<PAGE>
As filed with the Securities and Exchange Commission on November 17, 2000
Registration No. 333-46102
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
Amendment No. 1 to
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________________
GREENPOINT CREDIT, LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-4002891
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10089 Willow Creek Road
San Diego, California 92131
(858) 549-4700
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
Howard C. Bluver, Esq.
GreenPoint Financial Corp.
90 Park Avenue
New York, New York 10016
(212) 834-1000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Martin B. Howard, Esq.
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street, Suite 3200
Los Angeles, California 90017
(213) 629-2020
GREENPOINT ASSET LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-2260807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10089 Willow Creek Road
San Diego, California 92131
(858) 549-4700
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
Howard C. Bluver, Esq.
GreenPoint Financial Corp.
90 Park Avenue
New York, New York 10016
(212) 834-1000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Martin B. Howard, Esq.
Orrick, Herrington & Sutcliffe LLP
777 South Figueroa Street, Suite 3200
Los Angeles, California 90017
(213) 629-2020
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this Registration
Statement
If any of the securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check the following
box: [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per unit(1) offering price registration fee(2)(3)
--------------------- -------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
GreenPoint $3,871,635,247.00 100% $3,871,635,247.00 $1,048,314.83
Manufactured
Housing Contract
Pass-Through
Certificates and
Manufactured
Housing Contract-
Backed Notes
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $1,871,635,247.00 of securities are being carried forward from Registration
Statement No. 333-80437 and $520,314.83 of the filing fee is associated with
these securities being carried forward and was previously paid in connection
with the earlier Registration Statement.
(3) $2,640.00 was filed on September 19,2000 with the initial filing of this
Registration Statement.
____________________________
Pursuant to Rule 429 of the Securities and Exchange Commission's Rules
and Regulations under the Securities Act of 1933, as amended, the Prospectus and
Prospectus Supplements contained in this Registration Statement also relate to
Registration Statement No. 333-80437 as previously filed by GreenPoint Credit,
LLC on form S-3.
The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained in this prospectus is subject to completion or +
+amendment. A registration statement relating to these securities has been +
+filed with the Securities and Exchange Commission. These securities may not +
+be sold nor may offers to buy be accepted prior to the time the registration +
+statement becomes effective. This prospectus shall not constitute an offer to +
+sell or the solicitation of an offer to buy nor shall there by any sale of +
+these securities in any State in which such offer, solicitation or sale would +
+be unlawful prior to registration or qualification under the securities laws +
+of any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
GREENPOINT ASSET LLC
Issuer
GREENPOINT CREDIT, LLC
Seller and Servicer
Manufactured Housing Contract Pass-Through Certificates
and Manufactured Housing Contract-Backed Notes
Consider carefully the risk factors beginning on page 4 in this prospectus.
A security will represent an interest in or indebtedness of, as applicable,
only GreenPoint Asset LLC or the trust related to that series of securities. A
security will not represent an interest in, indebtedness of or obligation of
GreenPoint Credit, LLC.
This prospectus may be used to offer and sell a series of securities only if
accompanied by the prospectus supplement for that series.
The issuer may periodically issue notes representing indebtedness of the issuer
and secured by the collateral described below. Trusts formed by the seller may
periodically issue certificates or notes representing interests in the
collateral described below.
The collateral with respect to each trust relating to a series of securities
will consist of:
. a pool of manufactured housing installment sales contracts and installment
loan agreements, described in detail in the accompanying prospectus
supplement;
. related property and interests, if so specified in the related prospectus
supplement; and
. other property as described in the accompanying prospectus supplement.
The securities may be offered to the public through different methods as
described in "Method of Distribution" in this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.
November 17, 2000
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the securities 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 securities; and
(2) the accompanying prospectus supplement, which describes the specific
terms of your series of securities.
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 securities 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.
Some capitalized terms used in this prospectus are defined in the "Glossary"
beginning on page 81.
2
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Risk Factors.............................................................. 4
The Contract Pools........................................................ 10
The Pre-Funding Account................................................. 12
The Issuer................................................................ 13
The Seller and Servicer................................................... 13
Loan Originations....................................................... 13
Underwriting Practices.................................................. 14
Servicing............................................................... 17
Delinquency and Loan Loss/Repossession Experience....................... 18
Prepayment and Yield Considerations....................................... 19
Prepayment Considerations............................................... 19
Yield Considerations.................................................... 20
Description of the Securities............................................. 21
General................................................................. 22
Conveyance of Contracts................................................. 22
Payments on Contracts................................................... 23
Distributions on Securities............................................. 23
Global Securities....................................................... 26
Optional and Mandatory Repurchase of Securities; Optional Termination
and Termination Auction................................................ 27
Termination............................................................. 28
Collection and Other Servicing Procedures............................... 29
Servicing Compensation and Payment of Expenses; Matters Regarding the
Servicer............................................................... 29
Amendment............................................................... 33
The Trustee of Indenture Trustee........................................ 35
Indemnification......................................................... 35
Credit and Liquidity Enhancement.......................................... 35
Subordination........................................................... 35
Reserve Funds........................................................... 37
Credit Facilities....................................................... 38
Liquidity Facilities.................................................... 38
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Federal Income Tax Consequences........................................... 39
REMIC Elections......................................................... 40
REMIC Certificates...................................................... 40
Taxation of Regular Certificates........................................ 43
Treatment of Certificates Representing a REMIC Regular Interest Coupled
with a Swap or Cap Agreement........................................... 53
Taxation of Residual Certificates....................................... 54
Non-REMIC Trusts........................................................ 63
Owner Trust Certificates or Notes....................................... 67
Treatment of the Owner Trust Certificates or Notes as Debt.............. 67
Treatment of the Owner Trust............................................ 67
Treatment of the Owner Trust Certificates or Notes...................... 68
Other Tax Consequences.................................................. 69
Restrictions on Transfer of REMIC Residual Certificates................. 69
Tax-Exempt Investors.................................................... 69
Legal Investment.......................................................... 69
ERISA Considerations...................................................... 70
Legal Aspects of the Contracts............................................ 72
The Contracts (Other than Land Home Contracts and Land-in-Lieu
Contracts)............................................................. 72
Land Home Contracts and Land-in-Lieu Contracts.......................... 75
Matters Relating to Insolvency.......................................... 77
Consumer Protection Laws................................................ 77
Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer............................................................... 78
Applicability of Usury Laws............................................. 78
Ratings................................................................... 79
Method of Distribution.................................................... 79
Use of Proceeds........................................................... 80
Legal Matters............................................................. 80
Glossary.................................................................. 81
</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 securities.
Due to their complexity the The offered securities are not suitable
offered securities are not investments for all investors. In particular,
suitable for all investors. you should not purchase any class of offered
securities unless you understand and are able
to bear the prepayment, credit, liquidity and
market risks associated with that class. The
offered securities 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 securities
markets may limit the may not develop. If a secondary market does
ability to resell develop, it might not continue or it might not
securities. be sufficiently liquid to allow you to resell
any of your securities. The underwriters of a
particular series of securities may decide to
establish a secondary market for that
particular series of securities. If so, the
prospectus supplement for that series of
securities will indicate this intention.
However, no underwriter will be obligated to do
so. The securities will not be listed on any
securities exchange.
The lack of physical
securities may cause There is a risk that the liquidity of any of
difficulties in pledging or the offered securities issued in book-entry
selling securities or cause form will be reduced in the secondary trading
delays in the payment on market because many potential investors may be
securities. unwilling to purchase securities unless they
can obtain physical securities. To the extent
transactions in securities can be effected only
through DTC, participating organizations,
indirect participants and banks, the ability of
a holder of offered securities to pledge any
offered security to persons or entities that do
not participate in the DTC system, or otherwise
to take actions in respect of the offered
securities, may be limited due to the lack of
physical securities representing any offered
security. This may limit the holders of offered
securities liquidity of investment. To the
extent any offered security is held in book-
entry form, the holder of the offered security
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 the holder of the offered
security either directly or indirectly through
indirect participants. See "Description of the
Securities--Global Securities" in this
prospectus.
4
<PAGE>
The offered securities bear
the risk of defaults on the General Economic Conditions. An investment in
contracts. securities 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 securities 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 than 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 related contract.
Investors in the offered securities 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 securities and, if so specified in
the related prospectus supplement, the
monthly servicing fee;
. any credit facility or reserve fund that may
support one or more classes of securities;
and
. the subordination in interest of any junior
classes of securities issued with a class of
securities. See "Credit and Liquidity
Enhancement" in this prospectus.
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 securities, the payments on
securities will be delayed and losses will be
borne by the holders of the offered securities.
To the extent that the offered securities have
been designated as senior or subordinate, the
most junior securities would be the first to
bear these delays or losses. See "The Contract
Pools" and "Credit and Liquidity Enhancement"
in this prospectus.
5
<PAGE>
The securities will not be
guaranteed by GreenPoint
Asset LLC or GreenPoint The offered securities will not represent
Credit, LLC, so if payments interests in, indebtedness of or obligations of
on the contracts are GreenPoint Credit, LLC. A series of offered
insufficient to pay notes may represent indebtedness of GreenPoint
principal or interest on the Asset LLC, however only the assets pledged to
securities, there may be no secure that indebtedness as described in the
other source for payments to related prospectus supplement will be available
securityholders and to make payments on the related notes. The
shortfalls may occur. offered securities will not be insured or
guaranteed by any governmental agency or
instrumentality, the underwriter of the offered
securities, GreenPoint Asset LLC, GreenPoint
Credit, LLC or any affiliate of any of them,
except in the case of a letter of credit or
other credit enhancement if so specified in the
related prospectus supplement. The payments by
the obligors on the contracts included in the
related trust or pledged by GreenPoint Asset
LLC, as applicable, and any credit enhancement
will be the sole source of the payments on the
securities. If the payments by the obligors on
the contracts are insufficient to pay the
principal or interest on the securities, there
is no other source of payments. The seller of
the contracts and/or the servicer will have
limited obligations only with respect to the
contracts. These obligations usually include:
. the obligation under some 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.
Defaults in the security If a security interest has been effectively
interests of a trust may assigned in favor of the trustee but is not
make those security perfected, the assignment of the security
interests ineffective interest to the trustee may not be effective
against creditors of the against creditors of the issuer or the seller,
issuer or the seller, as as applicable, or against a receiver or trustee
applicable, or against a in bankruptcy for the issuer or the seller, as
receiver or trustee in applicable.
bankruptcy for the issuer or
the seller, as applicable.
Upon the initial issuance of the offered
securities in any series, the issuer or seller,
as applicable, will convey or pledge,
respectively, the contracts securing the
securities to a trust. 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. Each contract is secured by a security
interest in a manufactured home and, in some
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:
. The Uniform Commercial Code as adopted in
the states in which the manufactured homes
are located;
6
<PAGE>
. certificate of title statutes as adopted in
the states in which the manufactured homes
are located; and
. if applicable, the real estate laws as
adopted in the states which 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 "Legal Aspects of the Contracts--Security
Interests of the Seller in the Manufactured
Homes" and "Land Home Contracts and Land-in-
Lieu Contracts" in this prospectus.
If so specified in the related prospectus
supplement, the certificates of title for the
manufactured homes will show "GreenPoint
Credit, LLC" as the lienholder and the UCC
financing statements, will show "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;
. 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 if so specified
in the related prospectus supplement as
required under the related pooling and
servicing agreement upon the occurrence of
certain events, to the trustee of the
mortgage, deed of trust or other instrument
securing any real estate.
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.
Numerous federal and state consumer protection
Federal and state consumer laws could adversely affect the interest of any
protection laws may prevent trust in the contracts comprising the related
the enforceability of the contract pool. In addition, other federal and
contracts. 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 as
assignee of the related contracts. Pursuant to
the agreement related to each series of
securities, 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
7
<PAGE>
new contract, for any contract that does not
comply with all requirements of law if holders
of the securities are adversely affected by
GreenPoint Credit, LLC's breach of
representation or warranty. Pursuant to the
indenture related to each series of notes,
GreenPoint Asset LLC will assign the
representations and warranties that are similar
to the those described in the preceding
sentence made by GreenPoint Credit, LLC under
the related sale and servicing agreement to the
indenture trustee. The indenture trustee, on
behalf of the related noteholders, will then
have the right to require GreenPoint Credit,
LLC to repurchase, or substitute a new
contract, for any contract that does not comply
with all requirements of law if noteholders are
adversely affected by the breach of
representation or warranty.
The prepayment experience on the contracts
Prepayments on the contracts underlying any series of securities, including
will affect the average life prepayments due to liquidations of defaulted
and maturity of any series contracts, will affect the average life and the
of securities. maturity of any series of securities.
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 could result in
high interest shortfalls. Therefore, the amount
available for distribution to the holders of
the offered securities 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 securities. To
the extent that the offered securities have
been designated as senior or subordinate, the
most junior securities would be the first to
bear these delays or losses. See "Prepayment
and Yield Considerations" in this prospectus.
Insolvency or bankruptcy of GreenPoint Credit, LLC intends that each
GreenPoint Credit, LLC may transfer of contracts to the issuer or the
affect payments on the trust related to any series of securities, as
securities. applicable, constitutes a sale, rather than a
pledge of the contracts to secure indebtedness
of GreenPoint Credit, LLC. However, if
GreenPoint Credit, LLC 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, trustee or
debtor-in-possession in bankruptcy to
recharacterize the transfer as a borrowing,
even if unsuccessful, could result in delays in
or reductions of distributions on the offered
securities to the holders of the securities. To
the extent that the offered securities have
been designated as senior or subordinate, the
most junior securities would be the first to
bear these delays or losses.
8
<PAGE>
Bankruptcy of the servicer
could prevent the In the event of a bankruptcy of GreenPoint
termination of the servicer Credit, LLC, the trustee in bankruptcy for
and could result in possible GreenPoint Credit, LLC could prevent the
delays or reductions in termination of GreenPoint Credit, LLC, as
payments on the offered servicer of the contracts, if no event of
securities. default under the applicable 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 securities to the
holders of the securities to the extent
GreenPoint Credit, LLC received, but did not
deposit with the trustee or indenture trustee,
as applicable, contract collections before the
date of bankruptcy. To the extent that the
offered securities have been designated as
senior or subordinate, the most junior
securities would be the first to bear these
delays or losses. See "Legal Aspects of the
Contracts" in this prospectus.
9
<PAGE>
The Contract Pools
Each contract contained in a contract pool will have been either:
. originated or purchased by GreenPoint Credit, as 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 Contract 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 securities of any series, the seller
will convey the contracts comprising the related contract pool to the issuer
or the trust related to any series of securities, as applicable. The servicer
will obtain and maintain possession of all contract documents, except in some
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 series of securities will require the manufactured homes in
the related contract pool to comply with the requirements of 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.
The servicing agreement relating to each series of securities will require
the servicer to maintain hazard and flood insurance policies with respect to
each manufactured home in the related contract pool in the amounts and manner
set forth in this prospectus under "Description of the Securities--Servicing
Compensation and Payment of Expenses; 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.
A contract pool relating to any series of securities may contain Step-Up
Rate Contracts. If a contract pool contains Step-Up Rate Contracts, the
related prospectus supplement will specify the percentage of the contract pool
comprised of Step-Up Rate Contracts, the period during which the contract
interest rates for Step-Up Rate Contracts will be stepped up, the range of
increases in the contract interest rates for the Step-Up Rate Contracts and
the range of increases in the scheduled payments for the Step-Up Rate
Contracts.
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 Step-Up Rate Contracts will increase on
the dates on which the contract interest 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.
