributed to the holders of the Senior Certificates and
the level of liquidation losses on the underlying Contracts. Generally, if the
holders of Senior Certificates, other than holders of interest-only
Certificates, receive a disproportionate share of the Total Regular Principal
Amount on any Distribution Date, the effect will be to increase, as a relative
matter, the degree by which the Pool Principal Balance exceeds the Certificate
Balance of the Senior Certificates, thus increasing the degree of protection
against loss afforded by the subordination of the Subordinate Certificates. In
addition, Special Principal Distributions to the holders of the Senior
Certificates from sources other than
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principal collections on the underlying Contracts generally will increase the
degree of protection against loss above the protection that would have been
provided if such distributions were not made, because the Certificate Balance
of the Senior Certificates will be reduced without a reduction in the Pool
Principal Balance. On the other hand, if, due to liquidation losses or other
circumstances adversely affecting Contract collections, the holders of Senior
Certificates, other than holders of interest-only Certificates, receive less
than their proportionate share of the Total Regular Principal Amount, the
effect will be to decrease, as a relative matter, the degree to which the Pool
Principal Balance exceeds the Certificate Balance of the Senior Certificates,
thus decreasing the degree of protection against loss afforded by the
subordination of the Subordinate Certificates. The effects of particular
principal distribution formulae in this regard will be discussed in the
applicable prospectus supplement. The description of any of the effects
described in this paragraph in a particular prospectus supplement may relate
the Certificate Balances of the Senior Certificates to Pool Principal Balances
which are estimated or adjusted as described therein. Such Pool Principal
Balances may sometimes be referred to in a prospectus supplement as "Pool
Scheduled Principal Balances."
Where there is more than one Class of Subordinate Certificates, the rights
of one or more Classes of Subordinate Certificates to receive distributions of
principal, interest or principal and interest may be subordinated to the
rights of one or more other Classes of Subordinate Certificates to receive
distributions. Any Class of Subordinate Certificates that is entitled to
receive distributions from Contract Pool collections prior to any other Class
of Subordinate Certificates is a "mezzanine" Class of Subordinate
Certificates. The subordination of any Class of Subordinate Certificate to a
mezzanine Class of Subordinate Certificates will enhance the likelihood of
timely receipt by the holders of the mezzanine Class of Subordinate
Certificates relative to any Class of Subordinate Certificates that is
subordinate to the mezzanine Class of Subordinate Certificates. Subordinate
Certificates, including any mezzanine Classes of Subordinate Certificates, may
only be sold hereunder if rated in one of the four highest rating categories
of a nationally recognized statistical rating organization. See "Rating" in
this prospectus. The effect of any subordination on any Classes of Subordinate
Certificates sold hereunder will be discussed in the applicable prospectus
supplement.
Reserve Funds
The Certificates of one or more Classes may be entitled to the benefit of
one or more Reserve Funds which, to the extent specified in the related
prospectus supplement, will cover shortfalls created when collections on the
related Contract Pool that are available to make distributions to the holders
of such Certificates are not sufficient to fund full distributions of
principal, interest or principal and interest to such certificateholders. Any
Reserve Fund may be available to cover all or a portion of shortfalls and may
be available to cover any shortfalls, no matter what the cause, or only
shortfalls due to certain causes (e.g., liquidation losses only or
delinquencies only), all as specified in the related prospectus supplement. In
addition, to the extent specified in the related prospectus supplement, a
Reserve Fund may be used to make distributions of interest or Regular
Principal to the holders of a Class of Certificates on particular Distribution
Dates upon the occurrence of certain losses, delinquencies or other events,
even if such certificateholders would not have been entitled to any such
distributions on the related Distribution Dates in the absence of losses,
delinquencies or other events. A Reserve Fund may also be used to fund Special
Principal Distributions under the circumstances set forth in the related
prospectus supplement. The related prospectus supplement will specify whether
any Reserve Fund will be established as part of the Trust Fund or held outside
of the Trust Fund by a collateral agent or similar third party, who may be the
trustee acting in a different capacity, and will contain a description of any
arrangement pursuant to which the Reserve Fund is held outside of the Trust
Fund.
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The method of funding any Reserve Fund, and the required levels of funding,
if any, as well as the circumstances under which amounts on deposit in any
Reserve Fund may be distributed to persons other than certificateholders, will
be described in the applicable prospectus supplement. To the extent that a
Reserve Fund may be funded in whole or in part from some or all of the
interest collected on the Contracts in excess of the interest needed to make
distributions to the holders of one or more Classes of Certificates, such
Reserve Fund may be referred to in the applicable prospectus supplement as a
"Spread Account."
Credit Facilities
The Certificates of one or more Classes may be entitled to the benefit of
one or more Credit Facilities. Each Credit Facility may be in an amount
greater than, equal to or less than the Certificate Balance of the
Certificates of each Class entitled to the benefits thereof, and may be
subject to reduction or be limited as to duration, all as described in the
applicable prospectus supplement. To the extent specified in the related
prospectus supplement, amounts realized under a Credit Facility supporting the
Certificates of any Class may be used for the same purposes as amounts on
deposit in Reserve Funds. See "--Reserve Funds" above. A Credit Facility may
be held by a trustee as part of the related Trust Fund or may be held by a
collateral agent or other third party, who may be the trustee acting in a
different capacity. The related prospectus supplement will contain a
description of the material terms of any Credit Facility and any arrangement
pursuant to which the Credit Facility is held outside of the Trust Fund. The
related prospectus supplement will also contain certain information concerning
the "Credit Facility Provider," which information will have been provided to
the Seller by the Credit Facility Provider for use in the related prospectus
supplement. GreenPoint or an affiliate thereof may be a Credit Facility
Provider.
If specified in the applicable prospectus supplement, a Credit Facility,
rather than supporting distributions of particular amounts to the holders of
Certificates of particular Classes, may, instead, support certain collections
on the related Contract Pool. These collections may be of all or a portion of
amounts due on Contracts in liquidation, all or a portion of the scheduled
monthly payments due on the Contracts or of other amounts. The extent to which
any such collections are supported by a Credit Facility which functions in
this manner will be described in the applicable prospectus supplement.
Liquidity Facilities
The Certificates of one or more Classes may be entitled to the benefit of
one or more Liquidity Facilities, pursuant to which the provider of such
Liquidity Facility, the "Liquidity Facility Provider" will provide funds to be
used to purchase some or all of the Certificates entitled to the benefit of a
Liquidity Facility on the Repurchase Dates applicable thereto. If so specified
in the applicable prospectus supplement, a Liquidity Facility will be held
outside of the Trust Fund by a third party, which may be the trustee acting in
another capacity. The related prospectus supplement will contain a description
of the material terms of any Liquidity Facility and any arrangement pursuant
to which it is held outside of the Trust Fund, and will contain certain
information concerning the Liquidity Facility Provider, which information will
have been provided to the Seller by the Liquidity Facility Provider for use in
the related prospectus supplement. GreenPoint or an affiliate thereof may be a
Liquidity Facility Provider. If specified in the related prospectus
supplement, a Reserve Fund or Credit Facility may also serve as a Liquidity
Facility.
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Federal Income Tax Consequences
The following summary describes the material federal income tax consequences
of the purchase, ownership and disposition of Certificates of any Series as of
the date hereof. In connection with the issuance of each Series, special
counsel to GreenPoint will render its opinion that this discussion of the
federal income tax consequences, as supplemented by the discussion of federal
income tax consequences in the related prospectus supplement accompanying such
Series, is accurate in all material respects. As more fully discussed below,
special counsel to GreenPoint is also of the opinion that:
(A) for a Series for which an election to be treated as a "real estate
mortgage investment conduit" ("REMIC") will be made:
(1) the REMIC Fund will qualify as a REMIC for federal income tax
purposes;
(2) the Certificates of such Series identified in the related
prospectus supplement as "regular interests" in the REMIC ("Regular
Certificates") will be so treated for federal income tax purposes
and will be treated as debt instruments for purposes of chapter 1
of the Code (generally relating to the calculation of a
certificateholder's federal income tax liability);
(3) those Certificates of such Series identified in the related
prospectus supplement as "residual interests" in the REMIC
("Residual Certificates") will be treated for federal income tax
purposes as the sole class of "residual interests" in the REMIC;
(4) the REMIC represented by the REMIC Fund will not be subject to
federal income tax as a separate entity except for:
(a) the tax on "prohibited transactions" imposed by Section 860F of
the Code,
(b) the tax on "contributions after startup date" imposed by
Section 860G(d) of the Code, and
(c) the tax on "income from foreclosure property" imposed by
Section 860G(c) of the Code; and
(5) those Certificates, if any, identified as being comprised of a
REMIC "regular interest" coupled with a swap or cap contract will
be treated as representing ownership of a "regular interest" in a
REMIC to the extent of the portion thereof identified as such in
the prospectus supplement,
(B) for a Series for which no election to be treated as a REMIC will be
made and which is described as a "grantor trust" in the prospectus
supplement, for federal income tax purposes, the Trust Fund will be
classified as a grantor trust and not as a corporation or an
association which is taxable as a corporation and the Certificates will
be treated as equity in such Trust Fund; or
(C) for a Series for which no election to be treated as a REMIC will be
made and which is described in the prospectus supplement as an "owner
trust:"
(1) for federal income tax purposes, the Trust Fund will not be treated
as an association, taxable mortgage pool or publicly traded
partnership taxable as a corporation; and
(2) the Offered Certificates or Notes of such Series will be treated as
indebtedness for federal income tax purposes.
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Except to the extent provided in a related prospectus supplement, special
counsel to GreenPoint will render no other opinions on federal income taxes to
a Trust Fund with respect to the Certificates. Special counsel to GreenPoint
for each Series will be Orrick, Herrington & Sutcliffe LLP, and a copy of the
legal opinion of Orrick, Herrington & Sutcliffe LLP rendered in connection
with any Series of Certificates will be filed with the Commission on a Current
Report on Form 8-K prior to the sale of the related Series of Certificates.
This discussion is directed primarily to certificateholders that hold the
Certificates as "capital assets" within the meaning of Section 1221 of the
Code, although portions thereof also may apply to certificateholders who do
not hold Certificates as "capital assets," and it does not purport to discuss
all federal income tax consequences that may be applicable to the individual
circumstances of particular investors, some of which (such as banks, insurance
companies and foreign investors) may be subject to special treatment under the
Code. Further, the authorities on which this discussion, and the opinion
referred to below, are based are subject to change or differing
interpretations, which could apply retroactively. Prospective investors should
note that no rulings have been or will be sought from the IRS with respect to
any of the federal income tax consequences discussed below, and no assurance
can be given that the IRS will not take contrary positions. Taxpayers and
preparers of tax returns, including those filed by any REMIC or other issuer,
should be aware that under applicable Treasury regulations a provider of
advice on specific issues of law is not considered an income tax return
preparer unless the advice:
. is given with respect to events that have occurred at the time the
advice is rendered and is not given with respect to the consequences of
contemplated actions; and
. is directly relevant to the determination of an entry on a tax return.
Accordingly, taxpayers should consult their tax advisors and tax return
preparers regarding the preparation of any item on a tax return, even where
the anticipated tax treatment has been discussed in this prospectus. In
addition to the federal income tax consequences described in this prospectus,
potential investors are advised to consider the state, local and other tax
consequences, if any, of the purchase, ownership and disposition of
Certificates in a Series. See "Other Tax Consequences." Certificateholders are
urged to consult their tax advisors concerning the federal, state, local or
other tax consequences to them of the purchase, ownership and disposition of
Certificates in a Series.
The following discussion addresses securities of three general types:
(1) Certificates ("REMIC Certificates") representing interests in a REMIC
Fund with respect to which an election to be treated as a REMIC under
Sections 860A through 860G (the "REMIC Provisions") of the Code will be
made;
(2) Grantor Trust Certificates representing interests in a Trust Fund
("Grantor Trust") as to which no such election will be made; and
(3) Owner Trust Certificates or Notes which will be treated as indebtedness
for federal income tax purposes and as to which no REMIC election will
be made.
The following discussion is based in part upon the rules governing original
issue discount that are set forth in Sections 1271-1273 and 1275 of the Code
and in the Treasury regulations issued thereunder (the "OID Regulations"), and
in part upon the REMIC Provisions and the Treasury regulations issued
thereunder (the "REMIC Regulations"). The OID Regulations do not adequately
address certain issues relevant to, and in some instances provide that they
are not applicable to, securities such as the Certificates.
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The following discussion is limited in applicability to the Certificates.
For purposes of this tax discussion, references to a "certificateholder" or a
"holder" are to the beneficial owner of a Certificate.
REMIC Elections
Under the Code, an election may be made with respect to a REMIC Fund related
to any Series of Certificates to treat the REMIC Fund as a "real estate
mortgage investment conduit" ("REMIC") within the meaning of Section 860D(a)
of the Code, in which case the Certificates of any Class of such Series will
be either "regular interests" in the REMIC within the meaning of Section
860G(a)(1) of the Code or "residual interests" in the REMIC within the meaning
of Section 860G(a)(2) of the Code. The prospectus supplement for each Series
of Certificates will indicate whether each Seller of Contracts to the related
Contract Pool intends to cause an election to be made to treat the REMIC Fund
as a REMIC, and if such an election is to be made, which Certificates will be
regular interests and which will be the residual interest in the REMIC. The
discussion under the heading "--REMIC Certificates" discusses Series with
respect to which the Seller of Contracts to the related Contract Pool will
cause a REMIC election to be made and the discussion under the heading "--Non-
REMIC Trusts" discusses Series with respect to which the Seller will not cause
a REMIC election to be made.
REMIC Certificates
General. The discussion in this section applies only to a Series of
Certificates for which a REMIC election is to be made. Upon the issuance of
each Series of Certificates for which a REMIC election is to be made, Orrick,
Herrington & Sutcliffe LLP, special counsel to GreenPoint will deliver its
opinion that, with respect to each such Series of Certificates, under then
existing law and assuming that a REMIC election is made in accordance with the
requirements of the Code and compliance by the Seller, the servicer and the
trustee for such Series with all of the provisions of the related Agreement,
the agreement or agreements, if any, providing for a Credit Facility or a
Liquidity Facility, together with any agreement documenting the arrangement
through which a Credit Facility or a Liquidity Facility is held outside the
related REMIC Fund, and agreement or agreements with any underwriter, the
REMIC Fund will be a REMIC, and the Certificates of such Series will be
treated as either "regular interests" in the REMIC ("Regular Certificates") or
"residual interests" in the REMIC ("Residual Certificates") .
Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint, has
prepared or reviewed the statements in this prospectus under the heading
"Federal Income Tax Consequences--REMIC Certificates," and are of the opinion
that such statements are correct in all material respects. Such statements are
intended as an explanatory discussion of the possible effects of the
classification of any REMIC Fund as a REMIC for federal income tax purposes on
investors generally and of related tax matters affecting investors generally,
but do not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided
by an investor's own tax advisor. Accordingly, each investor is urged to
consult its own tax advisors with regard to the tax consequences to it of
investing in REMIC Certificates.
Tax Status of REMIC Certificates. If so specified in the related prospectus
supplement, the Certificates of any Series, in their entirety, will generally
be considered:
(1) "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code; and
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(2) assets described in Section 7701(a)(19)(C) of the Code (assets
qualifying under one or more of those sections, applying each section
separately, "qualifying assets") for a calendar quarter if at least 95%
of the assets of the related REMIC Fund are qualifying assets during
the related calendar quarter.
In the event the percentage of the REMIC Fund's assets which are qualifying
assets falls below 95% for any calendar quarter, then a corresponding
percentage of the Certificates will be treated as qualifying assets for the
related calendar quarter. Any amount includible in gross income with respect
to the Certificates will be treated as "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 to the extent that the
Certificates are treated as "real estate assets" within the meaning of Section
856(c)(4)(A) of the Code.
The assets of the REMIC Fund will include, in addition to the Contracts,
payments on the Contracts held pending distribution, and may include, among
other assets, one or more Reserve Funds. With respect to the treatment of
Contracts as qualifying assets:
. the Treasury Regulations under Section 856 of the Code define a "real
estate asset" under Section 856(c)(4)(A) of the Code to include a loan
secured by manufactured housing that qualifies as a single family
residence under the Code; and
. the Treasury Regulations under Section 7701(a)(19)(C) of the Code
provide that assets described in that Section include loans secured by
manufactured housing that qualifies as a single family residence under
the Code.
The IRS has ruled that obligations secured by permanently installed mobile
home units qualify as "real estate assets" under Section 856(c)(4)(A) of the
Code. Assets described in Section 7701(a)(19)(C) of the Code include loans
secured by mobile homes not used on a transient basis. However, whether
manufactured homes would be viewed as permanently installed for purposes of
Section 856 of the Code would depend on the facts and circumstances of each
case, because the IRS rulings on this issue do not provide facts on which
taxpayers can rely to achieve treatment as "real estate assets". No assurance
can be given that the manufactured homes will be so treated. A Real Estate
Investment Trust ("REIT") will not be able to treat that portion of its
investment in Certificates that represents ownership of Contracts on
manufactured homes that are not treated as permanently attached as "real
estate assets" for REIT qualification purposes. In this regard, investors
should note that generally, most Contracts prohibit the Obligor from
permanently attaching the related manufactured home to its site if it were not
so attached on the date of the Contract. If so specified in the related
prospectus supplement, Contracts in the related Contract Pool may permit the
Obligor to permanently attach the related manufactured home to its site even
if not attached at the date of the Contract. It is unclear whether other
assets of the REMIC Fund would be treated as qualifying assets under the
foregoing sections of the Code. REMIC Certificates held by a regulated
investment company will not constitute "Government Securities" within the
meaning of Code Section 851(b)(4)(A)(ii).
Qualification as a REMIC. Qualification as a REMIC requires ongoing
compliance with certain conditions. The following discussion assumes that such
requirements will be satisfied by a REMIC Fund so long as any REMIC
Certificates related to the REMIC Fund are outstanding. Substantially all of
the assets of the REMIC must consist of "qualified mortgages" and "permitted
investments" as of the close of the third month beginning after the day on
which the REMIC issues all of its regular and residual interests (the "Startup
Day") and at all times thereafter. The term "qualified mortgage" means any
obligation, including a participation or certificate of beneficial ownership
in such obligation,
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which is principally secured by an interest in real property that is
transferred to the REMIC on the Startup Day in exchange for regular or
residual interests in the REMIC or is purchased by the REMIC within the three-
month period beginning on the Startup Day if such purchase is pursuant to a
fixed price contract in effect on the Startup Day. The REMIC Regulations
provide that a manufactured housing contract is principally secured by an
interest in real property if the fair market value of the real property
securing the contract is at least equal to either:
. 80% of the issue price (generally, the principal balance) of the
contract at the time it was originated; or
. 80% of the adjusted issue price (the then outstanding principal balance,
with certain adjustments) of the contract at the time it is contributed
to a REMIC.
The fair market value of the underlying real property is to be determined
after taking into account other liens encumbering that real property.
Alternatively, a manufactured housing contract is principally secured by an
interest in real property if substantially all of the proceeds of the contract
were used to acquire or to improve or protect an interest in real property
that, at the origination date, is the only security for the contract (other
than the personal liability of the obligor). The REMIC Regulations as well as
a published notice issued by the IRS provide that obligations secured by
interests in manufactured housing, which qualify as "single family residences"
within the meaning of Section 25(e)(10) of the Code, are to be treated as
"qualified mortgages" for qualifying a REMIC Fund as a REMIC. Under Section
25(e)(10) of the Code, the term "single family residence" includes any
manufactured home which has a minimum of 400 square feet of living space and a
minimum width in excess of 102 inches and which is of a kind customarily used
at a fixed location. GreenPoint will represent and warrant that each of the
manufactured homes securing the Contracts conveyed by it to a REMIC Fund meets
this definition of a "single family residence." A qualified mortgage also
includes a "qualified replacement mortgage" that is used to replace any
"qualified mortgage" within three months of the Startup Day or to replace a
defective mortgage within two years of the Startup Day.
"Permitted investments" consist of:
(1) temporary investments of cash received under qualified mortgages before
distribution to holders of interests in the REMIC ("cash-flow
investments");
(2) amounts, such as a reserve fund, if any, reasonably required to provide
for full payment of expenses of the REMIC, the principal and interest
due on regular or residual interests in the event of defaults on
qualified mortgages, lower than expected returns on cash-flow
investments, prepayment interest shortfalls or certain other
contingencies ("qualified reserve assets"); and
(3) certain property acquired as a result of foreclosure of defaulted
qualified mortgages ("foreclosure property").
A reserve fund will not be qualified if more than 30% of the gross income from
the assets in the reserve fund is derived from the sale or other disposition
of property held for three months or less, unless such sale is necessary to
prevent a default in payment of principal or interest on Regular Certificates.
In accordance with Section 860G(a)(7) of the Code, a reserve fund must be
"promptly and appropriately" reduced as payments on contracts are received.
Foreclosure property will be a permitted investment only to the extent that
such property is not held for more than three years unless an extension of
such holding period is obtained from the IRS.
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The Code requires that in order to qualify as a REMIC an entity must make
reasonable arrangements designed to ensure that certain specified entities,
generally including governmental entities or other entities that are exempt
from United States tax, including the tax on unrelated business income
("Disqualified Organizations"), do not hold the residual interest in the
REMIC. Consequently, it is expected that in the case of any REMIC Fund for
which a REMIC election is made, the transfer, sale, or other disposition of a
Residual Certificate to a Disqualified Organization will be prohibited, and
the ability of a Residual Certificate to be transferred will be conditioned on
the trustee's receipt of a certificate or other document representing that the
proposed transferee is not a Disqualified Organization. The transferor of a
Residual Certificate must not, as of the time of the transfer, have actual
knowledge that such representation is false. The Code further requires that
reasonable arrangements be made to enable a REMIC to provide the IRS and
certain other parties, including transferors of residual interests in a REMIC,
with the information needed to compute the tax imposed by Section 860E(e)(1)
of the Code if, in spite of the steps taken to prevent Disqualified
Organizations from holding residual interests, such an organization does, in
fact, acquire a residual interest. See "Restrictions on Transfer of Residual
Certificates" below.
For certain Series of Certificates, two or more separate elections may be
made to treat segregated portions of the assets of a single Trust Fund as
REMICs for federal income tax purposes. Upon the issuance of any such series
of Certificates, Orrick, Herrington & Sutcliffe LLP, special tax counsel to
GreenPoint, will have advised GreenPoint, as described above, that at the
initial issuance of the Certificates of such Series, each such segregated
portion qualifies as a REMIC for federal income tax purposes, and that the
Certificates in such Series will be treated either as Regular Certificates or
Residual Certificates of the appropriate REMIC. Solely for the purpose of
determining whether such Regular Certificates will constitute qualifying real
estate or real property assets for certain categories of financial
institutions or real estate investment trusts as described above under "--Tax
Status of REMIC Certificates," some or all of the REMICs in a multiple-tier
REMIC structure may be treated as one. See the discussion below under "--
Taxation of Regular Certificates."
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 REMIC status during any
taxable year, the Code provides that the entity will not be treated as a REMIC
for such year and thereafter. In this event, an entity with multiple classes
of ownership interests may be treated as a separate association taxable as a
corporation under Treasury regulations, and interests in the REMIC may be
treated as debt or equity interests therein. If the REMIC Fund were treated as
a corporation, income of the REMIC Fund would be subject to corporate tax in
the hands of the REMIC Fund, and, therefore, only a reduced amount might be
available for distribution to certificateholders. The Code authorizes the
Treasury Department to issue Treasury regulations that address situations
where failure to meet one or more of the requirements for REMIC status occurs
inadvertently and in good faith, and disqualification of a REMIC would occur
absent regulatory relief. Investors should be aware, however, that the
Conference Committee Report (the "Committee Report") to the Tax Reform Act of
1986 (the "1986 Act") indicates that the relief may be accompanied by
sanctions, such as the imposition of a corporate income tax on all or a
portion of the REMIC's income for the period of time in which the requirements
for REMIC status are not satisfied. The Agreement with respect to each REMIC
will include provisions designed to maintain the related REMIC Fund's status
as a REMIC. It is not anticipated that the status of any REMIC Fund as a REMIC
will be terminated.
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Taxation of Regular Certificates
General. The Regular Certificates in any Series will constitute "regular
interests" in the related REMIC. Accordingly, the Regular Certificates will be
treated for purposes of calculating a certificateholder's federal income tax
liability as debt instruments that are issued by the related REMIC Fund on the
date of issuance of the Regular Certificates and not as ownership interests in
the REMIC Fund or the REMIC Fund's assets. Interest, original issue discount,
and market discount accrued on a Regular Certificate will be treated as
ordinary income to the holder. Each holder must use the accrual method of
accounting with regard to Regular Certificates, regardless of the method of
accounting otherwise used by such holder with the effect that an investor may
be required to report income for federal income tax purposes despite not yet
having received a cash distribution in respect of such income. Payments of
interest on REMIC Regular Certificates may be based on a fixed rate or a
variable rate as permitted by the REMIC Regulations, or may consist of a
specified portion of the interest payments on qualified mortgages where such
portion does not vary during the period the REMIC Regular Certificate is
outstanding. If a Regular Certificate represents an interest in a REMIC that
consists of a specified portion of the interest payments on the REMIC's
qualified mortgages, the stated principal amount with respect to that Regular
Certificate may be zero.
Original Issue Discount. Certain Regular Certificates may be issued with
"original issue discount" within the meaning of Code Section 1273(a). Any
holders of Regular Certificates issued with original issue discount generally
will be required to include original issue discount in income as it accrues,
in accordance with a constant interest method that takes into account the
compounding of interest, in advance of the receipt of the cash attributable to
such income. The servicer will report annually (or more often if required) to
the Service and to certificateholders such information with respect to the
original issue discount accruing on the REMIC Regular Certificates as may be
required under Code Section 6049 and the regulations thereunder. See "--
Reporting Requirements" below.
Rules governing original issue discount are set forth in Code Sections 1271
through 1273 and 1275 and, to some extent, in the OID Regulations. Code
Section 1272(a)(6) provides special original issue discount rules applicable
to Regular Certificates. Regulations have not yet been proposed or adopted
under Section 1272(a)(6) of the Code. Further, application of the OID
Regulations to the Regular Certificates remains unclear in some respects
because the OID Regulations generally purport not to apply to instruments to
which section 1272(a)(6) applies such as Regular Certificates, and separately
because they either do not address, or are subject to varying interpretations
with regard to, several relevant issues.
Code Section 1272(a)(6) requires that a mortgage prepayment assumption
("Prepayment Assumption") be used in computing the accrual of original issue
discount on Regular Certificates and for certain other federal income tax
purposes. The Prepayment Assumption is to be determined in the manner
prescribed in Treasury regulations. To date, no such regulations have been
promulgated. The Committee Report indicates that the regulations will provide
that the Prepayment Assumption, if any, used with respect to a particular
transaction must be the same as that used by the parties in pricing the
transaction. If so specified in the applicable prospectus supplement, the
servicer will use a percentage of the prepayment assumption specified in the
applicable prospectus supplement in reporting original issue discount that is
consistent with this standard. However, the servicer does not make any
representation that the Contracts will in fact prepay at a rate equal to that
prepayment assumption or at any other rate. Each investor must make its own
decision as to the appropriate prepayment assumption to be used in deciding
whether or not to purchase any of the Regular Certificates. The prospectus
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supplement with respect to a Series of Certificates will disclose the
prepayment assumption to be used in reporting original issue discount, if any,
and for certain other federal income tax purposes.
The total amount of original issue discount on a Regular Certificate is the
excess of the "stated redemption price at maturity" of the Regular Certificate
over its "issue price". Except as discussed in the following two paragraphs,
in general, the issue price of a particular Class of Regular Certificates
offered hereunder will be the price at which a substantial amount of Regular
Certificates of that Class are first sold to the public, excluding bond houses
and brokers.
If a Regular Certificate is sold with accrued interest that relates to a
period prior to the issue date of such Regular Certificate, the amount paid
for the accrued interest will be treated instead as increasing the issue price
of the Regular Certificate. In addition, that portion of the first interest
payment in excess of interest accrued from the Closing Date to the first
Distribution Date will be treated for federal income tax reporting purposes as
includible in the stated redemption price at maturity of the Regular
Certificate, and as excludible from income when received as a payment of
interest on the first Distribution Date. The OID Regulations suggest that some
or all of this pre-issuance accrued interest "may" be treated as a separate
asset and hence not includible in a Regular Certificate's issue price or
stated redemption price at maturity, whose cost is recovered entirely out of
interest paid on the first Distribution Date. It is unclear how such treatment
would be elected under the OID Regulations and whether an election could be
made unilaterally by a certificateholder.
The stated redemption price at maturity of a Regular Certificate is equal to
the total of all payments to be made on such Certificate other than "qualified
stated interest." Under the OID Regulations, "qualified stated interest" is
interest that is unconditionally payable at least annually during the entire
term of the Certificate at either:
. a single fixed rate that appropriately takes into account the length of
the interval between payments; or
. the current values of a single "qualified floating rate" or "objective
rate" (each, a "Single Variable Rate").
A "current value" is the value of a variable rate on any day that is no
earlier than three months prior to the first day on which that value is in
effect and no later than one year following that day. A "qualified floating
rate" is a rate whose variations can reasonably be expected to measure
contemporaneous variations in the cost of newly borrowed funds in the currency
in which the Certificate is denominated. Such a rate remains qualified even
though it is multiplied by a fixed, positive multiple not exceeding 1.35,
increased or decreased by a fixed rate, or both.
Certain combinations of rates constitute a single qualified floating rate,
including:
. interest stated at a fixed rate for an initial period of less than one
year followed by a qualified floating rate if the value of the floating
rate at the closing date is intended to approximate the fixed rate; and
. two or more qualified floating rates that can be expected to have
appropriately the same values throughout the term of the Certificate.
A combination of such rates is conclusively presumed to be a single floating
rate if the values of all rates on the closing date are within 0.25% of each
other. A variable rate that is subject to an interest rate cap, floor,
"governor" or similar restriction on rate adjustment may be a qualified
floating rate only if such restriction is fixed throughout the term of the
instrument, or is not reasonably expected as
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of the closing date to cause the yield on the debt instrument to differ
significantly from the expected yield absent the restriction.
An "objective rate" is a rate, other than a qualified floating rate,
determined using a single formula fixed for the life of the Certificate, which
is based on objective financial information. For example, rates of the
following types would generally be objective rates:
(1) one or more qualified floating rates (including a multiple or inverse
of a qualified floating rate);
(2) one or more rates each of which would be a qualified floating rate for
a debt instrument denominated in a foreign currency;
(3) a yield based on changes in price of one or more items of "actively
traded" personal property;
(4) a combination of rates described in (1), (2) and (3); or
(5) a rate designated by the IRS.
However, a variable rate is not an objective rate if it is reasonably expected
that the average value of the rate during the first half of the Certificate's
term will differ significantly from the average value of such rate during the
final half of its term or if the rate is based on financial information that
is within the control of the issuer or a related party. A combination of
interest stated at a fixed rate for an initial period of less than one year
followed by an objective rate is treated as a single objective rate if the
value of the objective rate at the closing date is intended to approximate the
fixed rate; such a combination of rates is conclusively presumed to be to be a
single objective rate if the objective rate on the closing date does not
differ from the fixed rate by more than 0.25%.
The qualified stated interest payable with respect to certain variable rate
debt instruments not bearing stated interest at a Single Variable Rate
generally is determined under the OID Regulations by converting such
instruments into fixed rate debt instruments. Instruments qualifying for such
treatment generally include those providing for stated interest at:
(1) more than one qualified floating rates; or
(2) a single fixed rate, and
(a) one or more qualified floating rates, or
(b) a single "qualified inverse floating rate" (each, a "Multiple
Variable Rate").
A qualified inverse floating rate is an objective rate equal to a fixed rate
reduced by a qualified floating rate, the variations in which can reasonably
be expected to inversely reflect contemporaneous variations in the cost of
newly borrowed funds, disregarding permissible rate caps, floors, governors
and similar restrictions such as are described above. Under these rules, some
of the payments of interest on a Certificate bearing a fixed rate of interest
for an initial period followed by a qualified floating rate of interest in
subsequent periods could be treated as included in the stated redemption price
at maturity if the initial fixed rate were to differ sufficiently from the
rate that would have been set using the formula applicable to subsequent
periods. See "Taxation of Regular Certificates--Variable Rate Certificates."
Regular Certificates offered hereby other than Certificates providing for
variable rates of interest or for the accretion of interest are not
anticipated to have stated interest other than "qualified stated interest,"
but if any such REMIC Regular Certificates are so offered, appropriate
disclosures will be made in the prospectus supplement. Some or all of the
payments on REMIC
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Regular Certificates providing for the accretion of interest will be included
in the stated redemption price at maturity of such Certificates.
Under a de minimis rule in the Code, as interpreted in the OID Regulations,
original issue discount on a Regular Certificate will be considered to be zero
if such original issue discount is less than 0.25% of the stated redemption
price at maturity of the Regular Certificate multiplied by the weighted
average life of the Regular Certificate. For this purpose, the weighted
average life of the Regular Certificate is computed as the sum of the amounts
determined by multiplying the amount of each payment under the instrument
(other than a payment of qualified stated interest) by a fraction, whose
numerator is the number of complete years from the issue date until such
payment is made, and whose denominator is the stated redemption price at
maturity of such Regular Certificate. The IRS may be anticipated to take the
position that this rule should be applied taking into account the prepayment
assumption and the effect of any anticipated investment income. Under the OID
Regulations, Regular Certificates bearing only qualified stated interest
except for any "teaser" rate, interest holiday or similar provision would be
treated as subject to the de minimis rule if the greater of the deferred or
foregone interest or the other original issue discount is less than such de
minimis amount.
The OID Regulations generally would treat de minimis original issue discount
as includible in income as each principal payment is made, based on the
product of the total amount of such de minimis original issue discount and a
fraction, whose numerator is the amount of such principal payment and whose
denominator is the stated principal amount of the Regular Certificate. The OID
Regulations also would permit a certificateholder to elect to accrue de
minimis original issue discount into income currently based on a constant
yield method. See "Taxation of Regular Certificates--Market Discount" and "--
Premium".
Each holder of a Regular Certificate must include in gross income the sum of
the "daily portions" of original issue discount on its Regular Certificate for
each day during its taxable year on which it held such Regular Certificate.
For this purpose, in the case of an original holder of a Regular Certificate,
the daily portions of original issue discount will be determined as follows. A
calculation will first be made of the portion of the original issue discount
that accrued during each accrual period, that is, if so specified in the
applicable prospectus supplement, each period that begins or ends on a date
that corresponds to a Distribution Date on the Regular Certificate and begins
on the first day following the immediately preceding accrual period (beginning
on the Closing Date in the case of the first such period). For any accrual
period such portion will equal the excess, if any, of:
(1) the sum of:
(a) the present value of all of the distributions remaining to be made
on the Regular Certificate, if any, as of the end of the accrual
period, and
(b) the distribution made on such Regular Certificate during the
accrual period of amounts included in the stated redemption price
at maturity; over
(2) the adjusted issue price of such Regular Certificate at the beginning
of the accrual period.
The present value of the remaining payments referred to in the preceding
sentence will be calculated based on:
(1) the yield to maturity of the Regular Certificate, calculated as of the
settlement date, giving effect to the Prepayment Assumption;
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(2) events (including actual prepayments) that have occurred prior to the
end of the accrual period; and
(3) the prepayment assumption.
The adjusted issue price of a Regular Certificate at the beginning of any
accrual period will equal the issue price of such Certificate, increased by
the aggregate amount of original issue discount with respect to such Regular
Certificate that accrued in prior accrual periods, and reduced by the amount
of any distributions made on such Regular Certificate in prior accrual periods
of amounts included in the stated redemption price at maturity. The original
issue discount accruing during any accrual period will be allocated ratably to
each day during the period to determine the daily portion of original issue
discount for each day. With respect to an accrual period between the
settlement date and the first Distribution Date on the Regular Certificate,
notwithstanding that no distribution is scheduled to be made on such date,
that is shorter than a full accrual period, the OID Regulations permit the
daily portions of original issue discount to be determined according to any
reasonable method.
A subsequent purchaser of a Regular Certificate that purchases such Regular
Certificate at a cost, not including payment for accrued qualified stated
interest, less than its remaining stated redemption price at maturity will
also be required to include in gross income, for each day on which it holds
such Regular Certificate, the daily portions of original issue discount with
respect to such Regular Certificate, but reduced, if such cost exceeds the
"adjusted issue price," by an amount equal to the product of:
. such daily portions; and
. a constant fraction, whose numerator is such excess and whose
denominator is the sum of the daily portions of original issue discount
on such Regular Certificate for all days on or after the day of
purchase.
The adjusted issue price of a Regular Certificate on any given day is equal to
the sum of the adjusted issue price or, in the case of the first accrual
period, the issue price, of the Regular Certificate at the beginning of the
accrual period during which such day occurs and the daily portions of original
issue discount for all days during such accrual period prior to such day,
reduced by the aggregate amount of distributions previously made other than
distributions of qualified stated interest.
Variable Rate Certificates. Purchasers of Regular Certificates bearing a
variable rate of interest should be aware that there is uncertainty concerning
the application of Section 1272(a)(6) of the Code and the OID Regulations to
such Certificates. In the absence of other authority, the servicer intends to
be guided by the provisions of the OID Regulations governing variable rate
debt instruments in adapting the provisions of Section 1272(a)(6) of the Code
to such Certificates for the purpose of preparing reports furnished to
certificateholders. The effect of the application of such provisions generally
will be to cause certificateholders holding Certificates bearing interest at a
Single Variable Rate to take into account for each period an amount
corresponding approximately to the sum of:
. the qualified stated interest, accruing on the outstanding face amount
of the Regular Certificate as the stated interest rate for that
Certificate varies from time to time; and
. the amount of original issue discount that would have been attributable
to that period on the basis of a constant yield to maturity for a bond
issued at the same time and issue price as the Regular Certificate,
having the same face amount and schedule of payments of principal as
such Certificate, subject to the same prepayment assumption, and bearing
interest at a fixed rate equal to the value of the applicable qualified
floating rate or qualified inverse floating
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rate in the case of a Certificate providing for either such rate, or
equal to the fixed rate that reflects the reasonably expected yield on
the Certificate in the case of a Certificate providing for an objective
rate other than an inverse floating rate, in each case as of the issue
date.
Certificateholders holding Regular Certificates bearing interest at a Multiple
Variable Rate generally will take into account interest and original issue
discount under a similar methodology, except that the amounts of qualified
stated interest and original issue discount attributable to such a Certificate
first will be determined for an equivalent fixed rate debt instrument, the
assumed fixed rates for which are:
(1) for each qualified floating rate, the value of each such rate as of the
closing date, with appropriate adjustment for any differences in
intervals between interest adjustment dates;
(2) for a qualified inverse floating rate, the value of the rate as of the
closing date;
(3) for any other objective rate, the fixed rate that reflects the yield
that is reasonably expected for the Certificate; and
(4) for an actual fixed rate, such hypothetical fixed rate as would result
under (1) or (2) if the actual fixed rate were replaced by a
hypothetical qualified floating rate or qualified inverse floating rate
such that the fair market value of the Certificate as of the issue date
would be approximately the same as that of an otherwise identical debt
instrument providing for the hypothetical variable rate rather than the
actual fixed rate.