10
<PAGE>
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 Step-Up Rate Contract, 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 a 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 interest rate
in effect when the scheduled payments on the contracts are due. If so
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 contract interest rate is
adjusted.
If so specified in the applicable prospectus supplement, a contract pool may
contain contracts which combine features of actuarial and simple interest
contracts.
If specified in the related prospectus supplement, the contract pool may
contain Land Home Contracts and/or Land-in-Lieu Contracts. In some
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 the
seller, 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 "Legal Aspects of the Contracts--Land
Home Contracts and Land-in-Lieu Contracts" in this prospectus.
11
<PAGE>
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 securities 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 interest rate of the contracts and the
distribution of contract interest 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.
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 contract
interest rates are determined, including any maximum or minimum rates and the
frequency with which any contract interest rate adjusts. The prospectus
supplement relating to a series of securities also will contain information
about contracts in the related trust 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 the seller
from one or more Bulk Sellers, the applicable prospectus supplement will
contain a description of practices observed by the seller or Bulk Sellers, as
applicable, in connection with any such purchase.
In addition, to the extent GreenPoint Credit's management believes
additional information concerning the related contract pool that is stored in
the electronic data processing system of GreenPoint Credit to be material, the
prospectus supplement may also include the additional information.
The Pre-Funding Account
If a trust for a particular series includes a pre-funding account, as
described 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;
12
<PAGE>
(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
related prospectus supplement, including the requisite characteristics
of the additional contracts and/or subsequent contracts.
The Issuer
Each series of notes will either:
. be issued by an owner trust established by GreenPoint Credit and
described in the related prospectus supplement; or
. be issued directly by GreenPoint Asset.
GreenPoint Asset was formed in August 2000 as a Delaware limited liability
company for the purposes described in this prospectus and is a wholly-owned
subsidiary of GreenPoint Credit. GreenPoint Asset will not engage in any
activity other than:
. acquiring and holding contracts and other assets to be used as
collateral for any series of notes and any proceeds therefrom;
. issuing the notes;
. making payments on the notes;
. holding equity interests and residual interests relating to any series
of securities; and
. engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected
therewith.
GreenPoint Asset's principal offices are located at 10089 Willow Creek Road,
San Diego, California 92131.
The Seller and Servicer
GreenPoint Credit will be the seller and initial servicer for each series of
securities. GreenPoint Credit 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. This
acquisition was consummated on September 30, 1998. The operating business of
the BankAmerica Housing Services division consisted primarily of originating,
purchasing and servicing manufactured housing installment sale contracts and
installment loan agreements. 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 Credit in the acquisition were substantially similar to those
described under "--Loan Originations" below.
On October 1, 1999 GreenPoint Credit changed its company 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's sole member is Green Point Mortgage Funding, Inc.
Green Point Mortgage Funding, Inc. is a wholly owned subsidiary of Headlands
Mortgage Company, which is a wholly owned subsidiary of GreenPoint Bank, a New
York state chartered bank. GreenPoint Bank is a wholly owned subsidiary of
GreenPoint Financial Corp., a publicly traded corporation whose shares are
traded on the New York stock exchange. As of June 30, 2000, GreenPoint Credit
had total assets of $1,751.5 million, total liabilities of $1,232.9 million
and total stockholders' equity of $518.6 million. As of June 30, 2000,
GreenPoint Financial Corp. and its consolidated subsidiaries had total
deposits of $11,371.5 million, total assets of $15,767.3 million and total
stockholders' equity of $2,035.3 million. The headquarters of GreenPoint
Credit are located in San Diego, California. The headquarters of both
GreenPoint Financial Corp. and GreenPoint Bank are located in New York, New
York.
Loan Originations
GreenPoint Credit purchases and originates manufactured housing contracts on
an individual basis through 26 regional offices throughout the United States,
serving retailers and borrowers in the 48 contiguous states. In
13
<PAGE>
the state of Mississippi, real estate secured manufactured housing contracts
are purchased and originated through a wholly owned subsidiary of GreenPoint
Credit named GreenPoint Credit Corp. of Mississippi. Regional personnel of
GreenPoint Credit arrange to purchase manufactured housing contracts
originated by manufactured housing retailers located throughout the United
States. Generally, these purchases result from GreenPoint Credit regional
office personnel contacting retailers located in their regions and explaining
GreenPoint Credit'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 Credit's investigation of the
retailer's creditworthiness and general business reputation, GreenPoint Credit
and the retailer would enter into a retailer agreement. GreenPoint Credit also
originates manufactured housing contracts and installment loan agreements
directly with customers and through brokers.
Underwriting Practices
With respect to each retail manufactured housing contract that was purchased
from a retailer, the general practice of GreenPoint Credit has been that the
retailer submit the customer's credit application, manufacturer's invoice, if
the contract was for a new home, and other information relating to the
contract to the applicable regional office of GreenPoint Credit. Personnel at
the regional office analyze the creditworthiness of the customer and 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 Credit. After the manufactured home financed under the
contract is delivered and set up by the retailer, and the customer has moved
in, GreenPoint Credit purchases the contract from the retailer.
Because manufactured homes generally depreciate in value, GreenPoint
Credit'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 Credit 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 Credit has developed certain guidelines for
employment history and debt-to-income ratios. In the case of employment
history, GreenPoint Credit 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 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 Credit's
estimate of the applicant's after-tax income. Although GreenPoint Credit has
guidelines for some of these criteria, GreenPoint Credit'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 Credit believes 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 Credit utilizes
a proprietary credit scoring system, developed by GreenPoint Credit in
conjunction with Fair-Isaacs, implemented in May 2000. The credit scoring
system generates a recommendation to approve or deny a credit application
based on certain criteria established by GreenPoint Credit. The underwriting
guidelines of GreenPoint Credit 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 Credit 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 underwriting criteria
will be periodically reviewed by GreenPoint Credit, and modified as necessary.
14
<PAGE>
It is the policy of GreenPoint Credit that one authorized person provide
written approval of credit applications for amounts up to or equal to certain
limits and that at least one additional authorized person provide written
approval of credit applications for amounts over those limits. The credit
limits established by GreenPoint Credit vary depending upon each authorized
person's position or grade level. In addition, each person authorized to make
these credit decisions has to be either a regional manager, branch 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 Credit's senior management. However, each
regional office may at various times have additional, or in some cases fewer,
personnel authorized to approve or reject credit applications.
It is the policy of GreenPoint Credit 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 Credit'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 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 Credit
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 140% of the base value, as
specified in the NADA Mobile/Manufactured Housing Appraisal Guide, 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 Credit'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
15
<PAGE>
. 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 Credit'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 140% of the base
value as specified in the NADA Mobile/Manufactured Housing Appraisal
Guide,
. 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 Credit'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
. taxes, fees, insurance and certain prepaid finance charges and closing
costs.
With respect to Land-in-Lieu Contracts involving new manufactured homes,
GreenPoint Credit'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 Credit's policy is to finance no more than the lesser of:
. 95% of the total sales price, or
. 140% of the base value, as specified in the NADA Mobile/Manufactured
Housing Appraisal Guide,
. 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 Credit 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 certain retailers whose applicants
who score in the highest credit score recommendation given by GreenPoint
Credit's proprietary credit scoring system (as described in the second
paragraph of this section).
16
<PAGE>
GreenPoint Credit 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 Credit 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 Credit'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.
The volume of contracts originated by GreenPoint Credit or purchased from
retailers on an individual basis by GreenPoint Credit for the periods
indicated below and 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 Year Ended Year to Date
December 31, 1998 December 31, 1999 June 30, 2000
----------------- ----------------- -------------
<S> <C> <C> <C>
Principal Balance of Con-
tracts Purchased........... $1,451,368.00 $3,045,734.00 $1,405,061.00
Number of Contracts Pur-
chased..................... 38,010 75,622 33,461
Average Contract Size....... $ 38.18 $ 40.27 $ 41.99
Number of Regional Offices.. 45 45 45
</TABLE>
The information in the table above includes only contracts originated by
GreenPoint Credit or purchased from retailers. The number of regional offices
includes regional offices in the United States originating or purchasing
contracts.
Servicing
GreenPoint Credit, 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 Credit will retain servicing responsibilities with respect to the
sold contracts. In addition, GreenPoint Credit 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 Credit. 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 Credit, 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 Credit, 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
Credit'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.
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<PAGE>
The following table shows the size of the portfolio of contracts serviced,
including contracts already in repossession, by GreenPoint Credit, 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 June 30, 2000
----------------- ----------------- -------------
<S> <C> <C> <C>
Unpaid Principal Balance of
Contracts Being Serviced... $11,504,320 $13,054,239 $13,659,538
Average Contract Unpaid
Principal Balance.......... $ 27.7 $ 29.9 $ 30.7
Number of Contracts Being
Serviced................... 415,373 437,093 444,642
</TABLE>
Delinquency and Loan Loss/Repossession Experience
The following table sets forth the delinquency experience of manufactured
housing contracts serviced by GreenPoint Credit since October 1998, other than
contracts already in repossession, as of the dates indicated:
Delinquency Experience
<TABLE>
<CAPTION>
As of As of As of
December 31, 1998 December 31, 1999 June 30, 2000
----------------- ----------------- -------------
<S> <C> <C> <C>
Number of Contracts Out-
standing................... 411,852 433,221 440,011
Number of Contracts Delin-
quent:
30-59 days................ 6,397 8,244 7,753
60-89 days................ 1,753 2,055 2,022
90 days or more........... 2,372 2,641 2,304
------- ------- -------
Total Contracts Delinquent.. 10,522 12,940 12,079
======= ======= =======
Delinquencies as a Percent-
age of Contracts Outstand-
ing........................ 2.55% 2.99% 2.75%
======= ======= =======
</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.
Since GreenPoint Credit 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 Credit, including contracts already in repossession, as of the
dates indicated:
Loan Loss/Repossession Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended Year to Date
December 31, 1999 June 30, 2000
----------------- -------------
<S> <C> <C>
Number of Contracts Being Serviced............ 437,093 444,642
Aggregate Principal Balance of Contracts Being
Serviced..................................... $13,054,239 $13,659,538
Average Principal Recovery Upon Liquidation... 46.15% 45.85%
Contract Liquidations......................... 3.88% 1.83%
Net Losses:
Dollars..................................... $ 281,757 $ 138,916
Percentage.................................. 2.16% 1.02%
Contracts in Repossession..................... 3,872 4,631
</TABLE>
18
<PAGE>
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 securities. A contract pool might include contracts with contract
interest 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 this
prospectus or the related 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 Credit's management is aware of
limited publicly available information relating to historical rates of
prepayment on manufactured housing contracts. However, GreenPoint Credit'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 Credit's management
anticipates that a number of contracts will be prepaid in full in each year
during which any related securities 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 owners of
manufactured homes 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 securities. See "Description of
the Securities--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 all states.
19
<PAGE>
See "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,
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 the related
prospectus supplement, when the aggregate Pool Principal Balance of the
related contract pool has been reduced to 10%, or any other percentage as may
be specified in the related prospectus supplement, of its Cut-off Date Pool
Principal Balance. The exercise of any option to purchase the contracts early
will affect the average life of and yield on the related securities.
To the extent provided in the related prospectus supplement, the trustee or
indenture trustee, as applicable, for the related trust shall solicit bids for
the purchase of the contracts remaining in the trust 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 that
contract pool's Cut-off Date Pool Principal Balance. The sale and consequent
termination of the related trust pursuant to a Termination Auction will affect
the average life and yield on the related securities.
The average life and maturity of the securities of any class will also be
affected by the amount and timing of any special principal distributions to
the holders of the securities. In addition, if any security of a class is
subject to mandatory repurchase, the occurrence of the repurchase date for the
security subject to mandatory repurchase will have the same effect as the
maturation of the security subject to mandatory repurchase, with the
repurchase price being equivalent to the amount due at maturity. See
"Description of the Securities--Distributions on Securities" and "Description
of the Securities--Optional and Mandatory Repurchase of Securities; 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 assumption 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 securities described therein.
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 securities from losses or delinquencies on
the related contract pool, the yield to the holders from their investment in
the securities 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 securities will depend upon, among other things, the
price at which the securities are purchased, the rate at which the contracts
for the related trust liquidate or are prepaid and the amount and timing of
any special principal distributions. If a purchaser of securities purchases
them at a discount or premium, as applicable, and calculates its anticipated
yield to maturity based on an assumed rate of distributions of principal on
the purchased securities that is faster or slower, respectively, 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 securities were
purchased at a discount or premium.
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The yield to holders of any class of securities may be below that otherwise
produced by the applicable Security 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 securities are entitled will not be
distributed until the first distribution date after the Collection Period in
which the interest was collected.
If a security 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 security is equal to its Percentage Interest of the then current
Security Balance, and the security 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.
The payment features of the contracts comprising any contract pool, as
described above under "The Contract Pools," may, under 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 securities 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 securities to the extent the non-default collection
shortfalls are not covered by credit enhancement or advances.
Description of the Securities
The securities will be issued in series. Each series of certificates will be
issued pursuant to a separate pooling and servicing agreement similar to the
form of pooling and servicing agreement filed as an exhibit to the
registration statement under the Securities Act of 1933, as amended, for the
certificates, of which this prospectus is a part. Each series of notes issued
by GreenPoint Asset will be issued pursuant to an indenture trust agreement
similar to the form of indenture filed as an exhibit to the registration
statement under the Securities Act of 1933, as amended, for the notes, of
which this prospectus is a part. Each series of notes issued by GreenPoint
Credit through an owner-trust structure will be issued pursuant to a trust
agreement similar to the trust agreement filed as an exhibit to the
registration statement under the Securities Act of 1933, as amended, for the
notes, of which this prospectus is a part together with the Indenture. In the
case of each series of notes, the servicer and the issuer or related owner
trust, as applicable, will enter into a separate servicing agreement. An
execution copy of each pooling and servicing agreement, indenture, trust
agreement and servicing agreement will be filed with the Securities and
Exchange Commission as an exhibit to a Form 8-K. The following summaries
describe only the material provisions expected to be common to each pooling
and servicing agreement, indenture, trust agreement or servicing agreement, as
applicable, and the related securities. All references to an "agreement" and
any discussion of the provisions of any agreement applies to pooling and
servicing agreements, indentures, trust agreements and servicing agreements,
as applicable. GreenPoint Credit recommends that the investor read all of the
provisions of the related pooling and servicing agreement, indenture, trust
agreement and/or servicing agreement, as applicable, and the descriptions set
forth in the related prospectus supplement. The prospectus supplement for each
series will describe the specific material provisions of the pooling and
servicing agreement, indenture trust agreement and/or servicing agreement, as
applicable, relating to that series.
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General
Each series of securities may be issued in one or more classes. If the
securities of a series are issued in more than one class, the securities 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 those 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 securities of a class should be understood to refer to the securities of a
class within a series, the securities of a subclass within a series or all of
the securities of a single-class series, as the context may require.
The securities will be issued in the denominations specified in the related
prospectus supplement. Interest-only securities will have no Percentage
Interest. Securities, if issued in registered form to beneficial owners of the
securities 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. 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 securities of each series will evidence an interest in or indebtedness
of, as applicable, a trust or the issuer, respectively, as specified in the
related prospectus supplement. Each trust will include:
(1) a contract pool, including 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 Payment Account as described
in the applicable prospectus supplement;
(3) any property which initially secured a contract and which is acquired
in the process of realizing thereon;
(4) the obligations of the seller, 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;
(6) the proceeds of all insurance policies described in this prospectus;
and
(7) if applicable, one or more forms of credit support.