If the interest paid or accrued with respect to a Multiple Variable Rate
Certificate during an accrual period differs from the assumed fixed interest
rate, such difference will be an adjustment to the certificateholder's taxable
income for the taxable period or periods to which such difference relates,
treated as an adjustment to interest or original issue discount, as
applicable. Additionally, purchasers of such Certificates should be aware that
the provisions of the OID Regulations applicable to variable rate debt
instruments have been limited and may not apply to some Regular Certificates
having variable rates. If such a Certificate is not governed by the provisions
of the OID Regulations applicable to variable rate debt instruments, it may be
subject to the provisions thereof applicable to instruments having contingent
payments. The application of those provisions to instruments such as variable
rate Regular Certificates is subject to differing interpretations. Prospective
purchasers of variable rate Regular Certificates are urged to consult their
tax advisors concerning the tax treatment of such Certificates.
Market Discount. A certificateholder that purchases a Regular Certificate at
a market discount, that is, at a purchase price less than the adjusted issue
price, as defined under "--Taxation of Regular Certificates--Original Issue
Discount," of such Regular Certificate generally will recognize market
discount upon receipt of each distribution of principal. In particular, such a
holder will generally be required to allocate each payment of principal on a
Regular Certificate first to accrued market discount, and to recognize
ordinary income to the extent such principal payment does not exceed the
aggregate amount of accrued market discount on such Regular Certificate not
previously included in income. Such market discount must be included in income
in addition to any original issue discount includible in income with respect
to such Regular Certificate.
A certificateholder may elect to include market discount in income currently
as it accrues, rather than including it on a deferred basis in accordance with
the foregoing. If made, such election will apply to all market discount bonds
acquired by such certificateholder on or after the first day of the first
taxable year to which such election applies. In addition, the OID Regulations
permit a certificateholder to elect to accrue all interest, discount,
including de minimis market or original issue discount, and
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premium in income as interest, based on a constant yield method. If such an
election were made for a Regular Certificate with market discount, the
certificateholder would be deemed to have made an election to currently
include market discount in income with respect to all other debt instruments
having market discount that such certificateholder acquires during the year of
the election or thereafter. Similarly, a certificateholder that makes this
election for a Certificate that is acquired at a premium is deemed to have
made an election to amortize bond premium, as described below, with respect to
all debt instruments having amortizable bond premium that such
certificateholder owns or acquires. The election to accrue interest, discount
and premium on a constant yield method with respect to a Certificate is
irrevocable.
Under a statutory de minimis exception, market discount with respect to a
Regular Certificate will be considered to be zero for purposes of Code
Sections 1276 through 1278 if such market discount is less than 0.25% of the
stated redemption price at maturity of such Regular Certificate multiplied by
the number of complete years to maturity remaining after the date of its
purchase. In interpreting a similar de minimis rule with respect to original
issue discount on obligations payable in installments, the OID Regulations
refer to the weighted average maturity of obligations, and it is likely that
the same rule will be applied in determining whether market discount is de
minimis. It appears that de minimis market discount on a Regular Certificate
would be treated in a manner similar to original issue discount of a de
minimis amount. See "Taxation of Regular Certificates--Original Issue
Discount". Such treatment would result in discount being included in income at
a slower rate than discount would be required to be included using the method
described above. However, Treasury regulations implementing the market
discount de minimis exception have not been issued in proposed or temporary
form, and the precise treatment of de minimis market discount on obligations
payable in more than one installment therefore remains uncertain.
The 1986 Act grants authority to the Treasury Department to issue
regulations providing for the method for accruing market discount of more than
a de minimis amount on debt instruments, the principal of which is payable in
more than one installment. Until such time as regulations are issued by the
Treasury Department, certain rules described in the Committee Report will
apply. Under those rules, the holder of a bond purchased with more than de
minimis market discount may elect to accrue such market discount either on the
basis of a constant yield method or on the basis of the appropriate
proportionate method described below.
Under the proportionate method for obligations issued with original issue
discount, the amount of market discount that accrues during a period is equal
to the product of:
(1) the total remaining market discount; multiplied by
(2) a fraction, the numerator of which is the original issue discount
accruing during the period and the denominator of which is the total
remaining original issue discount at the beginning of the period.
Under the proportionate method for obligations issued without original issue
discount, the amount of market discount that accrues during a period is equal
to the product of:
(1) the total remaining market discount; multiplied by
(2) a fraction, the numerator of which is the amount of stated interest
paid during the accrual period and the denominator of which is the
total amount of stated interest remaining to be paid at the beginning
of the period.
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The Prepayment Assumption, if any, used in calculating the accrual of original
issue discount is to be used in calculating the accrual of market discount
under any of the above methods. Because the regulations referred to in this
paragraph have not been issued, it is not possible to predict what effect such
regulations might have on the tax treatment of a Regular Certificate purchased
at a discount in the secondary market.
Further, a purchaser generally will be required to treat a portion of any
gain on sale or exchange of a Regular Certificate as ordinary income to the
extent of the market discount accrued to the date of disposition under one of
the foregoing methods, less any accrued market discount previously reported as
ordinary income. Such purchaser also may be required to defer a portion of its
interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry such Regular Certificate. Any such
deferred interest expense is, in general, allowed as a deduction not later
than the year in which the related market discount income is recognized. If
such holder elects to include market discount in income currently as it
accrues on all market discount instruments acquired by such holder in that
taxable year or thereafter, the interest deferral rule described above will
not apply.
Premium. A Regular Certificate purchased at a cost, not including payment
for accrued qualified stated interest, greater than its remaining stated
redemption price at maturity will be considered to be purchased at a premium.
The holder of such a Regular Certificate may elect to amortize such premium
under the constant yield method. The OID Regulations also permit
certificateholders to elect to include all interest, discount and premium in
income based on a constant yield method, further treating the
certificateholder as having made the election to amortize premium generally,
as discussed above. The Committee Report indicates a Congressional intent that
the same rules that will apply to accrual of market discount on installment
obligations will also apply in amortizing bond premium under Code Section 171
on installment obligations such as the Regular Certificates.
Effects of Defaults or Delinquencies. Certain Series of Certificates may
contain one or more Classes of Subordinate Certificates. In the event there
are defaults or delinquencies on Contracts in the related REMIC Fund, amounts
that would otherwise be distributed on the Subordinate Certificates may
instead be distributed on the Senior Certificates. Holders of Subordinate
Certificates nevertheless will be required to report interest income with
respect to such Certificates, including original issue discount, as such
income accrues without giving effect to delays or reductions in distributions
on such Subordinate Certificates attributable to defaults and delinquencies on
such Contracts, except to the extent that it can be established that the
undistributed amounts are not collectible. As a result, the amount of income
reported by a holder of a Subordinate Certificate in any period could
significantly exceed the amount of cash distributed to such holder in that
period. The holder will eventually be allowed a loss or will be allowed to
report a lesser amount of income to the extent that the aggregate amount of
distributions on the Subordinate Certificate is reduced as a result of
defaults or delinquencies on the related Contracts. However, the timing of
such losses or reductions in income is uncertain, and in some circumstances
losses could be capital losses that generally can be offset only with capital
gains. Holders of Subordinate Certificates should consult their own tax
advisors on these points.
Sales of Certificates. If a Regular Certificate is sold or exchanged, the
seller will recognize gain or loss equal to the difference, if any, between
the amount realized, net of accrued interest, and its adjusted basis in such
Regular Certificate. A seller's adjusted basis generally will equal the cost
of such Regular Certificate to the seller, increased by any original issue
discount reported by such seller with respect to such Regular Certificate and
reduced, but not below zero, by distributions received by
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such seller, other than payments of qualified stated interest, and by any
amortized premium. Except as described above "--Market Discount" and with
respect to the next three paragraphs, any such gain or loss will be capital
gain or loss provided the Regular Certificate is held as a capital asset.
Gain from the disposition of a Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent that such gain
does not exceed the excess, if any, of:
(1) the amount that would have been includible in the seller's gross income
had income accrued at a rate equal to 110% of "the applicable Federal
rate" under Section 1274(d) of the Code (generally, an average yield of
United States Treasury obligations of different ranges of maturities
published monthly by the IRS), determined as of the date of purchase of
such Regular Certificate; over
(2) the amount of income actually includible in the gross income of the
seller with respect to the Regular Certificate.
Regular Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, and accordingly, gain or loss recognized
from a sale of a Regular Certificate by a bank or thrift institution to which
such section applies would be ordinary income or loss.
If GreenPoint is determined to have intended on the date of issue of the
Regular Certificates to call all or any portion of the Regular Certificates
prior to their stated maturity within the meaning of Section 1271(a)(2)(A) of
the Code, any gain realized upon a sale, exchange, retirement, or other
disposition of a Regular Certificate would be considered ordinary income to
the extent it does not exceed the unrecognized portion of the original issue
discount, if any, with respect to the Regular Certificate. The OID Regulations
provide that the intention to call rule will not be applied to mortgage-backed
securities such as the Regular Certificates. In addition, under the OID
Regulations, a mandatory sinking fund or call option is not evidence of an
intention to call.
Pass-Through of Expenses Other Than Interest. If a REMIC Fund for which a
REMIC election is made is considered a "single-class REMIC" (as defined
below), a portion of such REMIC Fund's servicing, administrative and other
non-interest expenses will be allocated as a separate item to those Regular
certificateholders that are "pass-through interest holders" (as defined
below). Such a holder would be required to add its allocable share, if any, of
such expenses to its gross income and to treat the same amount as an item of
investment expense. An individual would generally be allowed a deduction for
such an expense item for regular tax purposes only as a miscellaneous itemized
deduction subject to the limitation under Section 67 of the Code, and may not
be allowed any deduction for such item for purposes of the alternative minimum
tax. Section 67 of the Code allows deductions for miscellaneous itemized
deductions only to the extent that in the aggregate they exceed 2% of an
individual's adjusted gross income. The Revenue Reconciliation Act of 1990
further limits the itemized deductions allowed to certain individuals. If so
specified in the related prospectus supplement, the applicable Agreement will
require each holder to give the REMIC Fund written notice immediately upon
becoming a holder, if it is a pass-through interest holder, or is holding a
Regular Certificate on behalf of a pass-through interest holder. The REMIC
Fund will report to each holder that has given the REMIC Fund such notice (and
others if it is required) and to the IRS, each such holder's allocable share,
if any, of the REMIC Fund's noninterest expenses. Generally, a "single-class
REMIC" is defined as:
. a REMIC that would be treated as an investment trust under Treasury
regulations but for its qualification as a REMIC; or
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. a REMIC that is substantially similar to an investment trust but is
structured with the principal purpose of avoiding the allocation
requirement imposed under Section 67 of the Code.
The term "pass-through interest holder" generally refers to individuals,
entities taxed as individuals and certain pass-through entities, but does not
include real estate investment trusts. Such investors should consult their own
tax advisors regarding consequences to them of the allocation of the REMIC
Fund's non-interest expenses. In addition, the amount of itemized deductions
otherwise allowable for the taxable year of an individual whose adjusted gross
income exceeds certain thresholds will be reduced.
Taxation of Certain Foreign Investors. For purposes of this discussion, a
"Foreign Holder" is a certificateholder who holds a Regular Certificate and
who is not:
(1) a citizen or resident of the United States;
(2) a corporation or partnership organized in or under the laws of the
United States, a state, other than any partnership that is treated as
not a United States person under any Applicable Treasury regulations,
thereof or the District of Columbia or an entity taxable as such for
U.S. federal income tax purposes;
(3) an estate, the income of which is included in gross income for United
States tax purposes regardless of its source; or
(4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial
decisions of the trust.
Unless the interest on a Regular Certificate is effectively connected with the
conduct by the Foreign Holder of a trade or business within the United States,
the Foreign Holder is not subject to federal income or withholding tax on
interest or original issue discount, if any, on a Regular Certificate, subject
to possible backup withholding of tax, discussed below, provided the Foreign
Holder is not a controlled foreign corporation related to GreenPoint and does
not own actually or constructively 10% or more of the voting stock of
GreenPoint. To qualify for this tax exemption, the Foreign Holder will be
required to provide periodically a statement signed under penalties of perjury
certifying that the Foreign Holder meets the requirements for treatment as a
Foreign Holder and providing the Foreign Holder's name and address. The
statement, which may be made on a Form W-8 or substantially similar substitute
form, generally must be provided in the year a payment occurs or in either of
the two preceding years. The statement must be provided either directly or
through a clearing organization or financial institution. This exemption may
not apply to a Foreign Holder that owns directly or indirectly both Regular
Certificates and Residual Certificates. If for any reason the exemption does
not apply, interest paid to Foreign Holders will be subject to U.S.
withholding tax at the rate of 30% or, if applicable, a reduced rate provided
in a tax treaty. If the interest on a Regular Certificate is effectively
connected with the conduct by a Foreign Holder of a trade or business within
the United States, then the Foreign Holder will be subject to tax at regular
graduated rates. Foreign Holders should consult their own advisors regarding
the specific tax consequences of their owning a Regular Certificate.
Any gain recognized by a Foreign Holder upon a sale, retirement or other
taxable disposition of a Regular Certificate generally will not be subject to
United States federal income tax unless either:
. the Foreign Holder is a non-resident alien individual who holds the
Regular Certificate as a capital asset and who is present in the United
States for 183 days or more in the taxable year of the disposition and
either the gain is attributable to an office or other fixed place of
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business maintained in the United States by the individual or the
individual has a "tax home" in the United States; or
. the gain is effectively connected with the conduct by the Foreign Holder
of a trade or business within the United States.
A Regular Certificate will not be included in the estate of a Foreign Holder
who does not own actually or constructively 10% or more of the voting stock of
GreenPoint. Regular certificateholders who are non-U.S. Persons and persons
related to such holders should not acquire any Residual Certificates, and
Residual certificateholders and persons related to Residual certificateholders
should not acquire any Regular Certificates without consulting their tax
advisors as to the possible adverse tax consequences of doing so.
Backup Withholding. Under certain circumstances, a REMIC certificateholder
may be subject to "backup withholding" at a 31% rate. Backup withholding may
apply to a REMIC certificateholder who is a United States person if the
holder, among other circumstances, fails to furnish his Social Security number
or other taxpayer identification number to the trustee. Backup withholding may
apply, under certain circumstances, to a REMIC certificateholder who is a
foreign person if the REMIC certificateholder fails to provide the trustee or
the REMIC certificateholder's securities broker with the statement necessary
to establish the exemption from federal income and withholding tax on interest
on the REMIC Certificates. Backup withholding, however, does not apply to
payments on a Certificate made to certain exempt recipients, such as
corporations and tax-exempt organizations, and to certain foreign persons.
Each non-exempt certificateholder will be required to provide, under penalty
of perjury, a certificate on IRS Form W-9 containing his or her name, address,
correct federal taxpayer identification number and a statement that he or she
is not subject to backup withholding. REMIC certificateholders should consult
their tax advisors for additional information concerning the potential
application of backup withholding to payments received by them with respect to
a Certificate.
Requirements. The servicer will report annually to the IRS, to holders of
record of the Regular Certificates that are not excepted from the reporting
requirements and, to the extent required by the Code, to other interested
parties, information with respect to the interest paid or accrued on the
Regular Certificates, original issue discount, if any, accruing on the Regular
Certificates and information necessary to compute the accrual of any market
discount or the amortization of any premium on the Regular Certificates.
New Withholding Regulations. The Treasury Department has issued new
regulations (the "New Regulations") which make certain modifications to the
withholding, backup withholding and information reporting rules described
above. The New Regulations attempt to unify certification requirements and
modify reliance standards. The New Regulations will generally be effective for
payments made after December 31, 2000, subject to certain transition rules.
Prospective investors are urged to consult their own tax advisors regarding
the New Regulations.
Treatment of Certificates Representing a REMIC Regular Interest Coupled with a
Swap or Cap Contract
Holders of Certificates that represent ownership of a REMIC Regular Interest
coupled with a swap or cap contract will be treated for federal income tax
purposes as owning a REMIC Regular Interest and a swap or cap contract. They
will be required to allocate the purchase price for their Certificates between
the REMIC Regular Interest and the swap or cap contract represented thereby
according to their respective fair market values on the date of acquisition of
the Certificates for
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purposes of computing any market discount or premium, as well as gain or loss
on disposition. In making reports to the IRS, the servicer will make such an
allocation with respect to the original issuance of the Certificates. Such
allocation will bind any holder of such a Certificate who does not properly
report the use of a different allocation to the IRS for purposes of
determining the issue price and amount of original issue discount for the
portion of the Certificate representing ownership of a REMIC Regular Interest.
The portions of such Certificates representing ownership of REMIC Regular
Interests will be accorded the treatment described above in "--REMIC
Certificates--General--Tax Status of REMIC Certificates" and "--REMIC
Certificates--Taxation of REMIC Regular Certificates."
Any portion of a purchaser's investment in a Certificate treated by such
purchaser as representing the right to payments from a swap or cap contract
would be treated as an interest in a notional principal contract. Any portion
of a Class A Certificate allocable to the right to payments from a swap or cap
contract and any payments with respect thereto will not qualify for any of the
treatments described in "REMIC Certificates--General--Tax Status of REMIC
Certificates." Treasury regulations issued under Section 446 of the Code (the
"Swap Regulations") specify rules for accounting for income from and recovery
of the purchase price of such investments. Under the Swap Regulations, income
in respect of the right to payments from a swap or cap contract would be taken
into account for the taxable period to which it related, which generally would
approximate accrual basis accounting regardless of an investor's usual method
of tax accounting. Such income would be ordinary income.
The Swap Regulations further provide that an investor in a Certificate would
recover any purchase price allocable to the right to payments from a swap or
cap contract over the term of that right, generally by allocating it to each
period in accordance with the prices of a series of cash-settled option
contracts that reflected the specified index and notional amount (i.e., any
excess of the applicable Pass-Through Rate over the weighted average net
Contract Rate and the applicable Certificate Balance, respectively) expiring
in each period. Under the Swap Regulations, straight-line or accelerated
amortization generally would be impermissible. The Swap Regulations also
permit a simplified alternative allocation methodology called the "level
payment method," under which the purchase price allocable to the right to
payments from a swap or cap contract would be allocated to each period on the
basis of the principal portion of each of a series of equal payments having a
discounted present value equal to such purchase price. There is no explicit
authority with respect to the character of such amortization deductions,
although they are generally regarded as ordinary items.
Certificateholders should be aware that the effect of allocating a portion
of their purchase price to the right to payments from a swap or cap contract
would be to increase the amount of original issue discount. It is expected
that an investor's amortization of any portion of its purchase price allocable
to the right to payments from a swap or cap contract would offset such
additional original issue discount, but the degree of offset in any given
period would depend upon the applicable amortization methodology and upon the
treatment of such amortization as an ordinary deduction, each as discussed
above. Although dependent upon the applicable discount rate, the annual amount
of offset should be relatively complete in the case of an investor amortizing
purchase price allocable to the right to payments from a swap or cap contract
under the "level payment method" described above.
On disposing of a Certificate, a holder will recognize gain or loss
separately with respect to the related regular interest and any right to
payments from a swap or cap contract. Gain or loss with respect to each asset
will be the excess of the amount realized in respect of such asset over its
adjusted basis; the amount realized will be allocated between the assets based
on their relative fair market value as of the date of disposition. The
holder's basis in its right to payments from a swap or cap contract
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will be any initial purchase price allocable thereto as discussed above),
reduced by amortization of such amount allowable through the date of
disposition. Gain or loss with respect to each asset generally will be capital
gain or loss, the term of which will be based on the period such holder held
the Certificate; gain or loss attributable to the right to payments from a
swap or cap contract may be ordinary if recognized by a bank, although the
matter is uncertain.
A purchaser of Certificate who is not a United States Person and is not
subject to federal income tax apart from its ownership of a Class A
Certificate should not be subject to United States federal income or
withholding tax on payments attributable to the right to payments from a swap
or cap contract, if such purchaser complies with the identification
requirements described in the prospectus. However, the inapplicability of
federal income tax withholding to such payments is not completely clear, and
prospective investors should consult their tax advisors. In the absence of
contrary authority, income tax will not be withheld from amounts paid in
respect of the right to payment from a swap or cap contract. See "Taxation of
Certain Foreign Investors".
Taxation of Residual Certificates
The discussion under this heading applies only to a Series of Certificates
with respect to which a REMIC election is made and to Residual Certificates.
Such Residual Certificates will be subject to tax rules, described below, that
differ from those that would apply if they were treated for federal income tax
purposes as direct ownership interests in the related REMIC Fund or as debt
instruments issued by such REMIC Fund.
Although a REMIC is a separate entity for federal income tax purposes, a
REMIC is not generally subject to federal income tax. Rather, the taxable
income of a REMIC is taken into account by the holders of REMIC residual
interests.
In general, each original holder of a Residual Certificate will report on
its federal income tax return, as ordinary income, its share of the "daily
portion" of the taxable income of the REMIC Fund for each day during the
taxable year on which such Residual certificateholder held a Residual
Certificate. The "daily portion" of the taxable income of the REMIC Fund is
determined by allocating to each day in any calendar quarter its ratable
portion of the taxable income or net loss of the REMIC Fund for such quarter,
and such Residual certificateholder's share of the "daily portion" is based on
the portion of outstanding Residual Certificates that such Residual
certificateholder owns on such day. REMIC taxable income will be taxable to
the Residual certificateholders without regard to the timing or amounts of
cash distributions by the REMIC. Ordinary income derived from Residual
Certificates will be "portfolio income" for purposes of the taxation of
taxpayers subject to the limitation on the deductibility of "passive losses."
As residual interests, the Residual Certificates will be subject to tax rules,
described below, that differ from those that would apply if the Residual
Certificates were treated for federal income tax purposes as direct ownership
interests in the Contracts, or as debt instruments issued by the REMIC. Under
certain circumstances, a Residual certificateholder may be required to
recognize for a given period income substantially in excess of distributions
made on the Residual Certificates.
A subsequent Residual certificateholder also will report on its federal
income tax return amounts representing a daily share of the taxable income of
the REMIC Fund for each day that such Residual certificateholder held such
Residual Certificate. Those daily amounts generally would equal the amounts,
described above, that would have been reported for the same days by a holder
of a Residual Certificate (an "Original Holder") that purchased such Residual
Certificate at its original issuance and
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held it continuously thereafter. As discussed below, the taxable income of the
REMIC Fund will be calculated based in part on the initial tax basis to the
REMIC Fund of its assets, which in turn equals the sum of the issue prices of
the Residual Certificates and each Class of Regular Certificates. The
legislative history of the 1986 Act indicates that certain adjustments may be
appropriate to reduce (or increase) the income of a subsequent Residual
certificateholder that purchased such Residual Certificate at a price greater
than (or less than) the adjusted basis (as defined below in "Distributions")
such Residual Certificate would have in the hands of an Original Holder. For
the present, however, adjustments are apparently not permitted or required.
A holder's adjusted basis in a Residual Certificate will equal the purchase
price of such Residual Certificate, increased by the amount of the related
REMIC Fund's taxable income that is allocated to the holder of such Residual
Certificate, and decreased, but not below zero, by the amount of distributions
received thereon by such holder and the REMIC Fund's net losses allocated to
such holder. Payments on a Residual Certificate, whether at their scheduled
times or as a result of prepayments, will generally not result in any taxable
income or loss to the holder of a Residual Certificate. If the amount of such
payment exceeds a holder's adjusted basis in its Residual Certificate,
however, the holder will recognize gain, treated as gain from the sale or
exchange of its Residual Certificate, to the extent of such excess. See "--
Sale or Exchange" below.
Taxable Income of the REMIC Fund. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except that:
(1) the limitation on deductibility of investment interest expense and
expenses for the production of income do not apply;
(2) all bad loans will be deductible as business bad debts; and
(3) the limitation on the deductibility of interest and expenses related to
tax-exempt income will apply.
In general, the REMIC Fund's taxable income will reflect a netting of:
(1) the gross income produced by the assets of the REMIC Fund, including
the stated interest and any original issue discount or market discount
income on the Contracts in the related Contract Pool, net of any
amortized premium on such Contracts, income from the investment or
reinvestment of cash flows and, if applicable, reserve assets, and
amortization of any issue premium with respect to the Regular
Certificates; and
(2) deductions, including stated interest and original issue discount
expense on Regular Certificates that would be permitted if the Regular
Certificates were indebtedness of the REMIC Fund, servicing fees, and
other administrative expenses of the REMIC Fund, except as described
below under "--Expenses Other Than Interest."
Any gain or loss realized by the REMIC Fund from the disposition of any asset
is treated as gain or loss from the sale or exchange of property that is not a
capital asset. If there is more than one Class of Regular Certificates,
deductions allowed to the REMIC Fund with respect to the Regular Certificates
will generally be calculated separately with respect to each Class based on
the yield of that Class.
For purposes of determining its taxable income, the REMIC Fund will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the Regular Certificates and the Residual Certificates. The issue price of
a Certificate of a Class, whether Regular Certificates or Residual
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Certificates, that is publicly offered will be the initial offering price to
the public, excluding bond houses and brokers, at which a substantial amount
of the Certificates of that Class is sold, and if not publicly offered will be
the price paid by the first buyer of a Certificate of such class. If a
Residual Certificate has a negative value, it is not clear whether its issue
price would be considered to be zero or such negative amount for purposes of
determining the REMIC's basis in its assets. The REMIC Regulations imply that
residual interest cannot have a negative basis or a negative issue price.
However, the preamble to the REMIC Regulations indicates that, while existing
tax rules do not accommodate such concepts, the IRS is considering the tax
treatment of these types of residual interests, including the proper tax
treatment of a payment made by the transferor of such a residual interest to
induce the transferee to acquire that interest. Absent regulations or
administrative guidance to the contrary, and unless the related prospectus
supplement otherwise provides, it is not expected that any REMIC Fund as to
which a REMIC election is made will treat a Class of Residual Certificates as
having a value of less than zero for purposes of determining the basis of the
related REMIC in its assets.
If a REMIC Fund acquires a Contract and the principal amount of such
Contract or revised issue price in the case of a Contract issued with original
issue discount exceeds the REMIC Fund's basis in such Contract by more than a
de minimis amount as described above in "Taxation of Regular Certificates--
Market Discount," such discount would generally be includible in the REMIC
Fund's income as it accrues, in advance of receipt of the cash attributable to
such income, under a constant yield method, similar to the method for accruing
original issue discount on Regular Certificates described above in "Taxation
of Regular Certificates--Original Issue Discount." The REMIC Fund's deductions
for original issue discount expense with respect to Regular Certificates also
will be determined under those rules, except that the de minimis rule that may
apply to holders of Regular Certificates and the adjustments for holders of
Regular Certificates that purchase their Certificates at a price greater than
the adjusted issue price described therein will not apply.
If the REMIC Fund's basis in a Contract exceeds the remaining stated
redemption price at maturity of such a Contract, the REMIC Fund will be
considered to have acquired such Contract at a premium equal to the amount of
such excess. In the event that any Contract in the Contract Pool is acquired
by the REMIC Fund at a premium, the REMIC Fund will be entitled to amortize
such premium on a yield-to-maturity basis. Although the matter is not free
from doubt, the REMIC Fund intends to make this calculation using a reasonable
prepayment assumption.
If a Class of Regular Certificates is issued at a price in excess of the
aggregate principal amount of such Class (the excess, the "Issue Premium"),
the portion of the Issue Premium that is considered to be amortized during a
taxable year will be treated as ordinary income of the REMIC Fund for such
taxable year. Although the matter is not entirely certain, it is likely that
the Issue Premium would be amortized under a constant yield method in a manner
analogous to the method of accruing original issue discount described above
under "Taxation of Regular Certificates--Original Issue Discount."
The taxable income recognized by a holder of a Residual Certificate in any
taxable year will be affected by, among other factors, the relationship
between the timing of interest, original issue discount or market discount
income, or amortization of premium with respect to the Contracts, on the one
hand, and the timing of deductions for interest, including original issue
discount, on the Regular Certificates, on the other hand. In the event that an
interest in the Contracts is acquired by a REMIC at a discount, and one or
more of such Contracts is prepaid, a holder of a Residual Certificate may
recognize taxable income without being entitled to receive a corresponding
cash distribution because:
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. the prepayment may be used in whole or in part to make distributions on
Regular Certificates; and
. the discount on the Contracts which is included in a REMIC's income may
exceed its deduction with respect to the distributions on those Regular
Certificates.
When there is more than one class of Regular Certificates that receive
payments sequentially (i.e., a fast-pay, slow-pay structure), this mismatching
of income and deductions is particularly likely to occur in the early years
following issuance of the Regular Certificates, when distributions are being
made in respect of earlier classes of Regular Certificates to the extent that
such classes are not issued with substantial discount. If taxable income
attributable to such a mismatching is realized, in general, losses would be
allowed in later years as distributions on the later classes of Regular
Certificates are made. The taxable income recognized by a holder of a Residual
Certificate also may be greater in earlier years because the REMIC will use a
constant yield in computing income from the Contracts, while interest
deductions with respect to Regular Certificates, expressed as a percentage of
the outstanding principal amount of the Regular Certificates, may increase
over time as earlier, lower-yielding Classes are paid. The mismatching of
income and deductions described in this paragraph, if present with respect to
a series of Residual Certificates, could have a significant adverse effect
upon the holder's after-tax rate of return. In addition, a holder of a
Residual Certificate may need to have sufficient other sources of cash to pay
any federal, state, or local income taxes due as a result of such mismatching,
or such holders must have unrelated deductions against which to offset such
income, subject to the discussion of "excess inclusions" below in "--Excess
Inclusions."
A Residual certificateholder will not be permitted to amortize the cost of
its Residual Certificate as an offset to its share of the taxable income of
the REMIC Fund. However, that taxable income will not include cash received by
the REMIC Fund that represents a recovery of the REMIC Fund's basis in its
assets, which will include the issue price of the Residual Certificates as
well as the issue price of Regular Certificates. Such recovery of basis by the
REMIC Fund will have the effect of amortization of the issue price of the
Residual Certificates over the life of the REMIC Fund's assets. However, in
view of the possible acceleration of the income of holders of Residual
Certificates described above, the period of time over which such issue price
is effectively amortized may be longer than the economic life of the Residual
Certificates.
The method of taxation of Residual Certificates described above can produce
a significantly lower after-tax yield for a Residual Certificate than would be
the case if:
. Residual Certificates were taxable in the same manner as debt
instruments issued by the REMIC Fund; or
. no portion of the taxable income on the Residual Certificates in each
period were treated as "excess inclusions" (as defined below).
In certain periods, taxable income and the resulting tax liability on a
Residual Certificate are likely to exceed payments received thereon. In
addition, a substantial tax may be imposed on certain transferors of the
Residual Certificates and certain beneficial owners of the Residual
Certificates that are "pass-through" entities. Investors should consult their
tax advisors before purchasing a Residual Certificate.
Net Losses of the REMIC Fund. The REMIC Fund will have a net loss for a
calendar quarter if its deductions for that calendar quarter exceed its gross
income for that calendar quarter. The net loss allocable to any Residual
Certificate will not be deductible by the holder to the extent that such net
loss exceeds such holder's adjusted basis as defined above in "--
Distributions" in such Residual
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Certificate at the end of the calendar quarter in which such loss arises or
the time of disposition of the Residual Certificate, if earlier, determined
without taking into account the net loss for such quarter. Any net loss that
is not currently deductible by reason of this limitation may be carried
forward indefinitely, but may be used only to offset taxable income of the
same REMIC Fund subsequently allocated to such Residual certificateholder. The
ability of Residual certificateholders that are individuals or closely-held
corporations to deduct net losses may be subject to additional limitations
under the Code.
Expenses Other Than Interest. Except in the limited circumstance when the
REMIC Fund is considered a "single-class REMIC" as defined above in "Taxation
of Regular Certificates--Pass-Through of Expenses Other Than Interest," the
REMIC Fund's servicing, administrative and other noninterest expenses will be
allocated entirely to the Residual certificateholders. In the case where the
REMIC Fund is considered a single-class REMIC, such expenses will be allocated
proportionately among Regular and Residual certificateholders. See "Taxation
of Regular Certificates--Pass-Through of Expenses Other Than Interest." In
either case, such expenses will be allocated as a separate item to those
holders that are "pass-through interest holders" as defined above in "Taxation
of Regular Certificates--Pass-Through of Expenses Other Than Interest." Such a
holder would be required to add its allocable share, if any, of such expenses
to its gross income and treat the same amount as an item of investment
expense. Limitations on the deductibility of such expenses are described above
in "Taxation of Regular Certificates--Pass-Through of Expenses Other Than
Interest." The related Agreement will require each holder to give the REMIC
Fund written notice upon becoming a holder if it is a pass-through interest
holder, or is holding a Residual Certificate on behalf of a pass-through
interest holder. The REMIC Fund will report quarterly to each holder of a
Residual Certificate during any calendar quarter that has given the REMIC Fund
such notice and others if it is required and to the IRS annually such holder's
allocable share, if any, of the REMIC Fund's non-interest expenses. Such
investors should consult their tax advisors in determining the consequences to
them of the allocation of the REMIC Fund's non-interest expenses.
Prohibited Transactions; Special Taxes. Income from certain transactions by
the REMIC, called prohibited transactions, will not be part of the calculation
of income or loss includible in the federal income tax returns of Residual
certificateholders, but rather will be taxed directly to the REMIC at a 100%
rate. Prohibited transactions generally include:
(1) the disposition of qualified mortgages other than pursuant to a:
(a) substitution for a defective mortgage within two years or for any
qualified mortgage within three months of the specified Startup
Date,
(b) repurchase of a defective mortgage,
(c) foreclosure, default, or imminent default of a qualified mortgage,
(d) bankruptcy or insolvency of the REMIC, or
(e) a qualified (complete) liquidation of the REMIC;
(2) the receipt of income from assets that are not the type of mortgage
loans or investments that the REMIC is permitted to hold;
(3) the receipt of compensation for services; or
(4) the receipt of gain from disposition of cash flow investments other
than pursuant to a qualified (complete) liquidation of the REMIC.
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The REMIC Fund will be subject to a tax equal to 100% of the amount of any
contributions of property made to the REMIC Fund after the Startup Day, except
for certain cash contributions specified in Section 860G(d) of the Code. An
additional tax may be imposed on the REMIC Fund, at the highest marginal
federal corporate income tax rate, on certain net income from foreclosure
property.
It is anticipated that the REMIC Fund will not engage in any prohibited
transactions in which it would recognize a material amount of net income or
receive substantial contributions of property after the Startup Date. However,
if the REMIC Fund is subject to the tax on prohibited transactions or
contributions, such tax would generally be borne by the Residual
certificateholders. It is not possible to predict the amount, if any, of net
income from foreclosure property that might be received by a REMIC Fund,
because such amount will depend on the particular delinquency and foreclosure
experience of such REMIC Fund. Accordingly, no assurance can be given that the
amount of tax on such income will not be material.
Excess Inclusions. A portion of the income of the REMIC Fund allocable to a
Residual certificateholder referred to in the Code as an "excess inclusion"
(as defined below) will be subject to federal income tax in all events. Thus,
for example, an excess inclusion:
(1) may not be offset by any unrelated losses or net operating loss
carryovers of a Residual certificateholder;
(2) will be treated as "unrelated business taxable income" within the
meaning of Section 512 of the Code if the Residual certificateholder is
a pension fund or any other organization that is subject to tax only on
its unrelated business taxable income; and
(3) is not eligible for any reduction in the rate of withholding tax in the
case of a Residual certificateholder that is a foreign investor, as
further discussed in "--Foreign Investors" below.
In addition, if a real estate investment trust, regulated investment company,
or certain pass-through entities own a Residual Certificate, a portion of
dividends paid by such entities would be treated as excess inclusions in the
hands of its shareholders with the same consequences as excess inclusions
attributed directly to a Residual certificateholder.
Except as discussed in the following paragraph, with respect to any Residual
certificateholder, the excess inclusion for any calendar quarter will equal
the excess, if any, of:
(1) the amount of the REMIC Fund's taxable income for the calendar quarter
allocable to the Residual certificateholder; over
(2) the sum of the "daily accruals" (as defined below) for all days during
the calendar quarter on which the Residual certificateholder held such
Residual Certificate.
For this purpose, daily accruals with respect to a Residual certificateholder
will be calculated by allocating to each day in such calendar quarter its
ratable portion of the product of:
(1) the "adjusted issue price" (as defined below) of the Residual
Certificate at the beginning of such calendar quarter; and
(2) 120% of the "long-term Federal rate" (as defined below), calculated on
the issue date of the Residual Certificate as if it were a debt
instrument and based on quarterly compounding.
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For this purpose, the "adjusted issue price" of a Residual Certificate at the
beginning of any calendar quarter will equal its issue price, increased by the
aggregate of the daily accruals for all prior calendar quarters and the amount
of any contributions made to the REMIC Fund with respect to the Residual
Certificates after the Startup Date, and decreased, but not below zero, by the
aggregate amount of distributions made with respect to the Residual
Certificate before the beginning of such calendar quarter. The "long-term
Federal rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by
the IRS. As an exception to the general rule described above, the Treasury has
authority to issue regulations that would treat 100% of the income accruing on
a Residual Certificate as an excess inclusion, if the Residual Certificates,
in the aggregate, are considered not to have "significant value." The REMIC
Regulations, however, do not contain such a rule.
The Small Business Act has eliminated a special rule that formerly permitted
certain financial institutions utilizing the reserve method of accounting for
bad debts pursuant to Section 593 of the Code to use net operating losses and
other allowable deductions to offset their excess inclusions from certain
REMIC residual certificates. In addition, the Small Business Act provides
three rules for determining the effect of excess inclusions on the alternative
minimum taxable income of a holder of a REMIC residual certificate. First,
alternative minimum taxable income for such a residual holder is determined
without regard to the special rule that taxable income cannot be less than
excess inclusions. Second, a residual holder's alternative minimum taxable
income for a tax year cannot be less than the excess inclusions for the year.
Third, the amount of any alternative minimum tax net operating loss deductions
must be computed without regard to any excess inclusions.
Effect of Defaults and Delinquencies. The Residual Certificates of a
multiple-Class Series may be subordinate to one or more Classes of Regular
Certificates, for purposes of this paragraph, "Senior Certificates," and, in
the event there are defaults or delinquencies on the Contracts in the related
Contract Pool, amounts that would otherwise be distributed on the Residual
Certificates may instead be distributed on the Senior Certificates. However,
the REMIC Fund will generally be required to report income in respect of
Contracts and deductions with respect to the Regular Certificates without
giving effect to default and delinquencies, except to the extent it can be
established that amounts due on the Contracts are uncollectable. To the extent
the income on a delinquent or defaulted Contract is greater than the deduction
allowed in respect of interest on the Regular Certificate that relates to such
Contract, the REMIC Fund may recognize net income without making corresponding
distributions of cash on the Residual Certificates, and holders of Residual
Certificates will be required to report their pro rata share of the net income
of the REMIC Fund without regard to the timing and amount of cash distributed
on such Residual Certificates.
Tax on Transfers of Residual Certificates to Certain Organizations. An
entity will not qualify as a REMIC unless there are reasonable arrangements
designed to ensure that residual interests in such entity are not held by
"disqualified organizations" (as defined below). Restrictions on the transfer
of the Residual Certificates that are intended to meet this requirement will
be included in the related Agreement and are discussed more fully in
"Restrictions on Transfer of REMIC Residual Certificates." If, notwithstanding
those restrictions, a Residual Certificate is transferred to a "disqualified
organization," a tax would be imposed in an amount equal to the product of:
(1) the present value of the total anticipated excess inclusions with
respect to such Residual Certificate for periods after the transfer;
and
(2) the highest marginal federal income tax rate applicable to
corporations.
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Under the REMIC Regulations, the anticipated excess inclusions must be
determined based on:
(1) events that have occurred up to the time of the transfer; and
(2) the projected payments based on the Assumed Prepayment Rate.