The seller will convey the contracts to the issuer or trust related to any
series of securities, as applicable. See "The Contract Pools" in this
prospectus and "--Conveyance of Contracts" below. The servicer will service
the contracts pursuant to the related agreement. If so specified in the
related prospectus supplement, the contract documents will be held for the
benefit of the trustee or the indenture trustee, as applicable, by the
servicer.
Conveyance of Contracts
On the date of initial issuance of the securities of a series, the seller
will sell to the issuer or trust related to any series of securities, as
applicable, 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 issuer or trust related to any series of securities, as applicable, 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 related 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
interest rate on each contract as of the Cut-off Date and the maturity date of
each contract. The servicer will be required to complete a review of the
contract files and confirm the
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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 securityholders 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 Payment Account in an amount sufficient to offset the
discrepancy. The trustee will not review the contract files.
If so provided in the related prospectus supplement, the servicer will hold,
as custodian and agent on behalf of the trustee or indenture trustee, as
applicable, 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 or indenture trustee's, as applicable, right, title and
interest in and to the contracts, a UCC-1 financing statement identifying the
trustee or indenture trustee, as applicable, 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 or indenture trustee, as
applicable. 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 or indenture trustee, as applicable, the
trustee's or indenture trustee's, as applicable, interest in the contracts
could be defeated. See "Legal Aspects of the Contracts--Security Interests of
the Seller in the Manufactured Homes" and "--Land Home Contracts and Land-in-
Lieu Contracts" in this prospectus.
The seller will make representations and warranties to the issuer or trust
related to any series of securities, as applicable, with respect to each
contract sold by it. With respect to any series of notes, the representations
and warranties made by the Seller to the issuer pursuant to the related sale
and servicing agreement will be assigned to the indenture trustee pursuant to
the indenture. The applicable prospectus supplement will describe:
. the representations and warranties made by the seller in connection with
the contracts conveyed to the issuer or trust related to any series of
securities, as applicable;
. the terms pursuant to which the seller will be obligated to repurchase
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 the seller may remedy any breach.
Payments on Contracts
The applicable prospectus supplement will specify the arrangements pursuant
to which contract collections are held pending distribution to
securityholders. 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; Matters Regarding the
Servicer" below.
Distributions on Securities
The securities 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 securities
of a class may entitle the holders thereof to:
. distributions of both principal and interest;
. distributions of principal only; or
. distributions of interest only.
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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 securities 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
securities of one or more other classes. See "Credit and Liquidity
Enhancement" in this prospectus.
Distributions of Principal. If the securities of a class entitle the holders
thereof to distributions of principal, the related prospectus supplement will
specify an initial aggregate Security Balance for the securities of that class
and a method of computing the amount of principal, if any, to be distributed
to the holders of the securities of that class on each distribution date. If
so specified in the related prospectus supplement, principal distributions for
the securities 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 securities of the
applicable class. See "The Contract Pools" and "--Servicing Compensation and
Payment of Expenses; 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 distributions of Regular Principal
to the holders of the securities 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 Security Balance
of the securities 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 securities 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 securities of that 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 securities 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 those distribution dates. 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 securities of a
class having an initial Security 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
securities of a class will not entitle the holders thereof to aggregate
principal distributions in excess of the initial Security Balance for the
securities in that class.
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Distributions of Interest. The distribution formula for a class of
securities having an initial Security 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 securities 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 Security Balance, before giving effect to any
reduction thereof on the related distribution date, calculated at the Security
Rate specified in the related prospectus supplement. The Security 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 Security Rates may vary from time
to time based upon changes in an index or other measure of 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 Security Rate for each
Rate Period will be determined, including the particular market rates and
measures thereof relevant for determining the Security 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 specified in the related prospectus
supplement. Variable Security 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 interest 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 Security 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 Security
Rate may be converted to a fixed Security 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
Security Rate may be converted to a fixed Security Rate.
Rather than entitling the holders thereof to receive distributions of
interest based upon a Security Rate, the distribution formula for the
securities 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 those distribution dates,
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 securities 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 securities
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 securities, 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 securities sold hereunder may evidence the residual interest in the
related trust. Securities evidencing a residual interest will not have the
features described above. Rather, if so specified in the related prospectus
supplement, securities 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 or to pay expenses of the trust in the absence of liquidation losses
or other events resulting in deficient contract collections. In addition, if
specified in the related prospectus supplement, any securities evidencing a
residual interest may also entitle the holders thereof to receive additional
distributions of assets of the related trust, to the extent any assets remain
after being applied to make distributions to the holders of other interests in
the trust or to pay expenses of the trust. Further, if so specified in the
related prospectus supplement, any amounts due to the holders of a
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residual interest with respect to any series may be subordinated to amounts
due to holders of securities of another series to the extent described in the
related prospectus supplement. The securities evidencing a residual interest
may entitle the holders thereof to distributions at various times throughout
the life of the related trust or only upon termination of the trust, all as
more fully set forth in the related prospectus supplement. If an election is
made to treat the related trust as a REMIC Fund, the holders of a residual
interest in that REMIC Fund will be subject to federal income taxation with
respect to their ownership of the related residual interest as described in
this prospectus under "Federal Income Tax Consequences--REMIC Securities--
Taxation of Residual Securities."
Global Securities
If so specified in the applicable prospectus supplement, the securities of a
series, or of one or more classes within a series, will be issuable in the
form of Global Securities.
The Depository Trust Company, or DTC, 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 securities. Indirect access to the DTC system is also available to
the Indirect Participants.
Unless and until Definitive Securities are issued, beneficial owners of the
securities who are not Participants but desire to purchase, sell or otherwise
transfer ownership of securities may do so only through Participants. In
addition, beneficial owners of the securities will receive all distributions
of principal of, and interest on, the securities from the trustee through DTC
and Participants. Beneficial owners of the securities will not receive or be
entitled to receive securities representing their respective interests in the
securities, except under the limited circumstances described below. In
addition, if some or all of the securities of a series are issued in the form
of one or more Global Securities, certain monthly and annual reports prepared
by the servicer under the related pooling and servicing agreement will be sent
on behalf of the related trust to DTC and not to the beneficial owners of the
securities.
Unless and until Definitive Securities are issued, it is anticipated that
the only "securityholder" of the securities will be Cede & Co., as nominee of
DTC. Beneficial owners of the securities will not be securityholders as that
term is used in the pooling and servicing agreement. Beneficial owners of the
securities are only permitted to exercise the rights of securityholders
indirectly through Participants and DTC.
If so specified in the related prospectus supplement, while the securities
are outstanding, under DTC's rules. Participants are required to make book-
entry transfers through DTC's facilities with respect to the securities, and
DTC as the sole holder of the securities is required to receive and transmit
distributions of principal of, and interest on, the securities. Unless and
until Definitive Securities are issued, beneficial owners of the securities
who are not Participants may transfer ownership of securities only through
Participants by instructing its Participants to transfer securities, by book-
entry transfer, through DTC for the account of the purchasers of the
securities, which account is maintained with their respective Participants.
Under DTC's rules and in accordance with DTC's normal procedures, transfers of
ownership of securities will be executed through DTC, and the accounts of the
respective Participants at DTC will be debited and credited.
Definitive Securities will be issued to beneficial owners of the securities,
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 securities and the servicer
or the trustee is unable to locate a qualified successor;
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. the seller at its option, elects to terminate the book-entry system
through DTC; or
. after the occurrence of an Event of Default, beneficial owners of the
securities having a majority in Percentage Interests of each class of
the securities 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 securities being
issued to beneficial owners of the securities is no longer in the best
interests of beneficial owners of the securities. See "--Servicing
Compensation and Payment of Expenses; Matters Regarding the Servicer--
Events of Default" below.
Upon issuance of Definitive Securities to beneficial owners of the securities,
the Definitive Securities 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 Securities are issued, DTC will take any action permitted
to be taken by a securityholder under the pooling and servicing agreement only
at the direction of one or more Participants to whose DTC accounts the
securities are credited. DTC will take such action with respect to any
Percentage Interests of the securities only at the direction of and on behalf
of its Participants to whose DTC accounts the securities are credited with
respect to the Percentage Interests of the securities. DTC may take actions,
at the direction of the related Participants, with respect to some securities
which conflict with actions taken with respect to other securities.
Optional and Mandatory Repurchase of Securities; Optional Termination and
Termination Auction
Repurchase of Securities. Some or all of the securities 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 securities 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 date of repurchase, the holder of the
security to be repurchased will cease to be entitled to any benefit of the
security or the related agreement and will be entitled only to receive from
the trustee the repurchase price of the security 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 security subject to mandatory or optional repurchase
as described therein will be provided under a security purchase agreement or
other liquidity facility as described in "Credit and Liquidity Enhancement" in
this prospectus.
Optional Termination. If so specified in the applicable prospectus
supplement, the servicer, or other parties as designated in the related
prospectus supplement, will have the option to purchase, upon giving notice
mailed no later than the distribution date next preceding the month of the
exercise of the option to purchase, all outstanding contracts in the related
contract pool 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 Cut-off Date Pool Principal Balance.
The price at which the servicer may purchase the related contracts will equal,
after deductions of related advances by the servicer, the greater of:
(1) the sum of:
(a) 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 (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, plus
in the case of both clause (1) and clause (2), an amount sufficient to
reimburse securityholders of each outstanding class for any shortfall in
interest due thereto in respect of prior distribution dates and any other
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amounts specified in the related prospectus supplement. The servicer's option
shall not be exercisable if there will not be distributed to the
securityholders 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 securities when realized or upon
the termination of the related trust 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.
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 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 purchase 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
purchase 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 securityholder,
the seller and one or more active participants in the asset-backed securities
or manufactured housing contract market that are not affiliated with
GreenPoint Credit 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 Credit.
If the foregoing requirements are satisfied, the successful bidder or bidders
shall deposit the aggregate purchase price for the contracts in the Payment
Account. If the foregoing requirements are not satisfied, the purchase shall
not occur and distributions will continue to be made on the securities. If a
REMIC election has been made with respect to the applicable trust, any sale
and consequent termination of the trust as a result of a Termination Auction
must constitute a "qualified liquidation" of the trust under Section 860F of
the Code.
Termination
Pooling and Servicing Agreement. The pooling and servicing agreement for any
series of certificates 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 related trust as described
above under "--Optional and Mandatory Repurchase of Securities;
Termination Auction;" or
. the final payment or other liquidation or any advance with respect
thereto of the last contract remaining in the related trust, including
the disposition of all property acquired upon repossession of any
manufactured home.
In the event of the termination of any pooling and servicing agreement, the
holders of securities of any class of the related series will be entitled to
receive, upon presentation and surrender of their securities at the office or
agency designated by the trustee, a final distribution in an amount computed
as described in the related prospectus supplement.
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Indenture. The indenture will be discharged with respect to a series of
notes, except with respect to continuing rights specified in the indenture,
upon the delivery to the indenture trustee for cancellation of all the notes
of that series or, with limitations, upon deposit with the indenture trustee
of funds sufficient for the payment in full of all of the notes of that
series.
In addition to the discharge with limitations, the indenture will provide
that, if so specified with respect to the notes of any series, the related
trust will be discharged from any and all obligations in respect of the notes
of that series, except for obligations relating to temporary notes and
exchange of notes, to register the transfer of or exchange notes of that
series, to replace stolen, lost or mutilated notes of that series, to maintain
paying agencies and to hold monies for payment in trust, upon the deposit with
the indenture trustee, in trust, of money and/or direct obligations of or
obligations guaranteed by the United States of America which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of and
each installment of interest on the notes of that series on the last scheduled
distribution date for the notes and any installment of interest on the notes
in accordance with the terms of the indenture and the notes of that series. In
the event of any defeasance and discharge of notes of the series, holders of
notes of that series would be able to look only to the money and/or direct
obligations for payment of principal and interest, if any, on their notes
until maturity.
Collection and Other Servicing Procedures
Except as otherwise provided in the related servicing agreement with respect
to any series of securities, the servicer may rescind, cancel or make material
modifications to 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
related servicing agreement, as appliable, the 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.
Servicing Compensation and Payment of Expenses; Matters Regarding the Servicer
The servicer will be entitled to the Monthly Servicing Fee with respect to
the contracts underlying any series of securities. Any additional servicing
compensation with respect to the contracts underlying a series of securities
will be specified in the applicable prospectus supplement.
If so specified in the related prospectus supplement, if GreenPoint Credit
is acting as servicer, the servicer may subordinate the Monthly Servicing Fee
for a series with respect to all, or a portion of, the amounts due to the
related securityholders 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 and for additional administrative services performed by the servicer.
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 include calculating
distributions to securityholders and providing related data processing and
reporting services for securityholders and on behalf of the trustee. If so
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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 other
expenses; and
. payment of expenses incurred in connection with distributions and
reports to securityholders.
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 that
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;
. any fees associated with the enforcement of deficiency amounts on
liquidated contracts if deficiency amounts are recoverable under the
laws of the applicable jurisdiction;
. 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.
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 related servicing 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 any servicing
agreement, whereupon it will no longer be liable for the obligations of the
servicer under the servicing agreement, provided that, among other conditions,
any rating assigned to the securities will not be reduced because of the
assignment and delegation.
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
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maintained hazard insurance policies that provide earthquake coverage. If
earthquake coverage is required with respect to contracts in a particular
trust, 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 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 with respect to the
repossessed manufactured home meeting the requirements set forth above, or to
indemnify the trust against any damage to the repossessed manufactured home
prior to resale or other disposition.
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 related servicing agreement has been made
under the supervision of that officer, and (2) that to the best of that
officer's knowledge, the servicer has fulfilled all its obligations under the
related servicing agreement throughout the applicable year, or, if there has
been a default in the fulfillment of any obligation, specifying each default
known to that officer and the nature and status thereof. The 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 documents
and records relating to servicing of the contracts under the servicing
agreement, or, at the servicer's option, the contracts and other contracts
being serviced by the servicer under agreements similar to the servicing
agreement conducted in accordance with generally accepted auditing standards,
the servicer's servicing has been conducted in compliance with the provisions
of the related servicing agreement or other agreements similar to the
servicing 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.
Pooling and Servicing Agreement Events of Default. Servicer events of
default under the pooling and servicing agreement relating to any series of
certificates will consist of, among other events:
. any failure by the servicer to make any deposit or payment required of
it under the pooling and servicing agreement which continues unremedied
for five days after the giving of written notice;
. any failure by the servicer duly to observe or perform in any material
respect any of its other covenants or agreements in the pooling and
servicing agreement which continues unremedied for 30 days after the
giving of written notice of such failure; and
. 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, any credit enhancement provider, or to the servicer, the trustee
and the seller by the holders of securities 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.
Rights Upon Pooling and Servicing Agreement Event of Default. If so
specified in the related prospectus supplement so long as a pooling and
servicing agreement event of default remains unremedied, the trustee may,
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but only with the consent of the credit enhancement provider, if any, if the
applicable credit enhancement has not expired or if the credit enhancement has
expired or been terminated and the credit enhancement 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
pooling and servicing 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 pooling and
servicing agreement will succeed to all the responsibilities, duties and
liabilities of the servicer under the pooling and servicing 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
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 pooling and servicing agreement.
If so specified in the related prospectus supplement, no certificateholder
will have any right under the pooling and servicing agreement to institute any
proceeding with respect to the pooling and servicing 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 pooling and servicing 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.