The REMIC Regulations also provide that the present value of the anticipated
excess inclusions is determined by discounting the anticipated excess
inclusions as of the date of the transfer using the applicable Federal rate
under Section 1274(d)(1) of the Code for the month of the transfer that would
apply to a hypothetical obligation with a term beginning on the date of the
transfer and ending on the date the life of the REMIC is anticipated to expire
as determined under rules described above in "--Excess Inclusions." Such a tax
would generally be imposed on the transferor of the Residual Certificate,
except that where such transfer is through an agent for a disqualified
organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate, or an agent for a disqualified
organization, would in no event be liable for such tax with respect to a
transfer if the transferee furnishes to such transferor (or such agent) an
affidavit that the transferee is not a disqualified organization, and as of
the time of the transfer the transferor or the agent does not have actual
knowledge that such affidavit is false.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of:
(1) the amount of excess inclusions on the Residual Certificate that are
allocable to the interest in the pass-through entity held by such
disqualified organization; and
(2) the highest marginal federal income tax rate imposed on corporations.
However, a pass-through entity will in no event be liable for such tax with
respect to a record holder if the record holder furnishes the pass-through
entity with an affidavit that the record holder is not a disqualified
organization, and, as of the time the record holder becomes such a holder, the
pass-through entity does not have actual knowledge that such affidavit is
false.
For these purposes, the term "disqualified organization" means:
(1) 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 the
foregoing (other than an instrumentality that is a corporation if all
of its activities are subject to tax and, except for the Federal Home
Loan Mortgage Corporation, a majority of its board of directors is not
selected by an such governmental unit);
(2) an organization (other than a cooperative described in Section 521 of
the Code) which is exempt from federal income tax (including the tax
imposed by Section 511 of the Code on unrelated business taxable
income) on excess inclusions; or
(3) any organization described in Section 1381(a)(2)(C) of the Code.
For these purposes, the term "pass-through entity" means any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust, estate and certain other entities described in
Section 860E(e)(6) of the Code. Except as may be provided in Treasury
Regulations, any person holding an interest in a pass-through entity as a
nominee for another will, with respect to such interest, be treated as a pass-
through entity.
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Sale or Exchange. If a Residual Certificate is sold or exchanged, the seller
will recognize gain or loss equal to the difference, if any, between the
amount realized and its adjusted basis in the Residual Certificate as defined
above in "--Distributions" at the time of such sale or exchange, except that
the recognition of a loss may be limited under the "wash sale" rules described
below. In general, any such gain or loss will be capital gain or loss,
provided the Residual Certificate is held as a capital asset as defined in
Section 1221 of the Code. However, a Residual Certificate will be an "evidence
of indebtedness" within the meaning of Section 582(c)(1) of the Code, so that
gain or loss recognized from the sale of a Residual Certificate by a bank or
thrift institution to which such section applies would be ordinary income or
loss.
Section 860F(d) of the Code and the Conference Committee Report to the 1986
Act indicate that, except as provided in Treasury Regulations, the wash sale
rules of Section 1091 of the Code will apply to dispositions of Residual
Certificates where the seller of the Residual Certificate, during the period
beginning six months before the sale or disposition of the Residual
Certificate and ending six months after such sale or disposition, acquires, or
enters into any other transaction that results in the application of Section
1091 of the Code, any residual interest in any REMIC or any interest in a
"taxable mortgage pool" (such as a non-REMIC owner trust) that is economically
comparable to a Residual Certificate.
Noneconomic Residual Interests. Under the REMIC Regulations, a transfer of a
"noneconomic residual interest" (as defined below) to a Residual Holder (other
than a Foreign Holder, as discussed below) is disregarded for all federal
income tax purposes if a significant purpose of the transfer is to enable the
transferor to impede the assessment or collection of tax. If a transfer of a
residual interest is disregarded, the transferor would continue to be treated
as the owner of the residual interest and thus would continue to be subject to
tax on its allocable portion of the net income of the REMIC. A residual
interest in a REMIC, including a residual interest with a positive value at
issuance, is a "noneconomic residual interest" unless, at the time of
transfer:
(1) the present value of the expected future distributions on the residual
interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate
in effect for the year in which the transfer occurs; and
(2) the transferor reasonably expects that the transferee will receive
distributions from the REMIC at or after the time at which taxes accrue
on the anticipated excess inclusions in an amount sufficient to satisfy
the accrued taxes.
The anticipated excess inclusions and the present value rate are determined in
the same manner as set forth above. The REMIC Regulations explain that a
significant purpose to impede the assessment or collection of tax exists if
the transferor at the time of the transfer either knew or should have known
that the transferee would be unwilling or unable to pay taxes due on its share
of the taxable income of the REMIC. A safe harbor is provided if:
(1) the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and, as a
result of the investigation, the transferor found that the transferee
had historically paid its debts as they came due and found no
significant evidence to indicate that the transferee will not continue
to pay its debts as they come due in the future; and
(2) the transferee represents to the transferor that it understands that,
as the holder of a non-economic residual interest, the transferee may
incur tax liabilities in excess of any cash flows
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generated by the interest and that the transferee intends to pay taxes
associated with holding the residual interest as they become due.
The Agreement with respect to each Series of REMIC Certificates will require
the transferee of a Residual Certificate to certify to the statements in clause
(2) of the preceding sentence as part of the affidavit described below under
"Restrictions on Transfer of REMIC Residual Certificates."
Termination. The REMIC Fund related to a Series of Certificates will
terminate shortly following the retirement of Certificates in such Series. If a
Residual certificateholder's adjusted basis in its Residual Certificate exceeds
the amount of cash distributed to such Residual certificateholder in final
liquidation of its interest, then, although the matter is not entirely free
from doubt, it would appear that the Residual certificateholder is entitled to
a loss equal to the amount of such excess.
Foreign Investors. Unless otherwise provided in the applicable prospectus
supplement, no record or beneficial ownership interest in a Residual
Certificate may be transferred to a Foreign Holder. See "Restrictions on
Transfer of REMIC Residual Certificates" below. With respect to permitted
transfers to Foreign Holders, any such Residual certificateholders should
assume that payments made on the Residual Certificates they hold will be
subject to a 30% withholding tax, or such a lesser rate as may be provided
under any applicable tax treaty, except that the rate of withholding on any
payments made on Residual Certificates that are excess inclusions will not be
eligible for reduction under any applicable tax treaties. See "--Excess
Inclusions" above. Under the REMIC Regulations, a transfer of a residual
interest that has tax avoidance potential is disregarded for all federal income
tax purposes if the transferee is a Foreign Holder. The REMIC Regulations state
that a residual interest has tax avoidance potential unless, at the time of the
transfer, the transferor reasonably expects that, for each excess inclusion,
the REMIC will distribute to the transferee residual interest holder an amount
that will equal at least 30% of the excess inclusion, and that each such amount
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. See "--Tax on Transfers of Residual Certificates to Certain
Organizations" above for rules regarding the determination of anticipated
excess inclusions. The above rules do not apply to transfers of Residual
Certificates if the transferee's income from the Residual Certificate would be
effectively connected with a United States trade or business of the transferee.
The REMIC Regulations also provide that a transfer of a Residual Certificate
from a Foreign Holder to a United States person or to a Foreign Holder in whose
hands the income from the Residual Certificate would be effectively connected
with a United States trade or business of the transferee will be disregarded if
the transfer has the effect of allowing the transferor to avoid tax on accrued
excess inclusions.
Mark-to-Market Rules. Treasury regulations provided that a Residual
Certificate acquired after January 3, 1995 will not be treated as a security
and therefore generally cannot be marked to market.
Additional Taxable Income of Residual Interests. Any payment received by a
holder of a Residual Certificate in connection with the acquisition of such
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that
any such payment would be includible in income immediately upon its receipt or
accrual as ordinary income, the IRS might assert that such payment should be
included in income over time according to an amortization schedule or according
to some other method. Because of the uncertainty concerning the treatment of
such payments, holders of Residual Certificates should consult their tax
advisors concerning the treatment of such payments for income tax purposes.
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Other Matters Relating to REMIC Certificates; Administrative Matters. Solely
for the purposes of the administrative provisions of the Code, each REMIC Fund
for which a REMIC election is made will be treated as a partnership, and the
Residual certificateholders will be treated as the partners thereof. The REMIC
Fund must maintain its books on a calendar year basis and must file federal
information returns in a manner similar to a partnership for federal income
tax purposes. Certain information on such returns will be furnished to each
Residual certificateholder. The REMIC Fund also will be subject to the
procedural and administrative rules of the Code applicable to partnerships,
including rules for determining any adjustments to among other things, items
of REMIC income, gain, loss, deduction or credit by the IRS in a unified
administrative proceeding. The holders of Residual Certificates will generally
be entitled to participate in audits of the REMIC Fund by the IRS to the same
extent as general partners in an audit of a partnership. Regular
certificateholders will not be entitled to participate in any such audits.
Each Residual certificateholder is required to treat items on its return
consistently with their treatment on the REMIC Fund's return, unless the
Residual certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the REMIC Fund. The IRS may assert a deficiency
resulting from a failure to comply with the consistency requirement without
instituting an administrative proceeding at the REMIC Fund level. The REMIC
Fund does not intend to register as a tax shelter pursuant to Section 6111 of
the Code because it is not anticipated that the REMIC Fund will have a net
loss for any of the first five taxable years of its existence. Any person that
holds a Residual Certificate as a nominee for another person will be required
to furnish the REMIC Fund, in a manner provided in Treasury Regulations, with
the name and address of such person, and other information.
Each Residual certificateholder, by purchasing its Residual Certificate:
(1) shall be deemed to consent to the appointment of the servicer as:
(a) the "tax matters person" (within the meaning of Section 1.860F-4(d)
of the REMIC Regulations) for the REMIC Fund, and
(b) attorney-in-fact and agent for any person that is the tax matters
person if the servicer is unable to serve as the tax matters
person; and
(2) agrees to execute any documents required to give effect to (1) above.
Non-REMIC Trusts
The discussion under this heading applies only to a Series with respect to
which a REMIC election is not made ("Non-REMIC Trusts"). A Non-REMIC Trust
will be described in the related prospectus supplement as either a grantor
trust (a "Grantor Trust") or an owner trust (an "Owner Trust").
Characterization of the Trust Fund. Upon the issuance of any Series with
respect to which no REMIC election is made and which is described in the
related prospectus supplement as a grantor trust, Orrick, Herrington &
Sutcliffe LLP, special counsel to GreenPoint, will deliver its opinion that,
with respect to each such Series of Certificates, under then existing law and
assuming compliance by the Seller, the servicer and the trustee of such Series
with all of the provisions of the related Agreement, and the agreement or
agreements, if any, providing for a Credit Facility or a Liquidity Facility,
together with any agreement documenting the arrangement through which a Credit
Facility or a Liquidity Facility is held outside the related Trust Fund, the
agreement or agreements with any underwriter, for
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federal income tax purposes, the Trust Fund will be classified as a grantor
trust and not as a corporation or an association which is taxable as a
corporation and the Certificates will be treated as equity in such Trust Fund.
Accordingly, each certificateholder in a Grantor Trust ("Grantor Trust
Certificateholder") will be treated for federal income tax purposes as the
owner of an undivided interest in the Contracts and other assets included in
the Trust Fund. As further described below, each holder of a Certificate in a
Grantor Trust (a "Grantor Trust Certificate") must therefore report on its
federal income tax return the gross income from the portion of the Contracts
that is allocable to such Grantor Trust Certificate and may deduct its share
of the expenses paid by the Trust Fund that are allocable to such Grantor
Trust Certificate, at the same time and to the same extent as such items would
be reported by such holder if it had purchased and held directly such interest
in the Contracts and received directly its share of the payments on the
Contracts and paid directly its share of the expenses paid by the Trust Fund
when those amounts are received and paid by the Trust Fund. A Grantor Trust
Certificateholder who is an individual will be allowed deductions for such
expenses only to the extent that the sum of those expenses and certain other
of the Grantor Trust Certificateholder's miscellaneous itemized deductions
exceeds 2% of such individual's adjusted gross income. In addition, the amount
of itemized deductions otherwise allowable for the taxable year of an
individual whose adjusted gross income exceeds certain thresholds will be
reduced. Other potential limitations on deductibility are described above in
"REMIC Certificates--Taxation of Regular Certificates--Pass-Through of
Expenses Other Than Interest." It appears that expenses paid by the Trust
Fund, and the gross income used to pay such expenses, should be allocated
among the classes of Grantor Trust Certificates in proportion to their
respective fair market values at issuance, but because other reasonable
methods of allocation exist and the allocation of such items has not been the
subject of a controlling court decision, regulation or IRS Ruling, no
definitive advice concerning the allocation of such items can be given.
Under current IRS interpretations of applicable Treasury Regulations,
GreenPoint would be able to sell or otherwise dispose of any subordinated
Grantor Trust Certificates. Accordingly, GreenPoint expects to offer
subordinated Grantor Trust Certificates for sale to investors. In general,
such subordination should not affect the federal income tax treatment of
either the subordinated or senior Certificates, and holders of subordinated
classes of Certificates should be able to recognize any losses allocated to
such class when and if losses are realized.
To the extent that any of the Contracts comprising a Contract Pool were
originated on or after March 21, 1984 and under circumstances giving rise to
original issue discount, certificateholders will be required to report
annually an amount of additional interest income attributable to such discount
in such Contracts prior to receipt of cash related to such discount. See the
discussion above under "REMIC Certificates--Taxation of Regular Certificates--
Original Issue Discount." Similarly, Code provisions concerning market
discount and amortizable premium will apply to the Contracts comprising a
Contract Pool to the extent that the loans were originated after July 18, 1984
and September 27, 1985, respectively. See the discussions above under "REMIC
Certificates--Taxation of Regular Certificates--Market Discount" and "REMIC
Certificates--Taxation of Regular Certificates--Premium."
Tax Status of Grantor Trust Certificates. In general, the Grantor Trust
Certificates, other than "Premium Grantor Trust Certificates" (as defined
below) will be:
. "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code; and
. assets described in Section 7701(a)(19)(C) of the Code to the extent the
Trust Fund's assets qualify under those Sections of the Code.
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Any amount includible in gross income with respect to the Grantor Trust
Certificates will be treated as "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 to the extent the income on the Trust Fund's
assets qualifies under that Code Section. The IRS has ruled that obligations
secured by permanently installed mobile home units qualify as "real estate
assets" under Section 856(c)(4)(A) of the Code. Assets described in Section
7701(a)(19)(C) of the Code include loans secured by mobile homes not used on a
transient basis. However, whether manufactured homes would be viewed as
permanently installed for purposes of Section 856 of the Code would depend on
the facts and circumstances of each case, because the IRS rulings on this
issue do not provide facts on which taxpayers can rely to achieve treatment as
"real estate assets". No assurance can be given that the manufactured homes
will be so treated. A Real Estate Investment Trust ("REIT") will not be able
to treat that portion of its investment in Certificates that represents
ownership of Contracts on manufactured homes that are not treated as
permanently attached as a "real estate asset" for REIT qualification purposes.
In this regard, investors should note that generally, most Contracts prohibit
the Obligor from permanently attaching the related manufactured home to its
site if it were not so attached on the date of the Contract. If so specified
in the related prospectus supplement, Contracts in the related Contract Pool
may permit the Obligor to permanently attach the related manufactured home to
its site even if not attached at the date of the Contract. Grantor Trust
Certificates that represent the right solely to interest payments on the
Contracts and Grantor Trust Certificates that are issued at prices that
substantially exceed the portion of the principal amount of the Contracts
allocable to such Grantor Trust Certificates (both types of Non- REMIC
Certificates, "Premium Grantor Trust Certificates") should qualify under the
foregoing sections of the Code to the same extent as other Certificates, but
the matter is not free from doubt. Prospective purchasers of Certificates who
may be affected by the foregoing Code provisions should consult their tax
advisors regarding the status of the Certificates under such provisions.
Taxation of Grantor Trust Certificates Under Stripped Bond Rules. Certain
classes of Grantor Trust Certificates may be subject to the stripped bond
rules of Section 1286 of the Code. In general, a Grantor Trust Certificate
will be subject to the stripped bond rules where there has been a separation
of ownership of the right to receive some or all of the principal payments on
a Contract from ownership of the right to receive some or all of the related
interest payments. Grantor Trust Certificates will constitute stripped
certificates and will be subject to these rules under various circumstances,
including the following:
(1) if any servicing compensation is deemed to exceed a reasonable amount;
(2) if GreenPoint or any other party retains a retained yield with respect
to the Contracts comprising a Contract pool;
(3) if two or more classes of Grantor Trust Certificates are issued
representing the right to non-pro rata percentages of the interest or
principal payments on the Contracts; or
(4) if Grantor Trust Certificates are issued which represent the right to
interest only payments or principal only payments.
Unless the prospectus supplement indicates otherwise, the Grantor Trust
Certificates will be subject to the "stripped bond" rules of Section 1286 of
the Code or, if the application of those rules to a particular Series of
Grantor Trust Certificates is uncertain, the Trust Fund will take the position
that they apply. There is some uncertainty as to how that section will be
applied to securities such as the Grantor Trust Certificates. Investors should
consult their own tax advisors regarding the treatment of the Grantor Trust
Certificates under the stripped bond rules.
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Although the matter is not entirely clear and alternative characterizations
could be imposed, it appears that each stripped Grantor Trust Certificate
should be considered to be a single debt instrument issued on the day it is
purchased for purposes of calculating original issue discount. Thus, in each
month the holder of a Grantor Trust Certificate, whether a cash or accrual
method taxpayer, will be required to report interest income from the Grantor
Trust Certificate equal to the income that accrues on the Grantor Trust
Certificate in such month, calculated, in accordance with the rules of the
Code relating to original issue discount, under a constant yield method. In
general, the amount of such income reported in any month would equal the
product of such holder's adjusted basis in such Grantor Trust Certificate at
the beginning of such month see "--Sales of Certificates" below and the yield
of such Grantor Trust Certificate to such holder. Such yield would be the
monthly rate, assuming monthly compounding, determined as of the date of
purchase that, if used in discounting the remaining payments on the portion of
the Contracts that is allocable to such Grantor Trust Certificate, would cause
the present value of those payments to equal the price at which the holder
purchased the Grantor Trust Certificate.
With respect to certain categories of debt instruments, the Code requires
the use of a reasonable prepayment assumption in accruing original issue
discount and provides a method of adjusting those accruals to account for
differences between the assumed prepayment rate and the actual rate. These
rules apply to "regular interests" in a REMIC and are described under "REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount."
Regulations could be adopted applying these rules to the Grantor Trust
Certificates. Although the matter is not free from doubt, it appears that the
Taxpayer Relief Act of 1997 has expanded the requirement of the use of a
reasonable prepayment assumption to instruments such as the Grantor Trust
Certificates. In the absence of regulations interpreting the application of
this requirement to such instruments particularly where such instruments are
subject to the Stripped Bond Rules, it is uncertain whether the assumed
prepayment rate would be determined based on conditions at the time of the
first sale of the Grantor Trust Certificates or, with respect to any holder,
at the time of purchase of the Grantor Trust Certificate by that holder.
Finally, if these rules were applied to the Grantor Trust Certificates, and
the principles used in calculating the amount of original issue discount that
accrues in any month would produce a negative amount of original issue
discount, it is unclear when such loss would be allowed.
In the case of a Grantor Trust Certificate acquired at a price equal to the
principal amount of the Contracts allocable to such Grantor Trust Certificate,
the use of a reasonable prepayment assumption would not have any significant
effect on the yield used in calculating accruals of interest income. In the
case, however, of a Grantor Trust Certificate acquired at a discount or
premium, that is, at a price less than or greater than such principal amount,
respectively, the use of a reasonable prepayment assumption would increase or
decrease such yield, and thus accelerate or decelerate the reporting of
interest income, respectively.