Indenture Events of Default. Events of default under the indenture relating
to any series of notes, in most cases, will include:
. default for five days or more in the payment of any principal of or
interest on any note of the series;
. failure to perform any other covenant of the issuer or the trust in the
indenture which continues for a period of thirty days after notice of
that failure is given in accordance with the procedures described in the
accompanying prospectus supplement;
. any representation or warranty made by the issuer or the trust in the
indenture or in any certificate or other writing delivered pursuant
thereto or in connection therewith as to our affecting the series having
been incorrect in a material respect as of the time made, and the breach
is not cured within thirty days after notice of that error is given in
accordance with the procedures described in the accompanying prospectus
supplement; and
. certain bankruptcy, insolvency, or similar events relating to the issuer
or the trust.
Rights Upon Indenture Events of Default. If an indenture event of default as
to the notes of any series occurs and is continuing, either the indenture
trustee, the provider of credit enhancement, if any, or the holders of a
majority of the then aggregate outstanding amount of the notes of that series,
with the written consent of the provider of credit enhancement, if any, may
declare the Security Balance of all the notes of that series to be due and
payable immediately. That declaration may, under some circumstances, be
rescinded and annulled by the holders of a majority in aggregate outstanding
amount of the related notes.
If, following an indenture event of default for any series of notes, the
notes of the series have been declared to be due and payable, the indenture
trustee may, in its discretion, or, if directed in writing by the provider of
credit enhancement, if any, will, regardless of that acceleration, elect to
maintain possession of the collateral securing the notes of that series and to
continue to apply payments on that collateral as if there had been no
declaration of acceleration if that collateral continues to provide sufficient
funds for the payment of principal of and interest on the notes of the series
as they would have become due if there had not been a declaration.
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In addition, the indenture trustee may not sell or otherwise liquidate the
collateral securing the notes of a series following an event of default,
unless:
. the holders of 100% of the then aggregate outstanding amount of the
notes of the series consent to that sale;
. the proceeds of the sale or liquidation are sufficient to pay in full
the principal of the accrued interest, due and unpaid, on the
outstanding notes of the series, and to reimburse the provider of credit
enhancement, if any, at the date of that sale; or
. the indenture trustee determines that the collateral would not be
sufficient on an ongoing basis to make all payments on those notes as
those payments would have become due if those notes had not been
declared due and payable, and the indenture trustee obtains the consent
of the holders of 66-2/3% of the then aggregate outstanding amount of
the notes of the series and the provider of credit enhancement, if any.
In the event that the indenture trustee liquidates the collateral in
connection with an indenture event of default, the indenture provides that the
indenture trustee will have a prior lien on the proceeds of that liquidation
for unpaid fees and expenses. As a result, on the occurrence of that event of
default, the amount available for payments to noteholders would be less than
would otherwise be the case. However, the indenture trustee may not institute
a proceeding for the enforcement of its lien except in connection with a
proceeding for the enforcement of the lien of the indenture for the benefit of
noteholders after the occurrence of an indenture event of default.
If stated in the accompanying prospectus supplement, in the event the
principal of the notes of a series is declared due and payable, as described
in the second preceding paragraph, the holders of any notes issued at a
discount from par may be entitled to receive no more than an amount equal to
the unpaid principal amount of those notes less the amount of the discount
that is unamortized.
In most cases, no noteholder will have any right under an indenture to
institute any proceeding in connection with that indenture unless:
. the holder previously has given to the indenture trustee written notice
of a default and the continuance of that default;
. the holders of securities of any class evidencing not less than 25% of
the aggregate percentage interests constituting the class (1) have made
written request upon the indenture trustee to institute that proceeding
in its own name as indenture trustee thereunder and (2) have offered to
the indenture trustee reasonable indemnity;
. the indenture trustee has neglected or refused to institute that
proceeding for 60 days after receipt of that request and indemnity; and
. no direction inconsistent with that written request has been given to
the indenture trustee during that 60 day period by the holders of a
majority of the Security Balances of that class, except as otherwise
provided for in the related agreement regarding the provider of credit
enhancement, if any.
However, the indenture trustee will be under no obligation to exercise any
of the trusts or powers vested in it by the indenture or to institute, conduct
or defend any litigation thereunder or in relation thereto at the request,
order or direction of any of the holders of notes, unless noteholders have
offered to the indenture trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred in or by exercise of
that power.
Amendment
In most cases, each agreement may be amended by the parties thereto without
the consent of the securityholders, but only with the consent of the provider
of credit enhancement, if any, if the applicable credit
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enhancement has not expired or if the credit enhancement has expired or been
terminated and the provider of credit enhancement 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 securities then
given by any rating agency, it being understood that, after obtaining
the rating of the securities from the rating agencies specified in the
related agreement, none of the parties thereto is obligated to obtain,
maintain or improve any rating assigned to the securities; 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 securityholders.
In most cases, each agreement may also be amended by the parties thereto and,
if so specified in the related prospectus supplement, the provider of credit
enhancement, if any, with the consent of at least 51% of the holders of
securities 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
securityholders; provided, however, that no such amendment shall:
(1) reduce in any manner the amount of, or delay the timing of, any
distributions on any security, without the consent of the holder of
such security as the case may be;
(2) adversely affect in any material respect the interests of the holders
of any class of securities in a manner other than as described in (1),
without the consent of the holders of securities of such class
evidencing, as to such class, Percentage Interests aggregating 66%; or
(3) reduce the aforesaid percentage of securities the holders of which are
required to consent to any such amendment, without the consent of the
holders of all securities then outstanding, and no such amendment shall
adversely affect the status of the trust as a REMIC if a REMIC election
has been made with respect to that trust.
In most cases each agreement may also be amended from time to time, without
the consent of any securityholders, by the parties thereto to modify,
eliminate or add to the provisions of the agreement to:
(1) maintain the qualification of the related trust as a REMIC under the
Code if a REMIC election has been made with respect to that trust or
avoid, or minimize the risk of, the imposition of any tax on the trust
under the Code that would be a claim against the trust 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 or avoid any such tax or minimize the risk
of its imposition; or
(2) prevent the trust from entering into any "prohibited transaction" as
defined in Section 860F of the Code if a REMIC election has been made
with respect to that trust, 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 from entering into the prohibited
transaction.
Each agreement may otherwise be subject to amendment without the consent of
any securityholders and, under some circumstances, without the consent of the
trustee, if and to the extent specified in the related prospectus supplement.
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The Trustee of Indenture Trustee
The trustee or indenture trustee, as applicable, with respect to a series
will be identified in the applicable prospectus supplement. If so specified
therein, the trustee or indenture trustee, as applicable, may resign at any
time, in which event the seller or issuer, respectively, will be obligated to
appoint a successor trustee or indenture trustee, as applicable. The seller or
issuer, respectively, may also remove the trustee or indenture trustee, as
applicable, if the trustee or indenture trustee, as applicable, ceases to be
eligible to continue as trustee or indenture trustee, as applicable, under the
related agreement or if the trustee or indenture trustee, as applicable,
becomes insolvent. If the seller or issuer, respectively, removes the trustee
or indenture trustee, as applicable, the seller or issuer, respectively, will
also be obligated to appoint a successor trustee or indenture trustee, as
applicable. Any resignation or removal of the trustee or indenture trustee, as
applicable, and appointment of a successor trustee or indenture trustee, as
applicable, will not become effective until acceptance of the appointment by
the successor trustee or indenture trustee, as applicable.
If so specified in the related prospectus supplement, the agreement for any
series will require the trustee or indenture trustee, as applicable, to
maintain, at its own expense, an office or agency in New York City where the
securities for such series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the trustee or indenture
trustee, as applicable, and the security registrar in respect of such
securities pursuant to the related agreement may be served.
If so specified in the related prospectus supplement, the trustee or
indenture trustee, as applicable, or any of its affiliates, in its individual
or any other capacity, may become the owner or pledgee of the securities of
any series with the same rights as it would have if it were not trustee or
indenture trustee, as applicable.
If so specified in the related prospectus supplement, the trustee or
indenture trustee, as applicable, will act as paying agent, security registrar
and authenticating agent for the related series of securities.
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 trustee or the
securityholders 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 any
agreement, other than in connection with the enforcement of any contract in
accordance with any 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 any 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 and the servicer shall be entitled to be reimbursed therefor from
amounts collected on the contracts.
Credit and Liquidity Enhancement
To the extent specified in the related prospectus supplement, a class of
securities may be entitled to the benefit of one or more of the following
forms of credit and liquidity enhancement:
Subordination
The senior securities of any series 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
securities of that series. If so specified in
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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 securities will entitle the related holders 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 securities 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 securities, this feature will enhance the
likelihood of timely receipt by the holders of the senior securities of full
distributions of principal or of interest or of both in accordance with the
applicable distribution formula.
The distribution formula for the senior securities, other than interest-only
securities, 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 Security Balance of the senior securities has been
reduced to zero. See "Description of Securities--Distributions on Securities--
Distributions of Principal" above. This feature, in effect, will provide the
holders of the senior securities, other than holders of interest-only
securities, with a prior right to receive the principal collected on the
contracts until the Security Balance of the senior securities 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 securities, other than
holders of interest-only securities, are entitled on particular distribution
dates. If the holders of the senior securities, other than holders of
interest-only securities, 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 securities, other
than holders of interest-only securities, 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 securities to receive any
principal collected on the contracts. If, however, the holders of the senior
securities, other than holders of interest-only securities, 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 securities, other than holders of interest-
only securities, 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 securities, other than holders of
interest-only securities, will ultimately receive distributions of principal
in an aggregate amount equal to the initial Security Balance of the senior
securities. It will not, however, enhance the likelihood of timely receipt by
the holders of the senior securities 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, securities which constitute senior securities under the criteria
described in the second preceding paragraph may constitute subordinate
securities under the criteria described in the next preceding paragraph, and
securities which constitute senior securities under the criteria described in
the next preceding paragraph may constitute subordinate securities 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
securities 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 Security Balance of the senior securities. The senior securities
are also given a
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degree of protection against loss, to a lesser extent, if the holders of the
senior securities 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
securities, and other expenses of the trust, exceeds the interest
distributable to the holders of the senior securities. The relative levels of
the Security Balance of the senior securities 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 securities and the level of liquidation losses on the
underlying contracts. Generally, if the holders of senior securities, other
than holders of interest-only securities, 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 Security Balance of the senior securities, thus increasing
the degree of protection against loss afforded by the subordination of the
subordinate securities. In addition, special principal distributions to the
holders of the senior securities from sources other than 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 Security Balance of the senior
securities 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 securities,
other than holders of interest-only securities, 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 Security Balance of the senior securities, thus decreasing
the degree of protection against loss afforded by the subordination of the
subordinate securities. 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 Security Balances of the
senior securities to Pool Principal Balances which are estimated or adjusted
as described therein.
Where there is more than one class of subordinate securities, the rights of
one or more classes of subordinate securities to receive distributions of
principal, interest or principal and interest may be subordinated to the
rights of one or more other classes of subordinate securities to receive
distributions. Any class of subordinate securities that is entitled to receive
distributions from contract pool collections prior to any other class of
subordinate securities is a "mezzanine" class of subordinate securities. The
subordination of any class of subordinate security to a mezzanine class of
subordinate securities will enhance the likelihood of timely receipt by the
holders of the mezzanine class of subordinate securities relative to any class
of subordinate securities that is subordinate to the mezzanine class of
subordinate securities. Subordinate securities, including any mezzanine
classes of subordinate securities, 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 securities sold hereunder will be
discussed in the applicable prospectus supplement.
Reserve Funds
The securities 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 those
securities are not sufficient to fund full distributions of principal,
interest or principal and interest to those securityholders. 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 securities on particular distribution dates upon the occurrence of certain
losses, delinquencies or other events, even if such securityholders would not
have been entitled to any such distributions on the related
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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 or held outside of the trust 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.
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 securityholders, 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 securities, such
reserve fund may be referred to in the applicable prospectus supplement as a
"Spread Account."
Credit Facilities
The securities of one or more classes may be entitled to the benefit of one
or more credit facilities, including but not limited to letters of credit,
swap agreements, interest rate caps, surety bonds or similar credit
facilities. Each credit facility may be in an amount greater than, equal to or
less than the Security Balance of the securities 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 securities 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
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. The related prospectus supplement will also contain certain information
concerning the provider of the credit facility, which information will have
been provided to the seller by the credit facility provider for use in the
related prospectus supplement. GreenPoint Credit or an affiliate of GreenPoint
Credit 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
securities 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 securities of one or more classes may be entitled to the benefit of one
or more liquidity facilities, or security purchase agreements, pursuant to
which the provider of such liquidity facility will provide funds to be used to
purchase some or all of the securities 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 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, and will contain certain information
concerning the provider of the liquidity facility, which information will have
been provided to the seller by the liquidity facility provider for use in the
related prospectus supplement. GreenPoint Credit or an affiliate of GreenPoint
Credit 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 the securities of any series as
of the date hereof. In connection with the issuance of each series, special
counsel to GreenPoint Credit 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 that series, is accurate in all material respects. As more fully
discussed below, special counsel to GreenPoint Credit is also of the opinion
that:
(A) for a series for which an election to be treated as a "real estate
mortgage investment conduit," or REMIC will be made:
(1) the REMIC Fund will qualify as a REMIC for federal income tax
purposes;
(2) the certificates of a 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 a 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 related 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 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 that trust; 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 will not be treated as
an association, taxable mortgage pool or publicly traded
partnership taxable as a corporation; and
(2) the offered securities of that series will be treated as
indebtedness for federal income tax purposes.
Except to the extent provided in a related prospectus supplement, special
counsel to GreenPoint Credit will render no other opinions on federal income
taxes to a trust with respect to the securities. Special counsel to GreenPoint
Credit 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 Securities
and Exchange Commission on a Current Report on Form 8-K prior to the sale of
the related series of securities. This discussion is directed primarily to
securityholders that hold the securities as "capital assets" within the
meaning of Section 1221 of the Code, although portions thereof also may apply
to securityholders who do not hold securities 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
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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 the
securities in a series. See "Other Tax Consequences" in this prospectus.
The following discussion addresses securities of three general types:
(1) "REMIC certificates," which are certificates representing interests in
a REMIC Fund with respect to which an election to be treated as a REMIC
under the REMIC Provisions will be made;
(2) grantor trust certificates, which are certificates representing
interests in a 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 the OID Regulations, and in part upon 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, some series of securities.
The following discussion is limited in applicability to certificates or
notes. 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 REMIC, in which
case the certificates of any class of a 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 the seller 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 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,
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Herrington & Sutcliffe LLP, special counsel to GreenPoint Credit 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 pooling and
servicing 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
a 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 Credit,
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
(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" or 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
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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 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, 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 Credit 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").
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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 that 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
the property is not held for more than three years unless an extension of the
holding period is obtained from the IRS.
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 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 Credit, will have advised GreenPoint Credit, as described above,
that at the initial issuance of the certificates of a series, each segregated
portion qualifies as a REMIC for federal income tax purposes, and that the
certificates in that series will be treated either as Regular Certificates or
Residual Certificates of the appropriate REMIC. Solely for the purpose of
determining whether the Regular Certificates will constitute qualifying real
estate or real property assets for certain categories of financial
institutions or REITs 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 that year and the following years. 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 to the Tax Reform Act of 1986 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
pooling and servicing 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.
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
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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 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 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 IRS and to certificateholders such information with respect to the
original issue discount accruing on the related 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 Treasury regulations issued
thereunder. 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 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 Conference Committee Report to the
Tax Reform Act of 1986 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 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 under this prospectus and the accompanying prospectus supplement 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 the 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
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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 qualified
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 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 that 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
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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 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"
below. 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 Regular Certificates are so offered, appropriate disclosures will
be made in the prospectus supplement. Some or all of the payments on 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 the 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" below.
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 the 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
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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 the Regular Certificate during the accrual
period of amounts included in the stated redemption price at
maturity; over
(2) the adjusted issue price of the 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;
(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 the Regular
Certificate that accrued in prior accrual periods, and reduced by the amount
of any distributions made on the 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 the 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
the Regular Certificate, the daily portions of original issue discount with
respect to the 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 the 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
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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 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" above, of the 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 the 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 the Regular Certificate.
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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 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 the following
years. 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 the 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" above. 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 Tax Reform Act of 1986 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 Conference
Committee Report to the Tax Reform Act of 1986 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.
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
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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 the 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 the following years, 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 Conference Committee Report to the Tax Reform Act of
1986 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 of that series. 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 the
Regular Certificate. A seller's adjusted basis generally will equal the cost
of the Regular Certificate to the seller, increased by any original issue
discount reported by such seller with respect to the Regular Certificate and
reduced, but not below zero, by distributions received by such seller, other
than payments of qualified stated interest, and by any amortized premium.
Except as described above under "--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
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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 the 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 Credit 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 holders of
Regular Certificates 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 pooling and
servicing 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
. 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 REITs. 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, other than any partnership that is
treated as not a United States person under any applicable Treasury
regulations, organized in or under the laws of the United States, a
state thereof or the District of Columbia or an entity taxable as such
for U. S. federal income tax purposes;
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(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 Credit
and does not own actually or constructively 10% or more of the voting stock of
GreenPoint Credit. 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 United States 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
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 Credit. Regular certificateholders who are non-United States
persons and persons related to such holders should not acquire any Residual
Certificates, and holders of Residual Certificates and persons related to
holders of Residual Certificates 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 holder of a REMIC
Certificate may be subject to "backup withholding" at a 31% rate. Backup
withholding may apply to a holder of a REMIC Certificate 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 holder of a
REMIC Certificate who is a foreign person if the holder of a REMIC Certificate
fails to provide the trustee or the holder of a REMIC Certificate'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.
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Holders of REMIC Certificates 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 Agreement
Holders of Certificates that represent ownership of a REMIC regular interest
coupled with a swap or cap agreement will be treated for federal income tax
purposes as owning a REMIC regular interest and a swap or cap agreement. They
will be required to allocate the purchase price for their certificates between
the REMIC regular interest and the swap or cap agreement represented thereby
according to their respective fair market values on the date of acquisition of
the certificates for 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 agreement
would be treated as an interest in a notional principal agreement. Any portion
of 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 above 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
agreement 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 agreement 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
agreements that reflected the specified index and notional amount (i.e., any
excess of the applicable Security Rate over the weighted average net contract
rate and the applicable Security 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
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of such amortization deductions, although they are generally regarded as
ordinary items. Payments made by the trust on the swap agreement and allocable
to investors that are individuals may be treated as investment expenses
subject to the limitations on deductibility imposed by Section 67 of the Code
and described in "Federal Income Tax Consequences--Taxation of Regular
Certificates--Pass-Through of Expenses Other Than Interest."
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 agreement
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 agreement. 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 agreement 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
agreement 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 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 agreement, 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 agreement. See "--Taxation of Regular Certificates --Taxation of
Certain Foreign Investors" above.
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 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
certificateholder's share of the "daily portion" is based on the portion of
outstanding Residual Certificates that such certificateholder owns on such
day. REMIC taxable income will be taxable to the holders of Residual
Certificates without regard to the timing or amounts of cash distributions by
the REMIC. Ordinary income derived from Residual Certificates will
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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 holder of a Residual Certificate may be required to recognize
for a given period income substantially in excess of distributions made on the
Residual Certificates.
A subsequent holder of a Residual Certificate 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 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 that purchased such Residual Certificate at its
original issuance (an "Original Holder") and 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 Tax Reform
Act of 1986 indicates that certain adjustments may be appropriate to reduce or
increase the income of a subsequent certificateholder that purchased such
Residual Certificate at a price greater than or less than, respectively, the
adjusted basis 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.
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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
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 manufactured housing 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" above, 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" above. 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 a contract pool is acquired by
the related 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:
. 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.
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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 or certificates 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 holder of a Residual Certificate 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 in such Residual 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 certificateholder. The ability of holders of
Residual Certificate 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 holders of Residual Certificates.
In the case where the REMIC Fund is considered a single-class REMIC, such
expenses will be allocated proportionately among Regular and holders of
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Residual Certificates. See "--Taxation of Regular Certificates--Pass-Through
of Expenses Other Than Interest" above. 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 pooling and
servicing 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 holders of
Residual Certificates, 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.
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 holders of Residual
Certificates. 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
Holder of a Residual Certificate 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 Holder of a Residual Certificate;
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(2) will be treated as "unrelated business taxable income" within the
meaning of Section 512 of the Code if the Holder of a Residual
Certificate 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 Holder of a Residual Certificate that is a foreign investor,
as further discussed in "--Foreign Investors" below.
In addition, if a REIT, 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 Holder of a Residual Certificate.
Except as discussed in the following paragraph, with respect to any Holder
of a Residual Certificate, 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 Holder of a Residual Certificate; over
(2) the sum of the "daily accruals" (as defined below) for all days during
the calendar quarter on which the certificateholder held such Residual
Certificate.
For this purpose, daily accruals with respect to a Holder of a Residual
Certificate 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.
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
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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 pooling and servicing agreement and are discussed
more fully in "--Restrictions on Transfer of REMIC Residual Certificates"
below. 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.
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 related mortgage prepayment
assumption.
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
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(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, REIT, common trust, 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.
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 at the time
of that 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 Tax
Reform Act of 1986 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 that 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
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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 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 that series. If
a holder of a Residual Certificate's adjusted basis in its Residual
Certificate exceeds the amount of cash distributed to such certificateholder
in final liquidation of its interest, then, although the matter is not
entirely free from doubt, it would appear that the 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 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.
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
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a partnership, and the holders of Residual Certificates 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 holder of a Residual Certificate. 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. Holders of Regular Certificates will not be
entitled to participate in any such audits.
Each Holder of Residual Certificates is required to treat items on its
return consistently with their treatment on the REMIC Fund's return, unless
the 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 holder of a Residual Certificate, 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. A non-REMIC trust will be described in the
related prospectus supplement as any of a grantor trust, an indenture trust or
an owner trust.
Characterization of the Trust. 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 Credit, 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 a 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, the
agreement or agreements with any underwriter, for federal income tax purposes,
the trust 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. Accordingly, each certificateholder in a
grantor trust 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.
As further described below, each holder of 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 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 when those amounts are received and paid by the trust. A grantor
trust certificateholder
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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 related trust, 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 Credit would be able to sell or otherwise dispose of any
subordinated grantor trust certificates. Accordingly, GreenPoint Credit
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, 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
related trust's assets qualify under those Sections of the Code.
Any amount includible in gross income with respect to 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 related
trust'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 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
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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 Credit 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 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.
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 above 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
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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 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
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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 or an indenture trust, Orrick, Herrington & Sutcliffe LLP, special
counsel to GreenPoint Credit, will deliver its opinion that with respect to
each such series of certificates or notes, under then existing law and
assuming compliance by the seller, the servicer and the trustee of a series
with all of the provisions of the related pooling and servicing agreement or
indenture, as applicable, 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, and the agreement or agreements
with any underwriter, for federal income tax purposes:
. the trust 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 related 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 Credit 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 or Indenture Trust
The related agreement permits the issuance of owner trust certificates or
notes and certain other interests in the related trust, each of which may be
treated for federal income tax purposes either as debt or as equity interests
in the trust. If all of the owner trust certificates or notes and other
interests, other than the transferor certificate, in the trust were
characterized as debt, the trust 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.
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Under such a view, the trust would be disregarded for federal income tax
purposes. Alternatively, if some of those interests were characterized as
equity interests in the trust, the trust might be 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. However, special counsel to GreenPoint
Credit is of the opinion that, under current law, any entity constituted by
the trust will not be an association, taxable mortgage pool or publicly traded
partnership taxable as a corporation.
Possible Treatment of the Trust as a Taxable Mortgage Pool. Although, as
described above, special counsel to GreenPoint Credit is of the opinion that
the certificates or notes will properly be treated as debt for federal income
tax purposes and that the trust 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 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 the holders of the
certificates. No distributions from the trust 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 or notes 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"
above.
Possible Treatment of the Owner Trust Certificates or Notes as Partnership
Interests. Although, as described above, special counsel to GreenPoint Credit
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 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
Credit 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.
If the trust 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 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
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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 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 treated as
partners equaled or exceeded 100, the transferor may cause the trust 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 securities in any state or locality. Securityholders 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 securities.
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 a trust to qualify as a REMIC, there must be
reasonable arrangements designed to ensure that the related 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 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 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 securities will specify which,
if any, of the classes of securities offered thereby constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market
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Enhancement Act of 1984, or SMMEA. Classes of securities 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," securities 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 securities
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 securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.
S. C. Section 24 (Seventh), subject in each case to such regulations as the
applicable federal 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.
All depository institutions considering an investment in the securities,
whether or not the class of securities 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 securities not entitled to
distributions allocated to principal or interest, or subordinated securities.
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 securities or to
purchase securities 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 securities constitute legal
investments for such investors.
ERISA Considerations
The Employee Retirement Income Security Act of 1974, as amended, or ERISA,
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
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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
securities 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 securities 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, or 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 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 of 1933, as
amended, that then becomes so registered. There can be no assurance that any
class of security 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 securities, an investment in the securities 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
securities" 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 securities 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 securities is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
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 securities, the related prospectus supplement will
refer to that possibility.
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Any Plan fiduciary that proposes to cause a Plan to purchase securities
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
securities. Moreover, each Plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification, an
investment in the securities is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
Legal Aspects of the Contracts
The following discussion contains summaries of Legal Aspects of manufactured
housing contracts, including Land Home Contracts 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 Home Contracts and Land-in-Lieu Contracts are situated.
The Contracts (Other than Land Home Contracts and Land-in-Lieu Contracts)
General. As a result of the assignment of the manufactured housing contracts
in a contract pool to the trustee, the related trust 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 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 the
seller's or any lender's interest in manufactured housing contracts. See "Risk
Factors--Security Interests of a Trust in the Manufactured Homes" in this
prospectus for a discussion of certain issues relating to the transfer to a
trust of contracts and the related security interests in the manufactured
homes comprising the related contract pool.
Security Interests of The Seller 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. The seller'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. The seller 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. If so specified in the applicable prospectus supplement, the seller
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 the seller's or an affiliate of the seller's creditors, a trustee in
bankruptcy of the seller or a receiver, conservator or trustee in bankruptcy
of an affiliate thereof that sold such contracts to the seller.
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 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.
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Generally, with respect to manufactured housing contracts individually
originated or purchased by the seller, the seller effects the notation or
delivery of the required documents and fees, and obtains possession of the
certificate of title or a lien security, as appropriate, under the laws of the
state in which any manufactured home securing a manufactured housing contract
is registered. If the seller 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, the seller, 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 the seller'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, the seller will represent that, at the
date of the initial issuance of securities 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 Securities--
Conveyance of Contracts" in this prospectus. The seller 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 Contracts 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 securities even
if the related contracts constitute chattel paper. In Octagon 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 the seller 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, securityholders
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.
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 the seller on the
certificate of title or delivery of the required documents and fees, or if
applicable, perfection under
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the UCC, will be sufficient to protect the seller 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 the seller 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. The seller 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,
the seller would receive notice of surrender if its security interest in the
manufactured home is noted on the certificate of title. Accordingly, the
seller 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, the seller 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, the seller must surrender
possession of the certificate of title or the seller will receive notice as a
result of its lien noted thereon; accordingly, the seller 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. The seller will warrant in the
agreement with respect to each series of securities that, as of the date of
initial issuance of a series of securities, no manufactured home relating to a
contract it sold was, to its knowledge, subject to any such lien. However,
such warranty will not be based on any lien searches or other review. The
prospectus supplement related to a series of securities will contain a
description of the remedies for a breach of the representations and warranties
made by the seller under the related agreement. In addition, liens could arise
after the date of initial issuance of the securities. Notice may not be given
to the seller, the servicer, the trustee or securityholders in the event a
lien arises subsequent to the date of initial issuance of the securities.
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.
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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 the
seller's ability to repossess and resell any manufactured home or enforce a
deficiency judgment.
Land Home Contracts 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.
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.
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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 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, is unable to sell a manufactured home
in the course of its ordinary commercial practices within 33 months after its
acquisition thereof, or a longer period as permitted by the related 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.
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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 that 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.
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.
Matters Relating to Insolvency
The seller intends that each transfer of securities to the related trust
constitutes a sale, rather than a pledge of the contracts to secure
indebtedness of the seller. However, if the seller were to become a debtor
under the federal bankruptcy code, it is possible that a creditor or trustee
in bankruptcy of the seller or the seller as debtor-in-possession may argue
that the sale of the contracts by the seller 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
securities.
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 the seller'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,
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the Fair Debt Collection Practices Act and the Uniform Consumer Credit Code.
In the case of some of these laws, the failure to comply with their provisions
may affect the enforceability of the related contract or create liability for
the trust.
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 securities. The
seller 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 sale
or transfer to which the seller has not consented. If so specified in the
related prospectus supplement, the seller will be required under the related
agreement for a series of securities 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 related
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 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
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which is secured by a first lien on certain kinds of manufactured housing. The
contracts related to any series of securities 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. The seller will represent, in the agreement for a series of
securities, 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 securities 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 or
manufactured housing contract-backed notes address the likelihood of the
receipt by securityholders 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 securities;
. the extent to which the payment stream on such underlying assets is
adequate to make payments required by such securities; and
. the credit quality of the credit facility provider or guarantor, if any.
Ratings on the securities 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
securities may be adversely affected as a result of such prepayments.
As a result, investors of any series of securities might suffer a lower than
anticipated yield.
A rating on any or all of the securities of any series by certain other
rating agencies, if assigned at all, may be lower than the rating or ratings
assigned to the securities by the rating agency or 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 issuer or seller, as applicable, may sell securities 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 securities
directly to other purchasers or through agents. The issuer or seller, as
applicable, intends that securities 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 securities may
be made through a combination of methods.
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The distribution of the securities 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
securities, the issuer, the seller, or any affiliate of either of them, may
purchase some or all of one or more classes of securities 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 securities so purchased
directly, through one or more underwriters to be designated at the time of the
offering of the securities 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 securities, underwriters may receive
compensation from the issuer or seller, as applicable, or from purchasers of
securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell the securities 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 securities 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 securities by them
may be deemed to be underwriting discounts and commissions, under the
Securities Act of 1933, as amended. 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 the seller, underwriters and
agents who participate in the distribution of the securities may be entitled
to indemnification by the seller against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The underwriters may, from time to time, buy and sell securities, 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.
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 securities will be
used by the seller, for general corporate purposes, including the payment of
expenses in connection with pooling the contracts and issuing the securities.
Legal Matters
Certain legal matters relating to the securities, including legal matters
relating to material federal income tax consequences concerning the
securities, will be passed upon for GreenPoint Credit and GreenPoint Asset by
Orrick, Herrington & Sutcliffe LLP, Los Angeles, California.
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Glossary
Below are abbreviated definitions of significant capitalized terms used in
this prospectus. The agreement for the related series may contain more
complete definitions of the terms used herein and reference should be made to
the agreement for the related series for a more complete understanding of all
such terms.
"Annual Servicing Rate" means 1.00% per annum or such other amount pursuant
to the related servicing agreement.
"Available Distribution Amount" means, with respect to each distribution
date, the amount available for distribution to the securityholders as
described in the related prospectus supplement.