If the yield used by the holder of a Grantor Trust Certificate in
calculating the amount of interest that accrues in any month is determined
based on scheduled payments on the Contracts, that is, without using a
reasonable prepayment assumption, and such Grantor Trust Certificate was
acquired at a discount or premium, then such holder generally will recognize a
net amount of ordinary income or loss if a Contract prepays in full in an
amount equal to the difference between the portion of the prepaid principal
amount of the Contract that is allocable to the Grantor Trust Certificate and
the portion of the adjusted basis of the Grantor Trust Certificate, see "--
Sales of Certificates" below, that is allocable to the Contract. In general,
basis would be allocated among the Contracts in proportion to their respective
principal balances determined immediately before such prepayment. It is not
clear
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whether any other adjustments would be required or permitted to take account
of prepayments of the Contracts.
Solely for purposes of reporting income on the Grantor Trust Certificates to
the IRS and to certain holders, as required under the Code, it is anticipated
that, unless provided otherwise in the related prospectus supplement, the
yield of the Grantor Trust Certificates will be calculated based on:
. a representative initial offering price of the Grantor Trust
Certificates to the public; and
. a reasonable Assumed Prepayment Rate, which will be the rate used in
pricing the initial offering of the Grantor Trust Certificates.
Such yield may differ significantly from the yield to any particular holder
that would be used in calculating the interest income of such holder. No
representation is made that the Contracts will in fact prepay at the Assumed
Prepayment Rate or at any other rate.
Sales of Certificates. Upon the sale or exchange of a Grantor Trust
Certificate, a Grantor Trust Certificateholder will recognize gain or loss
equal to the difference between the amount realized in the sale and its
aggregate adjusted basis in the Contracts represented by the Grantor Trust
Certificate. Generally, the aggregate adjusted basis will equal the Grantor
Trust Certificateholder's cost for the Grantor Trust Certificate increased by
the amount of any previously reported gain with respect to the Grantor Trust
Certificate and decreased by the amount of any losses previously reported with
respect to the Grantor Trust Certificate and the amount of any distributions
received thereon. Except as provided above with respect to the original issue
discount and market discount rules, any such gain or loss would be capital
gain or loss if the Grantor Trust Certificate was held as a capital asset.
Foreign Investors. Generally, interest or original issue discount paid to or
accruing for the benefit of a Grantor Trust Certificateholder who is a Foreign
Holder as defined above in "REMIC Certificates--Taxation of Regular
Certificates--Taxation of Certain Foreign Investors" will be treated as
"portfolio interest" and therefore will be exempt from the 30% withholding
tax. Such Grantor Trust Certificateholder will be entitled to receive interest
payments and original issue discount on the Grantor Trust Certificates free of
United States federal income tax, but only to the extent the Contracts were
originated after July 18, 1984 and provided that such Grantor Trust
Certificateholder periodically provides the trustee, or other person who would
otherwise be required to withhold tax, with a statement certifying under
penalty of perjury that such Grantor Trust Certificateholder is not a United
States person and providing the name and address of such Grantor Trust
Certificateholder. For additional information concerning interest or original
issue discount paid to a Foreign Holder and the treatment of a sale or
exchange of a Grantor Trust Certificate by a Foreign Holder, which will
generally have the same tax consequences as the sale of a Regular Certificate,
see the discussion above under "REMIC Certificates--Taxation of Regular
Certificates--Taxation of Certain Foreign Investors" and "--New Withholding
Regulations."
Owner Trust Certificates or Notes
Upon the issuance of any Series with respect to which no REMIC election is
made and which is described in the related prospectus supplement as an owner
trust, Orrick, Herrington & Sutcliffe LLP, special counsel to GreenPoint, will
deliver its opinion that with respect to each such Series of Certificates or
notes ("Notes"), under then existing law and assuming compliance by the
Seller, the servicer and the trustee of such Series with all of the provisions
of the related Agreement, and the agreement or agreements, if any, providing
for a Credit Facility or a Liquidity Facility, together with
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any agreement documenting the arrangement through which a Credit Facility or a
Liquidity Facility is held outside the related Trust Fund, and the agreement
or agreements with any underwriter, for federal income tax purposes:
. the Trust Fund will not be classified as a corporation or publicly
traded partnership; and
. the Owner Trust Certificates or Notes offered by the prospectus will be
treated as indebtedness.
Treatment of the Owner Trust Certificates or Notes as Debt
The Transferor will express in the Agreement the intent that for federal,
state and local income and franchise tax purposes, the Owner Trust
Certificates or Notes will be debt secured by the Contracts. The Transferor,
by entering into the Agreement, and each investor, by the acceptance of a
beneficial interest in a Certificate or Note, will agree to treat the Owner
Trust Certificates or Notes as debt for federal, state and local income and
franchise tax purposes. However, the Agreement may be ambiguous in
characterizing the transfer of Contracts, and because different criteria are
used in determining the non-tax accounting treatment of the transaction, the
Transferor may treat the Agreement for certain non-tax accounting purposes as
causing a transfer of an ownership interest in the Contracts and not as
creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines its tax consequences. The form and non-tax
characterization of a transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as the IRS to treat a transaction in accordance
with its economic substance as determined under federal income tax law, even
though the participants in the transaction have characterized it differently
for non-tax purposes.
The determination of whether the economic substance of a transfer of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and the courts on the basis of numerous factors designed
to determine whether the transferor has relinquished and the transferee has
obtained substantial incidents of ownership in the property. Among those
factors, the primary ones examined are whether the transferee had the
opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based on its analysis of such
factors, special counsel to GreenPoint is of the opinion that, under current
law, although no transaction closely comparable to the ones contemplated in
this prospectus has been the subject of any Treasury regulation, revenue
ruling or judicial decision, for federal income tax purposes the Owner Trust
Certificates or Notes will not constitute an ownership interest in the
Contracts but will properly be characterized as debt.
Treatment of the Owner Trust
The Agreement permits the issuance of Owner Trust Certificates or Notes and
certain other interests in the Trust Fund, each of which may be treated for
federal income tax purposes either as debt or as equity interests in the Trust
Fund. If all of the Owner Trust Certificates or Notes and other interests,
other than the Transferor Certificate, in the Trust Fund were characterized as
debt, the Trust Fund might be characterized as a security arrangement for debt
collateralized by the Contracts and issued directly by the Transferor or other
holder of the Transferor Certificate. Under such a view, the Trust Fund would
be disregarded for federal income tax purposes. Alternatively, if some of
those interests were characterized as equity interests in the Trust Fund, the
Trust Fund might be
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characterized as a separate entity owning the Contracts, issuing its own debt,
and jointly owned by the Transferor or other holder of the Transferor
Certificate and any other holders of equity interests in the Trust Fund.
However, special counsel to GreenPoint is of the opinion that, under current
law, any entity constituted by the Trust Fund will not be an association,
taxable mortgage pool or publicly traded partnership taxable as a corporation.
Possible Treatment of the Trust Fund as a Taxable Mortgage Pool. Although,
as described above, Special Counsel is of the opinion that the Certificates
will properly be treated as debt for federal income tax purposes and that the
Trust Fund will not be treated as a taxable mortgage pool taxable as a
corporation, such opinion will not bind the IRS and thus no assurance can be
given that such treatment will prevail. If the IRS were to contend
successfully that the Trust Fund were a taxable mortgage pool taxable as a
corporation, that entity would be subject to federal income tax at corporate
tax rates on its taxable income generated by ownership of the related mortgage
loans. That tax could result in reduced distributions to beneficial owners of
the Certificates. No distributions from the Trust Fund would be deductible in
computing the taxable income of the corporation, except to the extent that any
Certificates were treated as debt of the corporation and distributions to the
related beneficial owners of the Certificates were treated as payments of
interest thereon. In addition, distributions to beneficial owners of the
Certificates not treated as holding debt would be dividend income to the
extent of the current and accumulated earnings and profits of the corporation
and beneficial owners of the Certificates may not be entitled to any dividends
received deduction in respect of such income.
Treatment of the Owner Trust Certificates or Notes
Treatment of the Owner Trust Certificates or Notes as Indebtedness. If the
Owner Trust Certificates or Notes are treated as indebtedness for federal
income tax purposes, the taxation of holders of such interests generally will
be the same as that described, above, for holders of REMIC Regular Interests
with the following exceptions: Holders not otherwise required to use the
accrual method of accounting for tax purposes would not be required to adopt
that method of accounting for the Owner Trust Certificates or Notes. The
treatment described under "REMIC Certificates--General--Tax Status of REMIC
Certificates" would not apply. Gain on the sale of Owner Trust Certificates or
Notes would not be subject to re-characterization as ordinary income solely as
a result of failure of income otherwise accrued on such Owner Trust
Certificates or Notes to have accrued at a rate exceeding 110% of the
"applicable federal rate" as described for REMIC Regular Interests in the
second paragraph of "REMIC Certificates--Taxation of Regular Certificates--
Sales of Certificates." The discussion under "REMIC Certificates--Taxation of
Regular Certificates--Pass-Through of Expenses Other Than Interest" would not
apply. See "REMIC Certificates--Taxation of REMIC Regular Certificates."
Possible Treatment of the Owner Trust Certificates or Notes as Partnership
Interests. Although, as described above, special counsel to GreenPoint is of
the opinion that the Owner Trust Certificates or Notes will properly be
treated as debt for federal income tax purposes, such opinion will not bind
the IRS and thus no assurance can be given that such treatment will prevail.
If the IRS were to contend successfully that some or all of the Owner Trust
Certificates or Notes were equity in the Trust Fund for federal income tax
purposes, the Owner Trust Certificates or Notes could be classified as
partnership interests for such purposes. Because special counsel to GreenPoint
is of the opinion that the Owner Trust Certificates or Notes will be
characterized as debt for federal income tax purposes, no attempt will be made
to comply with any tax reporting requirements that would apply as a result of
such alternative characterizations.
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If the Trust Fund were treated as a partnership, that partnership would not
be subject to federal income tax. Rather, each item of income, gain, loss and
deduction of the partnership generated computing taxable income of the
Transferor or the holder of the Transferor Certificate and any Certificate or
Note Owners treated as partners in accordance with their respective
partnership interests therein. The amounts, character and timing of income
reportable by any Certificate or Note Owners treated as partners would likely
differ from that reportable by such Certificates or Note Owners had they been
treated as owning debt. In addition, if the Trust Fund were treated in whole
or in part as a partnership, income derived from the partnership by any
Certificates or Note Owner that is a pension fund or other tax-exempt entity
may be treated as unrelated business taxable income. Also, any Certificate or
Note owner that is a Non-United States Person could be subject to withholding
at the rate of 30% on its share of the partnership's income from the
Contracts. Partnership characterization also may have adverse state and local
income or franchise tax consequences for a Certificate or Note Owner. If the
Trust Fund were treated in whole or in part as a partnership and the number of
holders of interest in the publicly offered Owner Trust Certificates or Notes
and other interests in the Trust Fund treated as partners equaled or exceeded
100, the Transferor may cause the Trust Fund to elect to be an "electing large
partnership." The consequence of such election to investors could include the
determination of certain tax items at the partnership level and the
disallowance of otherwise allowable deductions. No representation is made as
to whether such election will be made.
Other Tax Consequences
No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax effect
of ownership of Certificates in any state or locality. Certificateholders are
advised to consult their own tax advisors with respect to any state or local
income, franchise, personal property, or other tax consequences arising out of
their ownership of Certificates.
Restrictions on Transfer of REMIC Residual Certificates
As discussed in "Federal Income Tax Consequences--Taxation of Residual
Certificates--Tax on Transfers of Residual Certificates to Certain
Organizations," in order for the Trust Fund to qualify as a REMIC, there must
be reasonable arrangements designed to ensure that the Residual Certificates
are not held by disqualified organizations. Further, transfers to "electing
large partnerships" within the meaning of Section 775 of the Code or persons
that are not United States persons raise special tax issues. Accordingly,
unless the related prospectus supplement provides otherwise, no record or
beneficial ownership interest in a Residual Certificate that is sold under
this prospectus may be transferred unless, among other things, the trustee
receives:
(1) an affidavit from the proposed transferee to the effect that it is not
a "disqualified organization" or electing large partnership and is not
purchasing on behalf of a disqualified organization or electing large
partnership, see "Federal Income Tax Consequences--Taxation of Residual
Certificates--Tax on Transfers of Residual Certificates to Certain
Organizations;"
(2) a representation from the proposed transferee to the effect that it is
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 or any political subdivision thereof, or an estate or trust
whose income from sources without the United States is includible in
gross income for
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United States federal income tax purposes regardless of its connection
with the conduct of a trade or business within the United States; and
(3) a covenant of the proposed transferee to the effect that the proposed
transferee agrees to be bound by and to abide by the transfer
restrictions applicable to such REMIC Residual Certificate.
Tax-Exempt Investors
A qualified pension plan or other entity that is exempt from federal income
taxation pursuant to Section 501 of the Code (a "Tax-Exempt Investor")
nonetheless will be subject to federal income taxation to the extent that its
income is "unrelated business taxable income" ("UBTI") within the meaning of
Section 512 of the Code. All "excess inclusions" of a "REMIC" allocated to a
"Residual Certificate" held by a Tax-Exempt investor will be considered UBTI
and thus will be subject to federal income tax. See "Federal Income Tax
Consequences--Certificates as REMIC Residual Interests--Excess Inclusions."
Legal Investment
The prospectus supplement for each Series of Certificates will specify
which, if any, of the Classes of Certificates offered thereby constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 or "SMMEA." Classes of Certificates that qualify as
"mortgage related securities" will be legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business
entities (including depository institutions, life insurance companies and
pension funds) created pursuant to or existing under the laws of the United
States or of any state, including the District of Columbia and Puerto Rico,
whose authorized investments are subject to state regulation to the same
extent as, under applicable law, obligations issued by or guaranteed as to
principal and interest by the United States or any such entities. Under SMMEA,
if a state enacted legislation prior to October 4, 1991 specifically limiting
the legal investment authority of any such entities with respect to "mortgage
related securities," Certificates will constitute legal investments for
entities subject to such legislation only to the extent provided therein.
Approximately twenty-one states adopted such legislation prior to the October
4, 1991 deadline.
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 Certificates
without limitations as to the percentage of their assets represented thereby,
federal credit unions may invest in mortgage related securities, and national
banks may purchase Certificates 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 authority may prescribe. In this connection, federal credit
unions should review the National Credit Union Administration ("NCUA") Letter
to Credit Unions No. 96, as modified by Letter to Credit Unions No. 108, which
includes guidelines to assist federal credit unions in making investment
decisions for mortgage related securities, and the NCUAs regulation
"Investment and Deposit Activities" (12 C.F.R. Part 703), which sets forth
certain restrictions on investment by federal credit unions in mortgage
related securities.
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All depository institutions considering an investment in the Certificates,
whether or not the Class of Certificates under consideration for purchase
constitutes a "mortgage related security," should review the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities, to the extent adopted by their respective regulators,
(the "Policy Statement"). The Policy Statement sets forth, in relevant part,
certain securities trading and sales practices deemed unsuitable for an
institution's investment portfolio, and guidelines for, and restrictions on,
investing in mortgage derivative products, including "mortgage related
securities," which are "high-risk mortgage securities" as defined in the
Policy Statement. According to the Policy Statement, such "high-risk mortgage
securities" include securities such as certificates not entitled to
distributions allocated to principal or interest, or subordinated
certificates. Under the Policy Statement, it is the responsibility of each
depository institution to determine, prior to purchase, and at stated
intervals thereafter, whether a particular mortgage derivative product is a
"high-risk mortgage security," and whether the purchase (or retention) of such
a product would be consistent with the Policy Statement.
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 Certificates or to
purchase 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 Certificates constitute legal
investments for such investors.
ERISA Considerations
ERISA, as amended, imposes certain restrictions on employee benefit and
other plans subject to ERISA and/or Section 4975 of the Code ("Plans") and on
persons having certain specified relationships to a Plan ("Parties in
Interest") with respect to such Plans, including, for this purpose, individual
retirement arrangements described in Section 408 of the Code. Certain employee
benefit plans, such as governmental plans and church plans, if no election has
been made under Section 410(d) of the Code, are not subject to the
requirements of ERISA, and assets of such plans may be invested in
Certificates without regard to the ERISA considerations described below,
subject to the provisions of other applicable federal and state law. Any such
plan which is qualified under Section 401(a) of the Code and exempt from
taxation under Section 501(a) of the Code is, however, subject to the
prohibited transaction rules set forth in Section 503 of the Code.
Investments by Plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. A fiduciary which decides to invest the assets of a Plan
in Certificates should consider, among other factors, the sensitivity of the
investments to the rate of principal payments, including prepayments, on the
Contracts as discussed in "Prepayment and Yield Considerations" in this
prospectus.
The United States Department of Labor (the "DOL") has issued regulations
concerning the definition of what constitutes the assets of a Plan (DOL Reg.
Section 2510.3-101). Under the DOL regulations, the underlying assets and
properties of corporations, partnerships and certain other entities in which a
Plan makes an "equity" investment could be deemed for purposes of ERISA to be
assets
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of the investing Plan in certain circumstances. A beneficial interest in a
trust is defined as an "equity" interest under the DOL regulations. However,
the DOL regulations provide that, generally, the assets of an entity in which
a Plan makes an equity investment will not be deemed for purposes of ERISA to
be assets of such Plan if the equity interest acquired by the investing Plan
is a publicly offered security. A publicly offered security, as defined in DOL
Reg. Section 2510.3-101 is a security that is widely held, freely transferable
and either registered under the Exchange Act or sold to the Plan as part of a
public offering under the Securities Act that then becomes so registered.
There can be no assurance that any Class of Certificate will qualify for this
or any other exception under the DOL regulations.
In addition to the imposition of general fiduciary standards of investment
prudence and diversification, ERISA prohibits a broad range of transactions
involving "plan assets" and Parties in Interest, and imposes additional
prohibitions where Parties in Interest are fiduciaries with respect to such
Plan. To the extent that the Contracts may be deemed "plan assets" of each
Plan that purchases Certificates, an investment in the Certificates by a Plan
could result in a prohibited transaction under ERISA Sections 406 and 407 and
be subject to an excise tax under Section 4975 of the Code unless a statutory
or administrative exemption applies.
In DOL Prohibited Transaction Class Exemption ("PTCE") 83-1, which amended
PTCE 81-7, the DOL exempted from ERISA's prohibited transaction rules certain
transactions relating to the operation of residential mortgage pool investment
trusts and the purchase, sale and holding of "mortgage pool pass-through
certificates" in their initial issuance. However, PTCE 83-1 does not apply to
trusts that hold Contracts.
Each Plan fiduciary who is responsible for making the investment decisions
whether to purchase or commit to purchase and to hold Certificates must make
its own determination as to the availability of any prohibited transaction
exemptions under ERISA. Each Plan fiduciary should also determine whether,
under the general fiduciary standards of investment prudence and
diversification, an investment in the Certificates is appropriate for the
Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
Several underwriters of asset-backed securities have applied for and
obtained ERISA prohibited transaction exemptions which are in some respects
broader than PTCE 83-1 and the exceptions to the DOL regulations referred to
above. The exemptions referred to in the previous sentence can only apply to
securities backed by certain receivables, loans and other obligations that are
secured and, among other conditions, are sold in an offering with respect to
which the underwriter holding the exemption serves as the sole or a managing
underwriter, or as a selling or placement agent. If such an exemption might be
applicable to a Series of Certificates, the related prospectus supplement will
refer to that possibility.
Any Plan fiduciary that proposes to cause a Plan to purchase Certificates
should consult with its legal advisors concerning the impact of ERISA and the
Code, the applicability of any exemption under ERISA and the potential
consequences in its specific circumstances, prior to making the purchase of
Certificates. Moreover, each Plan fiduciary should determine whether, under
the general fiduciary standards of investment prudence and diversification, an
investment in the Certificates is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the composition of the
Plan's investment portfolio.