"Bulk Sellers" means lenders or finance companies with whom GreenPoint
Credit may have or may establish referral arrangements, governmental agencies
or instrumentalities or the portfolios of other entities that purchase and
hold manufactured housing contracts
"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.
"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 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 Securities" means securities that are issued in registered form.
"Determination Date" means the third business day prior to the distribution
date specified in the related agreement.
"Eligible Institution" means a depository institution acceptable to the
applicable rating agency.
"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 securities for the related
series and, if so specified in the related prospectus supplement and if
GreenPoint Credit is acting as servicer, the Monthly Servicing Fee.
"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 security, the product of:
. the Percentage Interest evidenced by such security; and
. the amount derived from dividing the security balance of the class
represented by such security by the aggregate security balance of each
class.
"Global Security" means one or more global securities that are initially
registered in the name of Cede & Co., as nominee of DTC, on behalf of the
beneficial owners of the securities.
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"GreenPoint Asset" means GreenPoint Asset LLC its successors and assigns.
"GreenPoint Credit" 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.
"Land Home Contract" or "Land-in-Lieu 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 Contracts and Land Home Contracts will have
financed the purchase of the related manufactured home together with the real
estate on which the manufactured home is located.
"Minimum Termination Amount" means, for each outstanding class, an amount
equal to the aggregate security balance for each outstanding class together
with any shortfall in interest due to such securityholders in respect of prior
distribution dates and one month's interest on the aggregate security balance
for each outstanding class at the respective Security Rates for each
respective class and any other amounts specified in the related prospectus
supplement.
"Monthly Servicing Fee" means, as of any distribution date, an amount equal
to the product of (1) one-twelfth of the Annual Servicing Rate and (2) the
aggregate Scheduled Principal Balances of the contracts in the related
contract pool for that distribution date.
"Note Rate" means the rate of interest payable on each note as described in
the applicable prospectus supplement.
"OID Regulations" means Sections 1271-1273 and 1275 of the Code and in the
Treasury Regulations issued thereunder.
"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
as described in the applicable prospectus supplement.
"Payment 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 securities.
"Percentage Interest" means, as to any security of any class other than a
residual interest, the percentage interest evidenced thereby in distributions
required to be made on the securities of such class, such percentage interest
being equal to the percentage, for the residual interests, the percentage set
forth on the face thereof, and for all other securities, to be obtained by
dividing:
. the original denomination of such security, by
. the aggregate of the original denominations of all of the securities of
such class.
"Pool Principal Balance" means, with respect to any distribution date and a
series, the aggregate principal balances of the contracts relating to that
series.
"Pool Scheduled Principal Balance" means, with respect to any distribution
date and a series, an amount that is equal to the Cut-off Date Pool Principal
Balance of that series , less the aggregate of the Total Regular Principal
Amounts for that series for all prior distribution dates.
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"Rate Period" means the time period between Security Rate adjustments.
"Regular Certificates" means the certificates of any series identified in
the related prospectus supplement as "regular interests" in the related REMIC.
"REMIC" means a "real estate mortgage investment conduit" within the meaning
of Section 860D(a) of the Code.
"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 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.
"REMIC Provisions" means Sections 860A through 860G of the Code.
"Reserve Regulations" means the REMIC Provisions and the Treasury
regulations issued thereunder.
"Residual Certificates" means the certificates of any series identified in
the related prospectus supplement as "residual interests" in the related
REMIC.
"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.
"Security Balance" means, for any class of securities as of any distribution
date, the initial Security Balance of that class less all amounts previously
distributed to securityholders of that class on account of principal.
"Security Rate" means the Note Rate or Pass-Through Rate, as applicable.
"Startup Day" means the close of business of the third month beginning after
the day on which a REMIC issues all of its regular and residual interests.
"Step-Up Rate Contracts" means actuarial or simple interest contracts
bearing a contract interest rate that is fixed or variable and increases in
specified increments on particular dates.
"Termination Auction" the purchase at an auction of the contracts remaining
in the trust 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.
"WAC" means the weighted average contract interest rate of a particular
contract pool as of the first day of the month of the sale of the contract
pool.
"WAM" means the weighted average remaining term to maturity of the contracts
in a particular contract pool as of the first day of the month of the sale of
the contract pool.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration fee............................................ $1,048,314.83
Printing and engraving costs................................ $ 350,000.00
Legal fees and expenses..................................... $ 700,000.00
Accounting fees and expenses................................ $ 420,000.00
Trustee's fees and expenses................................. $ 70,000.00
Blue Sky Qualification Fees and Expenses (including
Counsel Fees)............................................. $ 20,000.00
Rating Agency Fees.......................................... $1,400,000.00
Total....................................................... $4,008,314.83
__________
Item 15. Indemnification of Directors and Officers.
Section 18-108 of the Limited Liability Company Act of the State of
Delaware, as amended, under which GreenPoint Credit, LLC is formed, empowers a
limited liability company to indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever.
1. GreenPoint Credit, LLC. Article IX of GreenPoint Credit, LLC's
----------------------
Limited Liability Company Agreement provides as follows:
Indemnification.
---------------
9.1 The Company shall indemnify and hold harmless any person (an
"indemnitee") who is made, or threatened to be made, a party to or is otherwise
involved in any action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he or his testator
or intestate is or was a manager or officer of the Company or serves or served,
in any capacity, any other enterprise (including, without limitation, service
with respect to an employee benefit plan) at the request of the Company (whether
the basis of such action, suit or proceeding is alleged action in an official
capacity as a director, officer, manager, employee or agent or in any other
capacity) against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amount paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith;
provided, however, that, except as provided below with respect to actions, suits
or proceedings to enforce rights to indemnification, the Company shall indemnify
any such indemnitee in connection with an action, suit or proceeding (or part
thereof) initiated by such person only if such action, suit or proceeding (or
part thereof) was authorized by the Management Committee. The right to
indemnification conferred in this Section 9 shall include the right to be paid
by the Company the
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expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted by law. The rights to
indemnification and to the advancement of expenses conferred by this Section 9
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a manager or officer, and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
9.2 If a claim under this Section 9 is not paid in full by the
corporation within sixty (60) days after a written claim has been received by
the Company, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty (20) days, the indemnitee may
at any time thereafter bring suit against the Company to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, the
indemnitee shall be entitled to be paid also the expenses of prosecuting or
defending such suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Section 9 or otherwise, shall be on the
Company.
9.3 The rights to indemnification and to the advancement of expenses
conferred in this Section 9 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Certificate of
Formation, this Agreement, a vote of the members or managers, or otherwise.
9.4 The Company may, to the extent authorized from time to time by
the Management Committee, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Company to the fullest extent of the
provisions of this Section 9 with respect to the indemnification and advancement
of expenses of managers and officers of the Company.
In addition, the agreement for each series of securities will provide
that no manager, officer, employee or agent of GreenPoint Credit, LLC is liable
to any holder of securities or to the related trustee on behalf of the holders
of such securities, or to any other person, except on account of such manager's,
officer's, employee's or agent's own willful misfeasance, bad faith, gross
negligence or reckless disregard of duty. The agreement for each series of
securities will further provide that, with the exceptions stated above, a
manager, officer, employee or agent of GreenPoint Credit, LLC is entitled to be
indemnified by the related trust against all liability in connection with the
contract pool evidenced by that series.
2. GreenPoint Asset LLC. Section 20 of GreenPoint Asset LLC's
--------------------
Limited Liability Company Agreement provides as follows:
Exculpation and Indemnification.
-------------------------------
(a) None of the Member, the Special Members or any Officer, Director,
employee or agent of the Company nor any employee, representative, agent or
Affiliate of the Member or Special Members (collectively, the "Covered Persons")
------- -------
shall be liable to the Company or any other Person who has an interest in or
claim against the Company for any loss, damage or claim incurred by reason of
any act or omission performed or omitted by such Covered Person in good faith on
behalf of the Company and in a manner reasonably believed to be within the scope
of the
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authority conferred on such Covered Person by this Agreement, except that a
Covered Person shall be liable for any such loss, damage or claim incurred by
reason of such Covered Person's gross negligence or willful misconduct.
(b) To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss, damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the Company and in
a manner reasonably believed to be within the scope of the authority conferred
on such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person's gross negligence or
willful misconduct with respect to such acts or omissions; provided, however,
-------- -------
that any indemnity under this Section 20 by the Company shall be provided out of
----------
and to the extent of Company assets only, and the Member and the Special Members
shall not have personal liability on account thereof; and provided further, that
-------- -------
so long as any Obligation is outstanding, no indemnity payment from funds of the
Company (as distinct from funds from other sources, such as insurance) of any
indemnity under this Section 20 shall be payable from amounts allocable to any
----------
other Person pursuant to the Basic Documents or from amounts subject to any lien
securing the Company's Obligations under the Basic Documents.
(c) To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by a Covered Person defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized in this Section 20.
----------
(d) A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, or any other facts pertinent to the
existence and amount of assets from which distributions to the Member might
properly be paid.
(e) To the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to the Company or
to any other Covered Person, a Covered Person acting under this Agreement shall
not be liable to the Company or to any other Covered Person for its good faith
reliance on the provisions of this Agreement or any approval or authorization
granted by the Company or any other Covered Person. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the Member
and the Special Members to replace such other duties and liabilities of such
Covered Person.
(f) The foregoing provisions of this Section 20 shall survive any
----------
termination of this Agreement.
II-3
<PAGE>
In addition, the agreement for each series of securities will provide
that no director, manager, officer, employee or agent of GreenPoint Asset LLC is
liable to any holder of securities or to the related trustee on behalf of the
holders of such securities, or to any other person, except on account of such
director's, manager's, officer's, employee's or agent's own willful misfeasance,
bad faith, gross negligence or reckless disregard of duty. The agreement for
each series of securities will further provide that, with the exceptions stated
above, a director, manager, officer, employee or agent of GreenPoint Asset LLC
is entitled to be indemnified by the related trust against all liability in
connection with the contract pool evidenced by that series.
Item 16. Exhibits.
Exhibit Description of Exhibit
----------------- ------------------------------------------------------------
1.1 Form of Certificate Underwriting Agreement. (Incorporated by
reference to exhibit 1.1 of registration statement no. 333-
59731)
1.2* Form of Note Underwriting Agreement.
2.1 Certificate of Merger of GreenPoint Credit Corp. into
GreenPoint Credit, LLC. (Incorporated by reference to
exhibit 2.1 of registration statement no. 333-80437)
2.2 Agreement of Merger of GreenPoint Credit Corp. into
GreenPoint Credit, LLC. (Incorporated by reference to
exhibit 2.2 of registration statement no. 333-80437)
3.1 Certificate of Formation of GreenPoint Asset LLC.
3.2 Certificate of Formation of GreenPoint Credit, LLC.
(Incorporated by reference to exhibit 3.5 of registration
statement no. 333-80437)
3.3 Limited Liability Company Agreement of GreenPoint Asset LLC.
3.4 Limited Liability Company Agreement of GreenPoint Credit,
LLC. (Incorporated by reference to exhibit 3.6 of
registration statement no. 333-80437)
4.1 Form of Pooling and Servicing Agreement. (Incorporated by
reference to exhibit 4.1 of registration statement no. 333-
59731)
4.2* Form of Indenture.
4.3* Form of Trust Agreement.
4.4* Form of Sale and Servicing Agreement.
5.1* Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to legality.
8.1* Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to tax matters.
12.1 Not Applicable.
15.1 Not Applicable.
23.1* Consent of Orrick, Herrington & Sutcliffe LLP (included in
Exhibit 8.1 hereto).
24.1 Powers of Attorney (included on the signature page hereto).
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
* Filed on September 19, 2000 with the initial filing of this Registration
Statement.
II-4
<PAGE>
Item 17. Undertakings.
In accordance with Item 512 of Regulation S-K under the Securities Act
of 1933, as amended (the "Securities Act"), each of the undersigned registrants
hereby undertakes:
To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement. Provided, however, that
paragraphs (1)(i) and (1)(ii) of this section do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrants pursuant to the foregoing provisions, the
registrants are aware that such indemnification
II-5
<PAGE>
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by either of the registrants of
expenses incurred or paid by a director, officer or controlling person of
either of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered. Each registrant, as
applicable, will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of section 310 of
the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(2) of the
Act.
II-6
<PAGE>
GREENPOINT CREDIT, LLC
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Charles P. Richardson, Michael F.
Najewicz and Howard C. Bluver, or any of them, his true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him and
his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, or their or his substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Peter Paul President (Principal Executive October 12, 2000
--------------------------
Peter Paul Officer) and Manager
/s/ John S. Buchanan Senior Vice President, October 12, 2000
--------------------------
John S. Buchanan Treasurer (Principal Financial
and Accounting Officer) and
Manager
/s/ Abdul H. Rajput Executive Vice President October 12, 2000
--------------------------
Abdul H. Rajput and Manager
/s/ Charles P. Richardson Executive Vice President October 12, 2000
--------------------------
Charles P. Richardson and Manager
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on October 12,
2000.
GREENPOINT CREDIT, LLC
By: /s/ Peter Paul
---------------------
Peter Paul
President and Manager
II-7
<PAGE>
GREENPOINT ASSET LLC
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Charles P. Richardson, Michael F.
Najewicz and Howard C. Bluver, or any of them, his true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him and
his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, or their or his substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Peter Paul President (Principal Executive October 12, 2000
--------------------------
Peter Paul Officer) and Director
/s/ Charles P. Richardson Treasurer (Principal Financial October 12, 2000
--------------------------
Charles P. Richardson and Accounting Officer),
Secretary and Director
/s/ Innis O'Rourke, Jr. Director October 19, 2000
--------------------------
Innis O'Rourke, Jr.
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on October 12,
2000.
GREENPOINT ASSET LLC
By: /s/ Peter Paul
----------------------
Peter Paul
President and Director
II-8
<PAGE>
Exhibit Index
-------------
Exhibit Description of Exhibit
----------- -----------------------------------------------------------------
1.1 Form of Certificate Underwriting Agreement. (Incorporated by
reference to exhibit 1.1 of registration statement no. 333-59731)
1.2* Form of Note Underwriting Agreement.
2.1 Certificate of Merger of GreenPoint Credit Corp. into GreenPoint
Credit, LLC. (Incorporated by reference to exhibit 2.1 of
registration statement no. 333-80437)
2.2 Agreement of Merger of GreenPoint Credit Corp. into GreenPoint
Credit, LLC. (Incorporated by reference to exhibit 2.2 of
registration statement no. 333-80437)
3.1 Certificate of Formation of GreenPoint Asset LLC.
3.2 Certificate of Formation of GreenPoint Credit, LLC. (Incorporated
by reference to exhibit 3.5 of registration statement no. 333-
80437)
3.3 Limited Liability Company Agreement of GreenPoint Asset LLC.
3.4 Limited Liability Company Agreement of GreenPoint Credit, LLC.
(Incorporated by reference to exhibit 3.6 of registration
statement no. 333-80437)
4.1 Form of Pooling and Servicing Agreement. (Incorporated by
reference to exhibit 4.1 of registration statement no. 333-59731)
4.2* Form of Indenture.
4.3* Form of Trust Agreement.
4.4* Form of Sale and Servicing Agreement.
5.1* Opinion of Orrick, Herrington & Sutcliffe LLP with respect to
legality.
8.1* Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax
matters.
12.1 Not Applicable.
15.1 Not Applicable.
23.1* Consent of Orrick, Herrington & Sutcliffe LLP (included in
Exhibit 8.1 hereto).
24.1 Powers of Attorney (included on the signature page hereto).
25.1 Not Applicable.
26.1 Not Applicable.
27.1 Not Applicable.
99.1 Not Applicable.
* Filed on September 19, 2000 with the initial filing of this Registration
Statement.
<PAGE>
Information contained in this prospectus supplement is subject to completion or
amendment. A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the accompanying prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to Completion, Dated [_____], 200[_]
[Form of Certificate] Prospectus Supplement
To Prospectus Dated [ ]
$[AMOUNT]
(Approximate)
[GREENPOINT CREDIT, LLC LOGO],
Seller and Servicer
Manufactured Housing Contract Trust Pass-Through Certificates, Series [ ],
Issuer
Consider carefully the risk factors beginning on page S-[ ] in this prospectus
supplement and at page [ ] in the accompanying prospectus.
A certificate will not represent an interest in or an obligation of GreenPoint
Credit, LLC or any of its affiliates.
This prospectus supplement may be used to offer and sell a series of
certificates only if accompanied by the prospectus.
The securities issuer is offering the following [] classes of certificates:
Underwriting
Principal Pass-Through Price to Discounts and Proceeds
Class Balance Rate Public Commissions to Seller
----------------------------------------------------------------------------
[A-1 $[ ] LIBOR+[]% ]
[A-2 $[ ] [ ]% ]
[A-3 $[ ] AUCTION ]
[A-IO $[ ] [ ]% ]
[M $[ ] [ ]% ]
[B-1 $[ ] [ ]% ]
. [The pass-through rates on the Class A-1, A-3, M and B-1 certificates are
capped at the weighted average of the net contract rates of the contracts.]
. [For risks associated with interest only securities, including loss of your
entire investment, see "Risk Factors--Interest-Only Certificates" in this
prospectus supplement.]
[The required monthly payments of interest and scheduled principal are
unconditionally guaranteed to the holders of all classes of offered
certificates by [INSURER]. See "[INSURER]" and "Description of the
Certificates-Certificate Guaranty Insurance Policy" in this prospectus
supplement.]
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.
<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 to 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 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.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page S-
<S> <C>
Summary Information.................................................. 3
Risk Factors......................................................... 10
The Contract Pool.................................................... 16
The Seller........................................................... 23
GreenPoint Credit, LLC's Management's Discussion and Analysis of
Delinquency, Repossession and Loan Loss Experience.................. 24
Prepayment And Yield Considerations.................................. 26
Weighted Average Life of the Offered Certificates.................... 30
[Sensitivity Of The Class A-IO Certificates]......................... 34
[Pre-Tax Yields on the Class A-IO Certificates]...................... 35
Description Of The Certificates...................................... 36
General.............................................................. 36
Pass-Through Rates................................................... 37
Conveyance of Contracts.............................................. 38
[Conveyance of [subsequent contracts and] [pre-funding account]...... 42
Payments on the Contracts; Payment Account........................... 44
Distributions........................................................ 46
[Reserve Account].................................................... 47
Subordination........................................................ 48
Losses on liquidated contracts....................................... 48
Example of Distributions............................................. 49
Advances............................................................. 50
Reports to Certificateholders........................................ 52
Optional Termination and Termination Auction......................... 53
Termination of the Pooling and Servicing Agreement................... 54
Collection and Other Servicing Procedures............................ 55
Servicing Compensation; Certain Other Matters Regarding
the servicer........................................................ 55
The Trustee.......................................................... 55
[Registration of the Offered Certificates............................ 56
[Formation of the Grantor Trust and Grantor Trust Property].......... 61
[Assignment of class [A-2 fixed] certificates]....................... 62
[Servicing].......................................................... 62
[Removal and Designation of Servicer]................................ 63
[The Grantor Trustee]................................................ 63
[Reporting Requirements]............................................. 63
[Termination of the Trust]........................................... 64
Calculation of LIBOR................................................. 64
Federal Income Tax Consequences...................................... 65
[Grantor Trust]...................................................... 67
ERISA Considerations................................................. 69
General.............................................................. 69
Senior Certificates.................................................. 69
[The class [A-2 floating] certificates].............................. 72
Class M and Class B-1 Certificates................................... 73
Fiduciary Review..................................................... 73
Ratings.............................................................. 74
Legal Investment..................................................... 75
Method Of Distribution............................................... 75
Use Of Proceeds...................................................... 76
Legal Matters........................................................ 76
Global Clearance, Settlement And Tax Documentation Procedures........ I-1
</TABLE>
S-2
<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.
Capitalized terms used in this prospectus supplement and not otherwise defined
in this prospectus supplement have the meanings assigned in the prospectus.
What The Offered Certificates Represent
The offered certificates represent ownership of a portion of a trust. The trust
contains a contract pool, which consists of [two groups of] manufactured housing
installment sales contracts, installment loan agreements and certain other
assets, as described under "Description of the Certificates--General" in this
prospectus supplement.
The offered certificates only represent interests in the assets of the trust.
All payments to certificateholders will come only from the amounts received in
connection with those assets.
Information About The Contract Pool
The contract pool consists of approximately [ ] contracts with an aggregate
scheduled principal balance as of [ ] of approximately $[ ]. Each contract was
either originated or purchased by GreenPoint Credit, LLC
[The contract pool consists of two contract groups. As of [ ]:
. contract group I consists of approximately [ ] fixed rate contracts with an
aggregate scheduled principal balance of approximately $[ ]; and
. contract group II consists of approximately [ ] adjustable rate contracts
with an aggregate scheduled principal balance of approximately $[ ].
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
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. The trust has
been created for the purpose of issuing the Manufactured Housing Contract Trust
Pass-Through Certificates, series 2000-[ ]. The approximate initial principal
balance, initial pass-through rate and last scheduled distribution date of each
class of the offered certificates will be as follows:
Last
Initial Initial Pass- Scheduled
Principal Through distribution
class Balance Rate date
A-1........ $ [ ] LIBOR+[]%
[A-2....... $ [ ] [ ]% ]
S-3
<PAGE>
[A-3....... $ [ ] [ ]% ]
[A-IO...... $ [ ] [ ]% ]
M.......... $ [ ] [ ]%
B-1........ $ [ ] [ ]%
_____________
. [The pass-through rate on the Class A-1, A-3, M and B-1 certificates are
capped at the weighted average net contract rates of the contracts.]
. [For risks associated with interest only securities, including loss of your
entire investment, see "Risk Factors--The Yield to Maturity of the
Interest-only Certificates Will Be Limited by the Repurchase, Prepayment
and Default Experience of the Underlying contracts" in this prospectus
supplement.]
[The trust will also issue one or more subordinate certificates. The subordinate
certificates will not be sold to the public. The subordinate certificates are
not being offered by this prospectus supplement, are subordinated to the offered
certificates and provide some limited credit support for the offered
certificates.]
The trust will also issue one or more Class R certificates. The Class R
certificates will not be sold to the public. The Class R certificates are not
being offered by this prospectus supplement, are subordinated to the offered
certificates and provide some limited credit support for the offered
certificates.
Denominations
The offered certificates [,other than the Class A-3 Certificates,] are offered
in minimum denominations of $1,000 each and multiples of $1 in excess thereof.
[The Class A-3 Certificates are offered in minimum denominations of $25,000 each
and integral multiples of $25,000 in excess thereof.]
[The Certificate Guaranty Insurance Policy and [insurer]]
[INSURER] will provide a certificate guaranty insurance policy to protect
certificateholders against certain losses. In most instances, as described in
more detail in this prospectus supplement, if funds in the [group I and group
II] certificate account[s, as applicable,] are insufficient to distribute
interest or scheduled principal to the certificateholders on any distribution
date, [INSURER] will make a payment into the [respective] certificate account to
cover the shortfall under a certificate guaranty insurance policy. See
"[INSURER]" and "Description of the Certificates--Certificate Guaranty Insurance
Policy" in this prospectus supplement.]
[Letter of Credit]
[[LETTER OF CREDIT PROVIDER] will provide a letter of credit to protect
certificateholders against certain losses. As described in more detail in this
prospectus supplement, if funds in the certificate account are insufficient to
distribute interest or scheduled principal to the certificateholders on any
distribution date, [LETTER OF CREDIT PROVIDER] may be required to make a payment
into the certificate account to cover the shortfall pursuant to a draw on the
letter of credit. See "The Letter of Credit Provider" and "Description of the
Certificates--The Letter of Credit" in this prospectus supplement.]
[swap Agreement
Pursuant to a swap agreement, on each payment date, the swap counterparty will
be entitled to receive from the grantor trust the distributions of interest on
the outstanding certificate principal balance of the Class A-2 fixed rate
S-4
<PAGE>
certificates immediately prior to the related payment date, which are calculated
at a fixed rate of [ ]% per annum. On each payment date, the swap counterparty
will be obligated to pay to the grantor trust an amount equal to one months'
interest at the Class A-2 floating pass-through rate on the outstanding
certificate principal balance of the Class A-2 floating certificates immediately
prior to the related payment date. The outstanding certificate principal balance
of the Class A-2 floating certificates will always equal the outstanding
certificate principal balance of the Class A-2 fixed certificates. The swap
counterparty is [ ].]
[Reserve Account
The trustee shall establish a reserve account for the benefit of the holders of
certificates. The reserve account will be funded as described under "Description
of the Certificates--Reserve Account" in this prospectus supplement.]
[pre-funding account
GreenPoint Credit, LLC will deposit an amount in the pre-funding account to
provide the trust with sufficient funds to purchase the subsequent contracts. In
no event will:
. the pre-funding account extend beyond 90 days past the date of initial
issuance of the certificates;
. amounts deposited into the pre-funding account be greater than 25% of the
balance of the certificates on the date of initial issuance of the
certificates; or
. amounts on deposit in the pre-funding account be held in anything other
than cash or invested in anything other than eligible investments as
defined under "Description of the Certificates--Payments on the Contracts;
Payment Account" in this prospectus supplement.
See "Prepayment and Yield Considerations" and "Description of the
Certificates--Conveyance of subsequent contracts and pre-funding account" in
this prospectus supplement.]
Distributions On The Certificates
General
Each month, the trustee, [TRUSTEE], will make distributions of interest and
principal to the holders of the certificates.
. The first distribution date with respect to the offered certificates
[,other than the Class A-3 Certificates,] will be [_____] 15, 200[_].
. Thereafter, distributions on the offered certificates [,other than the
Class A-3 Certificates,] will be made on the 15th day of each month, or if
the 15th day is not a business day, on the next business day.
. [The first distribution date with respect to the Class A-3 Certificates
will be [_____] 19, 200[_].
. Thereafter, distributions on the Class A-3 Certificates will be made on the
19th day of each month, or if the 19th day is not a business day, on the
next business day.]
The obligors under the contracts will pay their interest and principal during
each month to the servicer of the contracts.
S-5
<PAGE>
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, the trustee will distribute the amount remitted by the
servicer, less fees and expenses owed to the servicer, to the holders of the
certificates, 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
Certificates [,other than the Class A-1 and Class A-3 Certificates,]
--------------------------------------------------------------------
Interest Accrual. 1/12th of the related pass-through rate on the related
principal balance immediately prior to the related distribution date.
Interest period. For any distribution date, the calendar month preceding that
distribution date.
Class A-1 Certificates and Class A-3 Certificates
-------------------------------------------------
Interest Accrual. The product of:
. the actual number of days during the interest period divided by 360; and
. the applicable pass-through rate on the principal balance of the
certificate immediately prior to the related distribution date.
Interest Period. For any distribution date, 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" and "Risk
Factors--Due to the Delay in Payment of Fifteen Days, the Effective Yield on
Some classes of Certificates May Be Lower Than What Would Otherwise Be Produced
by the Applicable Pass-Through Rate of the Offered Certificates" in this
prospectus supplement.
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 the contracts to
cover interest owed on the certificates. If there are insufficient payments on
the contracts[, and there is a default by [INSURER] under the certificate
guaranty insurance policy,] the outstanding 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
"[INSURER]" and "Description of the Certificates"Certificate Guaranty Insurance
Policy" and "Description of the Certificates"Priority of Distributions" in this
prospectus supplement.
[LIBOR. The pass-through rate for the Class A-1 Certificates will be adjusted
each month, based on changes in LIBOR for one-month U.S. dollar deposits, as
described in "Description of the Certificates--Pass-Through Rates and Last
Scheduled distribution dates" in this prospectus supplement.]
[Auction Rate. The pass-through rate for the Class A-3 Certificates will be
adjusted each month, based on the auction procedures.]
S-6
<PAGE>
Distributions of Principal
General. Certificateholders will receive payments of principal corresponding to
payments of principal on the [related] contract[s] [group].
Certificates. On each distribution date, a certain portion of collections
received on the contracts will be distributed to the Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class M Certificates and Class
B-1 Certificates in the order and amounts 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 to
cover principal payable to you. If there is a shortfall in collections [for a
contract group] [and there is a default by [INSURER] under the certificate
guaranty insurance policy,] a holder of a certificate may not receive the full
amount of principal distributions to which it is otherwise entitled. See
"[INSURER]" and "Description of the Certificates--Certificate Guaranty Insurance
Policy" and "Description of the Certificates--Priority of Distributions" in this
prospectus supplement.
Allocation Of Losses
A contract suffers a loss when the servicer determines that:
. it has received all amounts it expects to recover from that contract; and
. amount of recovery is less than the sum of the outstanding principal
balance of the contract and the accrued and unpaid interest thereon.
[If there is a default by [INSURER] under the certificate guaranty insurance
policy, losses on the contracts in a contract group will only be allocated to
the certificates related to that contract group.]
In the event losses on the contracts would reduce the amount available for
distribution [and there is no payment under the certificate guaranty insurance
policy,] the certificates will receive only their respective percentage interest
of the proceeds from the liquidation of the contract rather than the scheduled
principal balance thereof. 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;
. the servicer receives no payment on a contract; and
. the servicer determines that the advances will be recoverable from future
payments or collections on that contract.
However, advances will not exceed the delinquent contract payments. See
"Description of the Certificates--Advances" in this prospectus supplement.
S-7
<PAGE>
Yield And Prepayment 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; and
. the rate of principal prepayments on the related contracts.
A higher than anticipated rate of principal prepayments 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 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 classes of certificates purchased
at a discount since payments of principal with respect to the contracts would
occur later than anticipated. For a discussion of special yield and prepayment
considerations applicable to the offered certificates, see "Risk Factors"The
Yield on Your 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, Cedelbank and the Euroclear System. See "Description of the
Certificates--Registration of the Certificates" in this prospectus supplement
and Annex I to this prospectus supplement. ]
Tax Status
For federal income tax purposes, GreenPoint Credit, LLC will cause an election
to be made to treat the trust as a "real estate mortgage investment 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 will
qualify as a "real estate mortgage investment conduit" for federal income tax
purposes and that for such purposes the offered certificates will constitute
"regular interests" in the "real estate mortgage investment conduit" and will be
treated as debt instruments of the trust 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. Assuming in each case that a substantial
amount of a class of certificates is sold at the price for the class of
certificates stated on the cover of this prospectus supplement, and subject to
the uncertainties concerning the determination of "original issue discount" for
variable rate certificates discussed in "Federal Income Tax Consequences--REMIC
Certificates--Taxation of regular certificates--Variable Rate Certificates" in
the prospectus, the offered certificates will not be issued with "original issue
discount."
S-8
<PAGE>
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 offered
certificates [,other than the Class M and Class B-1 Certificates,] will be
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts.