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Certain Legal Aspects of the Contracts
The following discussion contains summaries of certain legal aspects of
manufactured housing contracts, including Land Home and Land-in-Lieu
Contracts, which are general in nature. Because the legal aspects discussed in
the following paragraphs are governed by applicable state law, which laws may
differ substantially, the summaries should be viewed only as an overview and
therefore do not reflect the laws of any particular state, nor do they
encompass the laws of all states in which the security for the Contracts or
Land-and-Home Contracts is situated.
The Contracts (Other than Land Home and Land-in-Lieu Contracts)
General. As a result of the assignment of Contracts in a Contract Pool to
the trustee, the related Trust Fund will succeed collectively to all of the
rights, including the right to receive payment on the Contracts, and will
assume the obligations of the obligee, under the Contracts. Each Contract
evidences both (1) the obligation of the Obligor to repay the loan evidenced
thereby, and (2) the grant of a security interest in either the manufactured
home, and, in the case of a Land Home Contract or Land-in-Lieu Contract, the
real estate on which the related manufactured home is located, to secure
repayment of such loan. Certain aspects of both features of the Contracts are
described more fully below.
The following discussion focuses on issues relating generally to
GreenPoint's or any lender's interest in manufactured housing contracts. See
"Risk Factors--Security Interests of a Trust Fund in the Manufactured Homes"
in this prospectus for a discussion of certain issues relating to the transfer
to a Trust Fund of Contracts and the related security interests in the
manufactured homes comprising the related Contract Pool.
Security Interests of GreenPoint in the Manufactured Homes. Each Contract
generally will be "chattel paper" as defined in the UCC as in effect in
California and the jurisdiction in which the related manufactured home was
located at origination. GreenPoint's chief executive offices are located in
California. Under the UCC as in effect in California and each jurisdiction in
which the related manufactured home was located at origination, the sale of
chattel paper is treated in a manner similar to perfection of a security
interest in chattel paper. GreenPoint will make or cause to be made
appropriate filings of UCC-1 financing statements to give notice of the
trustee's ownership of the Contracts sold by it. The trustee's interest in the
Contracts could be defeated if a subsequent purchaser were able to take
physical possession of the Contracts without notice of the assignment to the
trustee. GreenPoint will not retitle any certificates of title that are in the
name of Bank of America, FSB or BankAmerica Housing Services, a division of
Bank of America, FSB relating to any contracts that it purchases in the
Acquisition as described under "The Seller." If so specified in the applicable
prospectus supplement, GreenPoint will be required under the related Agreement
to stamp or cause to be stamped each Contract sold by it to indicate its
transfer to the trustee. To the extent the Contracts do not constitute
"chattel paper" within the meaning of the UCC as in effect in California and
the jurisdictions in which the related manufactured homes were located at
origination, these steps may not be sufficient to protect the trustee's
interest in the Contracts against the claims of GreenPoint's (or an
affiliate's) or Bank of America, FSB's creditors, as the case may be, a
trustee in bankruptcy of GreenPoint or a receiver, conservator or trustee in
bankruptcy of an affiliate thereof that sold such Contracts to GreenPoint or
Bank of America, FSB, as applicable.
The manufactured homes securing the Contracts in a Contract Pool may be
located in all 50 states. Security interests in manufactured homes similar to
the ones securing the Contracts generally may be
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perfected either by notation of the secured party's lien on the certificate of
title or by delivery of the required documents and payment of a fee to the
state motor vehicle authority, depending on state law. In some non-title
states, perfection pursuant to the provisions of the UCC is required.
Generally, with respect to manufactured housing contracts individually
originated or purchased by GreenPoint, GreenPoint effects the notation or
delivery of the required documents and fees, and obtains possession of the
certificate of title or a lien certificate, as appropriate, under the laws of
the state in which any manufactured home securing a manufactured housing
contract is registered. If GreenPoint and its affiliates fails, due to
clerical errors or otherwise, to effect the notation or delivery, or files the
security interest under the wrong law, for example, under a motor vehicle
title statute rather than under the UCC, in a few states, GreenPoint, for
itself, or as agent of the secured lender, may not have a first-priority
security interest in the manufactured home securing a contract.
As manufactured homes have become larger and often have been attached to
their sites without any apparent intention to move them, courts in many states
have held that manufactured homes, under certain circumstances, may become
subject to real estate title and recording laws. As a result, a security
interest in a manufactured home could be rendered subordinate to the interests
of other parties claiming an interest in the home under applicable state real
estate law. In order to perfect a security interest in a manufactured home
under real estate laws, the holder of the security interest must file either a
"fixture filing" under the provisions of the UCC or a real estate mortgage
under the real estate laws of the state where the home is located. These
filings must be made in the real estate records office of the county where the
home is located.
If so specified in the related prospectus supplement, most of the Contracts
in any Contract Pool will contain provisions prohibiting the Obligor from
permanently attaching the manufactured home to its site if it was not so
attached on the date of the Contract. As long as each manufactured home was
not so attached on the date of the Contract and the Obligor does not violate
this agreement, a security interest in the manufactured home will be governed
by the certificate of title laws or the UCC. Under the certificate of title
laws or the UCC, the notation of the security interest on the certificate of
title or the filing of a UCC financing statement will be effective to maintain
the priority of GreenPoint's security interest in the manufactured home. If
any manufactured home does become attached after the date of the related
Contract, the related Contract provides that such attachment constitutes an
"event of default" that, if unremedied, gives rise to certain discrete
remedies including acceleration of the unpaid principal balance of the
Contract plus accrued interest and repossession of the manufactured home.
Regardless of whether a full recovery is obtained from an Obligor whose
manufactured home becomes attached, GreenPoint will represent that, at the
date of the initial issuance of Certificates in any Series, it had obtained a
perfected first-priority security interest in each of the manufactured homes
securing the related Contracts sold by it. The representation described in the
previous sentence, however, will not be based upon an inspection of the site
of any manufactured home to determine if the manufactured home had become
permanently attached to its site. See "Description of the Certificates--
Conveyance of Contracts" in this prospectus. GreenPoint will not be required
to make fixture filings or to file mortgages with respect to any of the
manufactured homes, except in the case of Land Home and Land-in-Lieu
Contracts, as described below. Consequently, if a manufactured home is deemed
subject to real estate title or recording laws because the owner attaches it
to its site or otherwise, the trustee's interest therein may be subordinated
to the interests of others that may claim an interest therein under applicable
real estate laws.
In addition, a federal circuit court decision may adversely affect a
trustee's interest in the Contract Pool related to a Series of Certificates
even if the related Contracts constitute chattel paper. In Octagon
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Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the court's
decision included language to the effect that accounts sold by an entity which
subsequently became bankrupt remained property of the debtor's bankruptcy
estate. Sales of chattel paper, like sales of accounts, are governed by
Article 9 of the UCC. If GreenPoint is subject to the federal bankruptcy code
and becomes a debtor under the federal bankruptcy code, and a court were to
follow the reasoning of the Tenth Circuit and apply such reasoning to chattel
paper, certificateholders for such Series could experience a delay in, or
reduction of, distributions as to the Contracts that constitute chattel paper
and were sold to the related Trust Fund.
In the absence of fraud, forgery or permanent affixation of a manufactured
home to its site by the manufactured home owner, or administrative error by
state recording officials, the notation of the lien of GreenPoint on the
certificate of title or delivery of the required documents and fees, or if
applicable, perfection under the UCC, will be sufficient to protect GreenPoint
against the rights of subsequent purchasers of a manufactured home or
subsequent lenders who take a security interest in the manufactured home. If
there are any manufactured homes as to which the security interest in favor of
GreenPoint is not perfected, the unperfected security interest would be
subordinate to the claims of, among others, subsequent purchasers for value of
and holders of perfected security interests in the related manufactured homes.
In the event that the owner of a manufactured home moves it to a state other
than the state in which such manufactured home initially is registered, under
the laws of most states, the perfected security interest in the manufactured
home would continue for four months after the relocation and thereafter until
the owner registers the manufactured home in the new state. If the owner were
to relocate a manufactured home to another state and were to re-register the
manufactured home in the new state, and if steps are not taken to re-perfect
an existing security interest in such state, the security interest in the
manufactured home would cease to be perfected. A majority of states generally
require surrender of a certificate of title to re-register a manufactured
home. GreenPoint must therefore surrender possession of the certificate of
title if it holds the certificate of title to a manufactured home which has
been relocated to another state and re-registered or, in the case of
manufactured homes registered in states which provide for notation of lien,
GreenPoint would receive notice of surrender if its security interest in the
manufactured home is noted on the certificate of title. Accordingly,
GreenPoint would have the opportunity to re-perfect its security interest in
the manufactured home in the state of relocation. In states which do not
require a certificate of title for registration of a manufactured home, re-
registration could defeat the perfection. In the ordinary course of servicing
manufactured housing contracts, GreenPoint takes steps to effect the re-
perfection discussed in this paragraph upon receipt of notice of re-
registration or information from the obligor as to relocation. Similarly, when
an obligor under a contract sells a manufactured home, GreenPoint must
surrender possession of the certificate of title or GreenPoint will receive
notice as a result of its lien noted thereon; accordingly, GreenPoint will
have an opportunity to require satisfaction of the related contract before
release of the lien. Such protections generally would not be available in the
case of security interests in manufactured homes located in non-title states
where perfection of such security interest is achieved by appropriate filings
under the UCC as in effect in such state. Consequently, the security interest
in the manufactured home could cease to be perfected.
Under the laws of most states, liens for repairs performed on a manufactured
home and liens for personal property taxes take priority over a perfected
security interest in the manufactured home. GreenPoint will warrant in the
Agreement with respect to each Series of Certificates that, as of the date of
initial issuance of such Series of Certificates, no manufactured home relating
to a Contract it
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sold was, to its knowledge, subject to any such lien. However, such warranty
will not be based on any lien searches or other review. See "Description of
the Certificates--Conveyance of Contracts" in the prospectus supplement
related to a Series of Certificates for a description of the remedies for a
breach of the representations and warranties made by GreenPoint under the
related Agreement. In addition, liens could arise after the date of initial
issuance of the Certificates. Notice may not be given to GreenPoint, the
servicer, the trustee or certificateholders in the event a lien arises
subsequent to the date of initial issuance of the Certificates.
Enforcement of Security Interests in Manufactured Homes. If so specified in
the applicable prospectus supplement, the servicer on behalf of the trustee,
to the extent required by the related Agreement, may take action to enforce
the trustee's security interest with respect to Contracts in default by
repossession and resale of the manufactured homes securing such defaulted
Contracts. In general, as long as a manufactured home has not become subject
to the real estate law, a creditor can repossess a manufactured home by
voluntary surrender, by "self-help" repossession that is "peaceful" (i.e.,
without breach of the peace) or, in the absence of voluntary surrender and the
ability to repossess without breach of the peace, by judicial process. The
holder of a manufactured housing contract generally must give the obligor a
number of days' notice prior to commencement of any repossession. The UCC and
consumer protection laws in most states place restrictions on repossession
sales, including requiring prior notice to the obligor and commercial
reasonableness in effecting a repossession sale. The law in most states also
requires that the obligor be given notice of any sales prior to resale of the
unit so that the obligor may redeem at or before resale.
Under the laws applicable in most states, a creditor is entitled to obtain a
deficiency judgment from an obligor for any deficiency on repossession and
resale of the manufactured home securing the related obligor's contract.
However, some states impose prohibitions or limitations on deficiency
judgments, and in many cases the defaulting obligor would have no assets with
which to pay a judgment.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, and general equitable principles may limit or delay
GreenPoint's ability to repossess and resell any manufactured home or enforce
a deficiency judgment.
Land Home and Land-in-Lieu Contracts
General. To the extent described in the applicable prospectus supplement,
the related Contract Pool may contain Land Home Contracts or Land-in-Lieu
Contracts. The Land Home Contracts and the Land-in-Lieu Contracts will be
secured by either first mortgages or deeds of trust, depending upon the
prevailing practice in the state in which the underlying property is located.
A mortgage creates a lien upon the real property described in the mortgage.
There are two parties to a mortgage: the mortgagor, who is the borrower, and
the mortgagee, who is the lender. In a mortgage state, the mortgagor delivers
to the mortgagee a note or bond evidencing the loan and the mortgage. Although
a deed of trust is similar to a mortgage, a deed of trust has three parties:
the borrower, a lender as beneficiary, 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 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, applicable law, and, in
some cases, with respect to the deed of trust, the directions of the
beneficiary.
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Foreclosure. Foreclosure of a mortgage is generally accomplished by judicial
action. Generally, the action is initiated by the service of legal pleadings
upon all parties having an interest of record in the real property. Delays in
completion of the foreclosure occasionally may result from difficulties in
locating necessary parties defendants. When the mortgagee's right to
foreclosure is contested, the legal proceedings necessary to resolve the issue
can be time-consuming and expensive. After the completion of a judicial
foreclosure proceeding, the court may issue a judgment of foreclosure and
appoint a receiver or other officer to conduct the sale of the property. In
some states, mortgages may also be foreclosed by advertisement, pursuant to a
power of sale provided in the mortgage. Foreclosure of a mortgage by
advertisement is essentially similar to foreclosure of a deed of trust by non-
judicial power of sale.
Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust that authorizes
the trustee to sell property to a third party upon any default by the borrower
under the terms of the note or deed of trust. In certain states, such
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states 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 the notice of sale.
In addition, the trustee must provide notice in some states to any other
individual having an interest of record in the real property, including any
junior lienholders. If the deed of trust is not reinstated within any
applicable cure period, 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 and sent to all parties having an interest of
record in the property.
In some states, the borrower-trustor has the right to reinstate the loan at
any time following default until shortly before the trustee's sale. In
general, the borrower, or any other 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. Certain state laws control the amount of foreclosure expenses
and costs, including attorneys' fees, that may be recovered by a lender.
In the case of foreclosure under either a mortgage or a deed of trust, the
sale by the receiver or other designated officer, or by the trustee, is a
public sale. However, because of the difficulty a potential buyer at the sale
would 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 not common for a third party to purchase the property at
the foreclosure sale. Rather, the lender generally purchases the property from
the trustee or receiver for an amount equal to the unpaid principal amount of
the note, accrued and unpaid interest and the expenses of foreclosure.
Thereafter, subject to the right of the borrower in some states to remain in
possession during the redemption period, the lender will assume the burdens of
ownership, including obtaining hazard insurance and making such repairs at its
own expense as are necessary to render the property suitable for sale. The
lender commonly will obtain the services of a real estate broker and pay the
broker a 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.
Because of certain requirements of the REMIC Provisions, a Trust Fund as to
which a REMIC election has been made generally must dispose of any related
manufactured homes acquired pursuant to repossession, foreclosure, or similar
proceedings within three years after acquisition. Consequently, if the
servicer, acting on behalf of the Trust Fund, is unable to sell a manufactured
home in the course
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of its ordinary commercial practices within 33 months after its acquisition
thereof, or a longer period as permitted by the Agreement, the servicer will
auction such manufactured home to the highest bidder, which bidder may be the
servicer, in an auction reasonably designed to produce a fair price. There can
be no assurance that the price for any manufactured home would not be
substantially lower than the unpaid principal balance of the Contract relating
thereto. In fact, manufactured homes, unlike site-built homes, generally
depreciate in value, and it has been industry experience that, upon
repossession and resale, the amount recoverable on a manufactured home
securing an installment sales contract is generally lower than the principal
balance of the contract.
Rights of Redemption. In some states, after sale pursuant to a deed of trust
or foreclosure of a mortgage, the borrower and certain foreclosed junior
lienholders or other parties are given a statutory period in which to redeem
the property from the foreclosure sale. In certain other states, this right of
redemption applies only to sale following judicial foreclosure, and not sale
pursuant to a non-judicial power of sale. In most states where the right of
redemption is available, statutory redemption may occur upon payment of the
foreclosure purchase price, accrued interest and taxes. In some states the
right to redeem is an equitable right. The effect of a right of redemption is
to diminish the ability of the lender to sell the foreclosed property. The
exercise of a right of redemption would defeat the title of any purchaser at a
foreclosure sale, or of any purchaser from the lender subsequent to judicial
foreclosure or sale under a deed of trust. Consequently, the practical effect
of the redemption right is to force the lender to maintain the property and
pay the expense of ownership until the expiration of the redemption period.
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 relating to a single
family residence. 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 borrower equal in most cases to the difference between
the amount due to the lender and the net amount realized upon the foreclosure
sale.
Some state 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 the
security afforded under a deed of trust or mortgage; 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 a personal action against the
borrower.
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 foreclosure 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.
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In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the federal Soldiers' and Sailors' Civil Relief Act of 1940 and state laws
affording relief to debtors, may interfere with or affect the ability of a
secured mortgage lender to realize upon its security and/or enforce a
deficiency judgment. For example, with respect to a Land Home Contract, in a
proceeding under the federal Bankruptcy Code, the court may prevent a lender
from foreclosing on the home, and when a court determines that the value of a
home is less than the principal balance of the loan, the court may reduce the
amount of the secured indebtedness to the value of the home as it exists at
the time of the proceeding, leaving the lender as a general unsecured creditor
for the difference between that value and the amount of outstanding
indebtedness. A bankruptcy court may grant the debtor a reasonable time to
cure a payment default, reduce the monthly payments due under such mortgage
loan, change the rate of interest and/or alter the mortgage loan repayment
schedule.
The Code provides priority to certain tax liens over the lien of the
mortgage or deed of trust. The laws of some states provide priority to certain
tax liens over the lien mortgage or deed of trust. Numerous federal and some
state consumer protection laws impose substantive requirements upon mortgage
lenders in connection with the origination, servicing and the enforcement of
mortgage loans. These laws include the federal Truth in Lending Act, Real
Estate Settlement Procedures Act, Equal Credit Opportunity, Fair Credit
Billing Act, Fair Credit Reporting Act, and related statutes and regulations.
These federal laws and state laws impose specific statutory liabilities upon
lenders who originate or service mortgage loans and who fail to comply with
the provisions of the law. In some cases, this liability may affect assignees
of the Contracts.
Certain Matters Relating to Insolvency
GreenPoint intends that each transfer of Certificates to the related Trust
Fund constitutes a sale, rather than a pledge of the Contracts to secure
indebtedness of GreenPoint. However, if GreenPoint were to become a debtor
under the federal bankruptcy code, it is possible that a creditor or trustee
in bankruptcy of GreenPoint or GreenPoint as debtor-in-possession may argue
that the sale of the Contracts by GreenPoint could be recharacterized as a
borrowing secured by a pledge of the Contracts. Such an attempt, even if
unsuccessful, could result in delays in or reductions of distributions on the
Certificates.
Consumer Protection Laws
The so-called "Holder-in-Due-Course" rule of the Federal Trade Commission is
intended to defeat the ability of the transferor of a consumer credit contract
which is the seller of goods which gave rise to the transaction, and certain
related lenders and assignees, to transfer such contract free of notice of
claims by the obligor thereunder. The effect of this rule is to subject the
assignee of such a contract to all claims and defenses which the obligor could
assert against the seller of goods. Liability under this rule is limited to
amounts paid under such a contract; however, the obligor also may be able to
assert the rule to set off remaining amounts due as a defense against a claim
brought by the assignee against such obligor. Generally, this rule will apply
to any Contracts conveyed to the trustee and to any claims made by the
servicer on behalf of the trustee, as GreenPoint's assignee. Numerous other
federal and state consumer protection laws impose requirements applicable to
the origination and lending pursuant to the Contracts, including the Truth in
Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt
Collection Practices Act and the Uniform Consumer Credit Code. In the case of
some of
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these laws, the failure to comply with their provisions may affect the
enforceability of the related Contract or create liability for the Trust Fund.
The Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Relief
Act") could, under certain circumstances, cap the amount of interest that may
be charged on certain Contracts at 6% and may hinder the ability of the
servicer to foreclose on the Contracts thus capped in a timely fashion. Under
the terms of the Relief Act, if so required by an obligor under a manufactured
housing contract who enters military service after the origination of such
obligor's contract, including an obligor who is a member of the National Guard
or is in reserve status at the time of the origination of the contract and is
later called to active duty, such obligor may not be charged interest above an
annual rate of 6% during the period of such obligor's active duty status,
unless a court orders otherwise upon application of the lender. In addition,
the Relief Act imposes limitations which would impair the ability of any
lender to foreclose on an affected contract during the obligor's period of
active duty status and within three months thereafter. It is possible that
application of the Relief Act to certain of the Contracts could have an
effect, for an indeterminate period of time, on the ability of the servicer to
collect full amounts of interest or foreclose on such Contract, and could
result in delays in payment or losses to the holders of the Certificates.
GreenPoint will not make any representation or warranty as to whether any
Contract is or could become subject to the Relief Act.
Transfers of Manufactured Homes; Enforceability of Restrictions on Transfer
If so specified in the related prospectus supplement, the Contracts
comprising any Contract Pool generally will prohibit the sale or transfer of
the related manufactured homes without the consent of the obligee and permit
the acceleration of the maturity of the Contracts by the obligee upon any such
sale or transfer to which GreenPoint has not consented. If so specified in the
related prospectus supplement, GreenPoint will be required under the related
Agreement for a Series of Certificates to consent to a transfer as described
in the previous sentence and to permit the assumption of the related Contract
if:
. the proposed buyer meets the servicer's underwriting standards and
enters into an assumption agreement;
. the servicer determines that permitting such assumption will not
materially increase the risk of nonpayment of the Contract;
. and such action will not adversely affect or jeopardize any coverage
under any insurance policy required by the related Agreement.
If the servicer determines that these conditions have not been fulfilled,
then it will be required to withhold its consent to the transfer, but only to
the extent permitted under the Contract and applicable law and governmental
regulations and only to the extent that such action will not adversely affect
or jeopardize any coverage under any insurance policy required by the
Agreement. In certain cases, a delinquent Obligor may attempt to transfer a
manufactured home in order to avoid a repossession proceeding with respect to
such manufactured home.
In the case of a transfer of a manufactured home after which the obligee
desires to accelerate the maturity of the related Contract, the obligee's
ability to do so will depend on the enforceability under state law of the
clause permitting acceleration on transfer. The Garn-St. Germain Depository
Institutions Act of 1982 preempts, subject to certain exceptions and
conditions, state laws prohibiting enforcement of such clauses applicable to
manufactured homes. To the extent such exceptions and
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conditions apply in some states, the servicer may be prohibited from enforcing
such a clause in respect of certain manufactured homes.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Controls
Act of 1980, as amended ("Title V"), provides that, subject to the following
conditions, state usury limitations shall not apply to any loan which is
secured by a first lien on certain kinds of manufactured housing. The
Contracts related to any Series of Certificates would be covered under Title V
if, among other things, they satisfy certain conditions governing the terms of
any prepayments, late charges and deferral fees and contain a requirement of a
30-day notice period prior to instituting any action leading to repossession
of the related unit.
Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejected application of the federal law. Fifteen
states adopted such a law prior to the April 1, 1983 deadline. In addition,
even where Title V was not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on loans covered
by Title V. GreenPoint will represent, in the Agreement for a Series of
Certificates (if so specified in the related prospectus supplement), that the
Contracts sold by it comply with applicable usury laws.
Ratings
It is a condition to the issuance of the Certificates of each Series offered
hereby that at the time of issuance they shall have been rated in one of the
four highest rating categories by the nationally recognized statistical rating
agency or agencies specified in the related prospectus supplement.
Ratings on manufactured housing contract pass-through certificates address
the likelihood of the receipt by certificateholders of their allocable share
of principal and interest on the underlying manufactured housing contract
assets. These ratings address:
. structural and legal aspects associated with the certificates;
. the extent to which the payment stream on such underlying assets is
adequate to make payments required by such certificates; and
. the credit quality of the credit enhancer or guarantor, if any.
Ratings on the Certificates do not, however, constitute a statement regarding:
. the likelihood of principal prepayments by Obligors under the Contracts
in the related Contract Pool;
. the degree by which prepayments made by such Obligors might differ from
those originally anticipated; or
. whether the yield originally anticipated by investors of any Series of
Certificates may be adversely affected as a result of such prepayments.
As a result, investors of any Series of Certificates might suffer a lower than
anticipated yield.
A rating on any or all of the Certificates of any Series by certain other
rating agencies, if assigned at all, may be lower than the rating or ratings
assigned to the Certificates by the rating agency or
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agencies specified in the related 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 agency. Each
security rating should be evaluated independently of any other security
rating.
Method of Distribution
The Seller may sell Certificates of each Series to or through underwriters
by a negotiated firm commitment underwriting and public reoffering by the
underwriters, and also may sell and place Certificates directly to other
purchasers or through agents. The Seller intends that Certificates be offered
through various methods from time to time and that offerings may be made
concurrently through more than one of these methods or that an offering of a
particular Series of Certificates may be made through a combination of
methods.
The distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so specified in the prospectus supplement relating to a Series of
Certificates, the Seller or any affiliate thereof may purchase some or all of
one or more Classes of Certificates of that Series from the underwriter or
underwriters at a price specified in the related prospectus supplement. The
purchaser may thereafter from time to time offer and sell, pursuant to this
prospectus, some or all of the Certificates so purchased directly, through one
or more underwriters to be designated at the time of the offering of the
Certificates or through broker-dealers acting as agent and/or principal. The
offering may be restricted in the manner specified in the related prospectus
supplement. Transactions may be effected at market prices prevailing at the
time of sale, at negotiated prices or at fixed prices.
In connection with the sale of the Certificates, underwriters may receive
compensation from the Seller or from purchasers of Certificates for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell the Certificates of a Series to or through dealers and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Certificates of a Series may be deemed to be
underwriters, and any discounts or commissions received by them from the
Seller and any profit on the resale of the Certificates by them may be deemed
to be underwriting discounts and commissions, under the Securities Act. Any
such underwriters or agents will be identified, and any compensation received
from the Seller will be described, in the prospectus supplement.
Under agreements which may be entered into by GreenPoint, underwriters and
agents who participate in the distribution of the Certificates may be entitled
to indemnification by GreenPoint against certain liabilities, including
liabilities under the Securities Act.
The underwriters may, from time to time, buy and sell Certificates, but
there can be no assurance that an active secondary market will develop and
there is no assurance that any such market, if established, will continue.
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Use of Proceeds
If so specified in the applicable prospectus supplement, substantially all
of the net proceeds to be received from the sale of the Certificates will be
used by the Seller for general corporate purposes, including the payment of
expenses in connection with pooling the Contracts and issuing the
Certificates.
Legal Matters
Certain legal matters relating to the Certificates, including legal matters
relating to material federal income tax consequences concerning the
Certificates, will be passed upon for GreenPoint by Orrick, Herrington &
Sutcliffe LLP, Los Angeles, California.
Experts
The consolidated financial statements of GFC as of December 31, 1998 and
1997 incorporated in this prospectus by reference to GFC's Annual Report on
Form 10-K for each of the three years ended December 31, 1998 have been so
incorporated in reliance on the report by PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
accounting and auditing.
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Glossary
Below are abbreviated definitions of significant capitalized terms used in
this prospectus and in the prospectus supplement. The pooling and servicing
agreement for the related series may contain more complete definitions of the
terms used herein and in the prospectus supplement and reference should be
made to the pooling and servicing agreement for the related series for a more
complete understanding of all such terms.
"Agreement" means the pooling and servicing agreement relating to each
Series of Certificates as described in the related prospectus supplement.
"Annual Servicing Rate" means 1.00% per annum or such other amount pursuant
to the related Agreement.
"Available Distribution Amount" means, with respect to each Distribution
Date, the amount available for distribution to the certificateholders as
described in the related prospectus supplement.
"Bulk Sellers" means lenders or finance companies with whom GreenPoint may
have or may establish referral arrangements, governmental agencies or
instrumentalities or the portfolios of other entities that purchase and hold
manufactured housing contracts
"Certificate" means any of the GreenPoint Manufactured Housing Contract
Trust Pass-Through Certificates issuable in Series.
"Certificate Account" means the separate account created and initially
maintained by the trustee at an Eligible Institution pursuant to the related
Agreement for the benefit of the holders of the Certificates.
"Certificate Balance" means, for any Class as of any Distribution Date, the
initial Certificate Balance of that Class less all amounts previously
distributed to certificateholders of that Class on account of principal.
"Class" means any class of Certificates within a Series.
"Closing Date" means the date of the initial issuance of any Series of
Certificates.
"Code" means the Internal Revenue Code of 1986, as it may be modified or
amended from time to time.
"Collection Period" means, with respect to any Distribution Date, the
calendar month preceding the month of the Distribution Date or such other
period as may be specified in the related Prospectus Supplement.
"Contract" means any one of the manufactured housing installment sale
contracts or installment loan agreements described in any Contract Schedule.
Contracts include all related security interests and any and all rights to
receive payments which are due pursuant thereto from and after the related
Cut-off Date, but exclude any rights to receive payments which were due prior
to the related Cut-off Date.
"Contract Files" means all of the originals of the Contracts, the
certificates of title to, or other evidence of a perfected security interest
in, the manufactured homes, any related mortgages, if any, and any assignments
or modifications of the foregoing.
"Contract Pool" means the pool of Contracts held in the Trust Fund for each
Series.
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"Contract Rate" means, with respect to each Contract, the per annum rate of
interest borne by such Contract.
"Contract Schedule" means the schedule attached to the Agreement for any
Series of Certificates describing the Contracts to be conveyed to the Contract
Pool.
"Credit Facility" means any letters of credit, swap agreements, interest
rate caps, surety bonds or similar credit facilities.
"Cut-off Date" means, the date specified in the related prospectus
supplement from which principal and interest payments on the related Contracts
are included in the Trust Fund for the related Series.
"Cut-off Date Pool Principal Balance" means the aggregate Scheduled
Principal Balances of the Contracts as of the Cut-off Date.
"Definitive Certificates" means Certificates that are issued in registered
form.
"Determination Date" means the third business day prior to each Distribution
Date.
"Distribution Date" means, the date payments are made to certificateholders
as provided in the related prospectus supplement.
"Due Date" means the day of the month on which each scheduled payment of
principal and interest is due on a Contract, exclusive of any days of grace.
"Eligible Institution" means a depository institution organized under the
laws of the United States or any state, the deposits of which are insured to
the full extent permitted by law by the FDIC whose commercial paper, long-term
deposits or long-term unsecured senior debt has a rating of A-1 by S&P and P-1
by Moody's in the case of commercial paper or in one of the two highest rating
categories by S&P and Moody's in the case of long-term deposits or long-term
unsecured senior debt, and which is subject to examination by federal or state
authorities or a depository institution otherwise acceptable to S&P and
Moody's.
"Eligible Investments" means, among other investments, obligations of the
United States or of any agency thereof backed by the full faith and credit of
the United States; Certificates of deposit, time deposits and bankers'
acceptances sold by eligible financial institutions; commercial paper rated A-
1 by S&P and P-1 by Moody's; money market funds acceptable to S&P and Moody's
(as evidenced by a letter from S&P and Moody's to such effect); and other
obligations acceptable to S&P and Moody's.
"Eligible Substitute Contract" means a contract that satisfies, as of the
date of its substitution, the representations and warranties specified in the
related Agreement, has a Scheduled Principal Balance that is not greater than
the Scheduled Principal Balance of the Replaced Contract as of the beginning
of the month in which the substitution takes place, has a Contract Rate that
is at least equal to the Contract Rate of the Replaced Contract, has a
remaining term to scheduled maturity that is not greater than the remaining
term to scheduled maturity of the Replaced Contract and has not been
delinquent for more than 31 days as to any Scheduled Payment due in the twelve
months prior to its substitution.
"Excess Interest" means the amount, if any, by which the interest collected
on non-defaulted Contracts during the same Collection Period exceeds the
interest distribution due to the holders of the Certificates for the related
Series and, if so specified in the related prospectus supplement and if
GreenPoint is acting as servicer, the Monthly Servicing Fee.
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"Formula Principal Distribution Amount" means, with respect to each
Distribution Date, an amount that equals the sum of:
. the Total Regular Principal Amount for the related Distribution Date;
and
. any previously undistributed shortfalls in the distribution of the Total
Regular Principal Amount in respect of prior Distribution Dates.
"Fractional Interests" means, as to any Certificate, the product of:
. the Percentage Interest evidenced by such Certificate; and
. the amount derived from dividing the certificate balance of the Class
represented by such Certificate by the aggregate certificate balance of
each Class.
"Global Certificate" means one or more global certificates that are
initially registered in the name of Cede & Co., as nominee of DTC, on behalf
of the beneficial owners of the Certificates.
"GFC" means GreenPoint Financial Corp. its successors and assigns.
"GreenPoint" means GreenPoint Credit, LLC its successors and assigns.
"Indirect Participants" means banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly.
"Initial Certificate Balance" means the Certificate Balances of a Class of
Certificates on the Closing Date as set forth under "Summary Information" in
the related prospectus supplement.
"IRS" means the Internal Revenue Service.
"Land-in Lieu Contract" or "Land Home Contract" means the Obligor owns the
real estate on which the related manufactured home is located and provides a
mortgage on the real estate in lieu of all or part of any required down
payment for its Contract. If so specified in the related prospectus
supplement, all Land-in Lieu and Land Home Contracts will have financed or re-
financed the purchase of the related manufactured home together with the real
estate on which the manufactured home is located.
"Liquidated Contract" means a defaulted Contract as to which all Liquidation
Proceeds have been received. A Liquidated Contract includes any defaulted
contract in respect of which the related manufactured home has been realized
upon and disposed of and the proceeds of the disposition have been received.
"Liquidation Expenses" means reimbursements to the servicer in the amount of
expenses incurred in connection with the liquidation of any Contracts.
"Liquidation Proceeds" means amounts that the servicer expects to recover
relating to a defaulted Contract.
"Liquidity Facility" means certificate purchase agreements or other
liquidity facilities.
"loan-to-value ratio" or "LTV" means, with respect to each Contract, a
fraction, expressed as a percentage, the numerator of which is all of the
amounts owing on the Contract at the time the ratio is determined and the
denominator of which is the Value.
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"Minimum Termination Amount" means, for each outstanding Class, an amount
equal to the aggregate certificate balance for each outstanding Class together
with any shortfall in interest due to such certificateholders in respect of
prior Distribution Dates and one month's interest on the aggregate certificate
balance for each outstanding Class at the respective Pass-Through Rates for
each respective Class and, if so specified in the related prospectus
supplement, any amounts owing to the provider of a Credit Facility.
"Monthly Servicing Fee" means, as of any Distribution Date, an amount equal
to one-twelfth of the Annual Servicing Rate of the Scheduled Principal Balance
for such Distribution Date.
"Obligor" means the obligor under a Contract.
"Offered Certificates" means the publicly offered certificates with respect
to a Series as described in the related prospectus supplement.
"Participants" means securities brokers and dealers, banks and trust
companies and clearing corporations and may include certain other
organizations that are DTC participating organizations.
"Pass-Through Rate" means the rate of interest payable on each Certificate.
"Percentage Interest" means, as to any Certificate of any Class other than a
Class R Certificate, the percentage interest evidenced thereby in
distributions required to be made on the Certificates of such Class, such
percentage interest being equal to the percentage, for the Class R
Certificates, the percentage set forth on the face thereof, and for all other
Certificates, to be obtained by dividing:
. the original denomination of such Certificate, by
. the aggregate of the original denominations of all of the Certificates
of such Class.
"Pool Principal Balance" means, as to any Distribution Date, the aggregate
principal balances of the underlying Contracts relating to each Series.
"Pool Scheduled Principal Balance" means, with respect to any Distribution
Date, an amount that is equal to the Cut-off Date Pool Principal Balance, less
the aggregate of the Total Regular Principal Amounts for all prior
Distribution Dates.
"Prepayment Model" means the model used in the related prospectus supplement
and which is based on an assumed rate of prepayment each month of the then
unpaid principal balance of a pool of new contracts.
"Rate Period" means the time period between Pass-Through Rate adjustments.
"REMIC Fund" means, with respect to a Series identified in the related
prospectus supplement as being subject to an election to be treated as a REMIC
for federal income tax purposes, those assets of the Trust Fund related to
that Series with respect to which an election to be treated as a REMIC will be
made, as described in the related prospectus supplement.
"Replaced Contract" means a Contract as to which the Seller has a repurchase
obligation and which, at the Seller's option, is replaced in the related Trust
Fund by an Eligible Substitute Contract.
"Repurchase Date" means the date on which any Certificate is subject to
repurchase.
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"Reserve Fund" means, with respect to any Series, the spread accounts or
other reserve funds established pursuant to the related Agreement.
"Residual Interest" means a residual interest in the Trust Fund of any
Series.
"Scheduled Payment" means the scheduled payment due on the Contracts on each
monthly Due Date.
"Scheduled Principal Balance" means, with respect to each Contract and any
Distribution Date, its unpaid scheduled principal balance as of the Cut-off
Date reduced by all previous partial prepayments, all previous scheduled
principal payments, whether or not paid, and the scheduled principal payment
due on the Due Date in the Collection Period immediately preceding such
Distribution Date.
"Seller" means GreenPoint, in its capacity as originator and seller of the
Contracts.
"Senior Certificates" means certain of the Certificates of one or more
Classes of a multiple-Class Series.
"Series" means one or more series of Certificates sold from time to time
pursuant to the related prospectus supplement.
"Step-Up Rate" means actuarial or simple interest Contracts bearing a
Contract Rate that is fixed or variable and increases in specified increments
on particular dates.
"Subordinate Certificates" means certain of the Certificates of one or more
Classes of a multiple-Class Series other than the Senior Certificates for that
Series.
"Termination Auction" the purchase at an auction of the Contracts remaining
in the Trust Fund for a particular Series as described in the related
prospectus supplement.
"Total Regular Principal Amount" is the total amount by which the aggregate
outstanding principal balance of the Contracts in the related Contract Pool is
reduced during one or more Collection Periods prior to the related
Distribution Date designated in the related prospectus supplement. The
reduction described in the previous sentence may occur as a result of
actuarially predetermined scheduled principal reductions, receipt of principal
prepayments, liquidation of Contracts, repurchases of Contracts under certain
conditions, losses on Contracts, the failure of a third party credit support
provider, if any, to make a required payment, or a combination of any of the
foregoing events.
"Trust Fund" means the assets of the trust fund created by GreenPoint, in
which the Certificates for the related Series represent an interest, as
described in the related prospectus supplement.
"Underwriting Agreement" means the underwriting agreement relating to each
Series of Certificates as described in the related prospectus supplement.
"Value" is equal to the total buyer's cost of the manufactured home or in
the case of some used homes, the NADA Mobile/Manufactured Housing Appraisal
Guide, including taxes, insurance and any prepaid finance charges or closing
costs that are financed. For Land Home and Land-in-Lieu contracts, "Value" is
equal to (1) the value of the real property as determined by appraisal or tax
assessment, plus the total buyer's cost of the manufactured home, as indicated
above, plus the cost of the
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improvements to the land or (2) in the case of a manufactured home that is
already located on the land, the final appraised value of the land and
manufactured home together.
"WAC" means the Weighted Average Contract Rate of a particular pool as of
the first day of the month of the sale of the pool.
"WAM" means the weighted average remaining term to maturity of the contracts
in a particular pool as of the first day of the month of the sale of the pool.
"Weighted Average Contract Rate" means the weighted average of the Contract
Rates of the Contracts.
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$719,166,228
(Approximate)
[LOGO OF GREENPOINT CREDIT]
Seller and Servicer
Manufactured Housing Contract Trust
Pass-Through Certificates, Series 2000-3,
-------------------------
PROSPECTUS SUPPLEMENT
-------------------------
Salomon Smith Barney
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the offered certificates in any state where the offer is
not permitted.
We do not claim the accuracy of the information in this prospectus supplement
and the accompanying prospectus as of any date other than the dates stated on
their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the offered certificates and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the offered
certificates will deliver a prospectus supplement and prospectus until August
10, 2000.
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