[The Class M and Class B-1 Certificates will not be eligible for purchase by
persons investing assets of employee benefit plans or individual retirement
accounts other than by persons investing general account assets of an insurance
company. See "ERISA Considerations--Class M and Class B-1 Certificates" in this
prospectus supplement.]
Ratings
The offered certificates are required to receive the ratings of "AAA" by
Standard & Poor"s Ratings Services and "Aaa" by Moody"s Investors Service, Inc.
The ratings do not address whether or not the Class A-1 Certificates or the
Class A-3 Certificates will receive any related net funds cap 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
As of the date of their issuance, all of the offered certificates will 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
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 offered General Risks Associated with Higher Than Expected Prepayments
certificates could be
limited by a higher than The offered certificates represent an interest in a trust
expected rate of containing manufactured housing contracts. As the obligors
prepayments on the make payments of interest and principal on the contracts,
contracts underlying the certificateholders will receive payments. Because the
offered certificates. obligors are free to make those payments faster than
scheduled, certificateholders may receive distributions of
principal faster than expected. Therefore, the certificates
may be paid in full earlier than the scheduled maturity of
the certificates. Interest on the certificates will no
longer be paid to certificateholders on any principal
distributions paid to the holders of certificates. 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;
-- Repurchases of variable rate contracts that have
been converted to a fixed interest rate;
-- Partial prepayments on any contract; and
-- Liquidation principal, which is the principal
recovered after foreclosing on or otherwise
liquidating a defaulted contract.
For a complete discussion on 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
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
expected. Offered certificates purchased at a premium may
receive a lower yield than you expected if the rate of
principal payments is faster than expected. See "Prepayment
and Yield Considerations" in this prospectus supplement.
Prepayments May Limit Pass-Through Rates Due to the Weighted
Average Cap on Pass-Through Rates
The pass-through rates for the offered certificates will not
exceed the weighted average of the net contract rates.
Disproportionate prepayments of contracts with net contract
rates that are higher than the initial pass-through rates
for any class of offered certificates will increase the
possibility that the pass-through rate for that class of
offered certificates will be adjusted to an amount lower
than the initial pass-through rate for that class of offered
certificates. There is no mechanism to compensate the
holders of the related classes of offered certificates for
any reduction other than the payment, if any, of the net
funds cap carryover amount. See "Description of the
Certificates--Priority of Distributions" in this prospectus
supplement.
Losses on the contracts [[INSURER] has insured the payments of principal and
may reduce the yield on interest on all classes of offered certificates. However, if
the offered certificates. [INSURER] has defaulted under the certificate guaranty
insurance policy,] the yield to maturity on the offered
certificates may be reduced by losses on the contracts. See
"Prepayment and Yield Considerations," ["[INSURER]" and
"Description of the Certificates--Certificate Guaranty
Insurance Policy"] in this prospectus supplement.]
[Due to the delay in Because the payment date on the certificates is the 15th day
payment on the offered of each month, the yield to each holder of a certificate,
certificates for will be lower than it would if the payment date was on the
[fifteen] days, the yield first day of the month. The reason for this is interest on
on some classes of the certificates will accrue from the first day of the month
certificates may be to the last day of the month, but the accrued interest will
lower. not be paid until the distribution made on the 15th day, or,
if the 15th day is not a business day, the next succeeding
business day, of the following month. In addition,
distributions of principal on any distribution date will
have the effect of reducing the outstanding principal
balance as of the open of business on the first day in the
month in which the related distribution occurs. Therefore,
interest on the certificates will accrue on a lower
outstanding balance beginning on the first day of the
related collection period, but the certificateholders will
not receive their distribution until the 15/th/ day of the
related collection period. See "Prepayment and Yield
Considerations" in this prospectus supplement.]
[The class [ ] The group II contracts are variable rate contracts. The
certificates and class group II contracts:
[ ] certificates may have a
lower yield if LIBOR is . provide for periodic adjustments to their interest
greater than the interest rates;
rate accruing on
. will not have their first interest adjustment date
until after the date
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
the contracts. indicated by the index under which the group II
contracts are adjusted;
. bear interest at a fixed rate set at the origination of
the group II contract until its first adjustment date;
and
. after the first adjustment dates, only adjust every 12
months thereafter.
However, the class II A-1 certificates adjust monthly based
on the LIBOR index. The LIBOR index:
. is a different index than the index with which the
group II contracts adjust; and
. may be higher or move differently than the index under
which the group II contracts are adjusted.
Because the pass-through rate on the class II A-1
certificates may be capped by the weighted average of the
interest 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 LIBOR index. Similarly, the class II A-
3 certificates are subject to adjustment monthly pursuant to
the auction procedures. Since the pass-through rate on the
class II A-3 certificates may be capped by the weighted
average of the interest rates on the contracts, the yield to
the class II A-3 certificates may be lower than a yield
based upon the auction procedures.]
[The class [ ] [The group I contracts accrue interest at a fixed rate. If
certificates may have a interest rates, including LIBOR, increase, the rate of
lower yield if LIBOR is interest on the group I contracts will not. As a result, the
greater than the interest pass-through rate on the class I A-1 certificates will be
rate accruing on the increasing, up to its cap, while greater than the interest
contracts.] rate contracts will not be increasing. Since the pass-
through rate on the class I A-1 certificates may be capped
by the weighted average of the interest rates on the
contracts, the yield to the class I A-1 certificates may be
lower than a yield based upon the LIBOR index.]
[There may not be [Although holders of the class I A-1 certificates, class II
sufficient funds to pay A-1 certificates and class II A-2 certificates will be
holders of offered entitled to any related interest shortfalls resulting from
certificates amounts in the weighted average caps on the contracts from and to the
respect of interest limited extent of funds available therefor as provided in
shortfalls resulting from this prospectus supplement, there can be no assurance that
the weighted average cap funds will be available or sufficient for payment of any
on the contracts.] interest shortfalls resulting from the weighted average cap
on the contracts. In addition, the certificate guaranty
insurance policy does not cover, and the ratings of the
class I A-1 certificates, class II A-1 certificates and
class II A-2 certificates do not address, the likelihood of
payment of any interest shortfalls resulting from the
weighted average cap on the contracts.]
</TABLE>
S-12
<PAGE>
[Some variable rate [Although all of the group II contracts are
contracts can convert to variable rate, the obligor on each of the group
fixed rates of interest II contracts can convert a variable rate to a
which may reduce the fixed rate as long as the obligor is current in
yield to holders of class payment on the obligor"s contract. If an obligor
[ ] and class [ ] converts a contract from a variable rate to a
certificates.] fixed rate, the holder of the Class R
certificates is obligated to purchase the
contract. The fixed rate may be lower than the
LIBOR index or the pass-through rate produced by
an auction. Since the pass-through rates on the
class II A-1 certificates and class II A-2
certificates may be capped by the weighted
average of the interest rates on the group II
contracts, 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 and class II A-2
certificates will be lower than the LIBOR index
or the rate produced by the auction procedures.]
[Upon the occurrence of [So long as [INSURER] is not in default in
events of default of the payment under the certificate guaranty insurance
servicer under the policy, upon the occurrence of an event of
pooling and servicing default of the servicer under the pooling and
agreement, [INSURER] will servicing agreement, neither the trustee nor the
have the sole right to certificateholders may exercise any remedies
exercise any remedies.] provided for in the pooling and servicing
agreement. [INSURER] will generally have the
right to control all remedies provided for in the
pooling and servicing agreement. See "[INSURER]"
and "Description of the Certificates"Certificate
Guaranty Insurance Policy" in this prospectus
supplement.]
Certificateholders must The trust will not have, nor is it permitted
rely on the limited assets or expected to have, any significant assets
of the trust only for limited assets of the trust only for or
payment on the offered sources of funds other than the contracts
certificates and will have and related assets, [two] certificate
no recourse against the payment on the offered certificates accounts
seller or the servicer if [and the certificate guaranty insurance
offered certificates incur policy]. Certificateholders must rely and
shortfalls and/or losses. will have no recourse against upon payments
on the contracts [and payments of claims
made under the certificate guaranty the
seller or the servicer if the insurance
policy] for payments on their certificates.
[Although the certificate guaranty offered
certificates incur insurance policy will be
available for the offered certificates to
cover shortfalls in shortfalls and/or
losses. distributions of interest and scheduled
principal due thereon, if [INSURER] defaults in
its obligations under the certificate guaranty
insurance policy, the trustee will depend solely
on current distributions on the contracts to make
payments on the offered certificates. See
"[INSURER]" and "Description of the
Certificates"Certificate Guaranty Insurance
Policy" in this prospectus supplement.]
The offered certificates will not represent
interests in or obligations of the seller or the
servicer. 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 underwriters or any of their
affiliates, GreenPoint Credit, LLC or any of its
affiliates. [Except for the certificate guaranty
insurance policy], collections on the contracts
will constitute the only source of funds for
payment on the offered certificates. Any
shortfalls in the collections on contracts will
be borne by the holders of the offered
certificates [,except to the extent of the
certificate
S-13
<PAGE>
guaranty insurance policy].
[Random lot procedures [Distributions of principal on the [AUCTION]
make timing and amount certificates will be made in round lots of and
of distributions on the amount of distributions on the $25,000 and
[AUCTION] certificates integral multiples thereof. Further, distributions
uncertain.] will be allocated to specific [AUCTION]
certificates in accordance with the then-
applicable established random lot procedures of
DTC, and the then-applicable established
procedures of its participating organizations and
indirect participating organizations, which may or
may not be by random lot. Investors may ask
participating organizations and indirect
participating organizations which allocation
procedures they use. On any distribution date on
which principal is to be distributed to the
[AUCTION] certificates, one or more holders of
[AUCTION] certificates may receive no
distributions of principal while other holders of
[AUCTION] certificates receive distributions. ]
[The class [B] [The class [B] certificates will not constitute
certificates will have "mortgage related securities" for purposes of
limited liquidity since SMMEA. Accordingly, many institutions with legal
they are not considered authority to invest in SMMEA securities will not
mortgage related be able to invest in the class [B] certificates.
securities.] This will reduce the amount of potential
purchasers of the class [B] certificates, thus
limiting the liquidity of the investment of the
holders of any class [B] certificates.]
[Shortfalls and/or losses [The rights of the holders of the class [M]
on the offered certificates certificates to receive distributions of available
will be borne first by the amounts in the trust will be subordinate, to the
class [M] and class [B] extent described in this prospectus supplement, to
certificates since they are the rights of the holders of the senior
subordinated in rights to certificates. certificates since they are
receive payments.] Consequently, if shortfalls and/or losses arise
with respect to the certificates, they will be
borne by the holders of the class [M] certificates
before they are borne by the payments.] holders of
senior certificates. The rights of the holders of
class [B] certificates to receive distributions of
available amounts in the trust will be
subordinate, to the extent described in this
prospectus supplement, to the rights of holders of
the class [M] certificates. Consequently, if
shortfalls and/or losses arise with respect to the
certificates, they will be borne by the holders of
the Class B certificates before they are borne by
the holders of Class M Certificates or the holders
of the senior certificates. See "Description of
the Certificates"Priority of Distributions" in
this prospectus supplement.]
S-14
<PAGE>
[The yield to maturity of [Because amounts distributable to the holders of
the interest-only interest-only certificates consist entirely only
certificates will be of interest, the yield to maturity of the
limited by the repurchase, interest-only extremely sensitive to the
prepayment and default repurchase, prepayment and default experience of
experience of the the contracts. Prospective investors should fully
underlying contracts.] consider the associated risks, including the risk
that investors may not fully recover their initial
investment. In addition, investors in the
interest-only certificates should be aware that
the [servicer/other party] may exercise a right to
repurchase all remaining contracts and other
property in the trust or direct the trustee to
conduct a termination auction for the sale of all
contracts then outstanding in the trust. The right
to repurchase or direct a termination auction will
arise after the first date that payments of
principal and/or interest are made when the
aggregate principal balance of the underlying
contracts is less than 10% of the original
scheduled principal balance. See "Prepayment and
Yield Considerations" in this prospectus
supplement.]
S-15
<PAGE>
The Contract Pool
Each contract was purchased or originated by GreenPoint Credit on an
individual basis in the ordinary course of its business. A description of the
general practices of GreenPoint Credit with respect to the origination or
purchase of manufactured housing contracts similar to the contracts contained in
the contract pool is set forth in the prospectus under "The Seller and Servicer
-- Loan Originations" and "The Seller and Servicer -- Underwriting Policies."
On the date of initial issuance of the offered certificates, the seller
will convey to the trust the contracts owned by it immediately prior to the
conveyance. GreenPoint Credit, as servicer, will obtain and maintain possession
of all contract documents.
[The pooling and servicing agreement provides that the additional contracts
will be purchased by the trust on the closing date and that the subsequent
contracts will be purchased by the trust no later than [ ]. Although the
additional contracts and subsequent contracts sold to the trust will have
characteristics that differ somewhat from the initial contracts described in
this prospectus supplement, GreenPoint Credit does not expect that the
characteristics of the additional contracts and subsequent contracts will vary
materially from the initial contracts since the additional contracts and
subsequent contracts will conform to the representations and warranties set
forth in the applicable pooling and servicing agreement as they relate to
additional contracts and subsequent contracts. See "Description of the
Certificates -- Conveyance of subsequent contracts and pre-funding account" in
this prospectus supplement.]
No manufactured housing installment sales contract or installment loan
agreement will be in excess of 100% of the value of the manufactured home. See
"The Contract Pool" in the prospectus.
The contracts are all [fixed rate, actuarial contracts]. [Some of the
contracts in the contract pool are secured by a lien on real estate.] [None of
the contracts:
. were purchased in bulk from an unrelated third party;
. are insured in whole or in part or guaranteed in whole or in part, as
applicable, by the Veterans Administration, the Federal Housing
Administration or by any other governmental entity or instrumentality;
. are amortized using the "simple interest" amortization method; or
. have a variable contract rate or a contract rate which steps up on
particular dates.]
Management of GreenPoint Credit estimates that in excess of [ ]% of the
manufactured homes are used as primary residences by the obligors under the
contracts secured by those manufactured homes.
As of the Cut-off Date, the contract rates on the contracts ranged from[ ]%
to [ ]%. The weighted average contract rate of the contracts as of the Cut-off
Date was
S-16
<PAGE>
approximately [ ]%. As of the Cut-off Date, the contracts had remaining
scheduled maturities of at least [ ] months but not more than [ ]months, and
original scheduled maturities of at least [ ] months but not more than [ ]
months. As of the Cut-off Date, the contracts had a weighted average remaining
term to maturity of approximately [ ] months, and a weighted average original
term to scheduled maturity of approximately [ ] months. The average outstanding
principal balance of the contracts as of the Cut-off Date was approximately $[ ]
and the outstanding principal balances of the contracts as of the Cut-off Date
ranged from approximately $[ ] to $[ ]. The weighted average loan-to-value ratio
for the contracts at origination was approximately [ ]% and the loan-to-value
ratio of the contracts at origination ranged from [ ]% to [ ]%. The underwriting
practices of GreenPoint Credit regarding loan-to-value ratios of contracts it
originates or purchases are set forth in the prospectus under "The Seller and
Servicer -- Loan Originations" and "The Seller and Servicer -- Underwriting
Policies." Manufactured homes, unlike site-built homes, generally depreciate in
value, and GreenPoint Credit 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.
In addition, the percentage recovery of principal on liquidation of manufactured
housing contracts historically has been adversely affected by 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.
The contracts are secured by manufactured homes located in [ ] states and
the District of Columbia; approximately [ ]% of the contracts by outstanding
principal balance as of the Cut-off Date were secured by manufactured homes
located in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [
]and [ ]% in [ ]. No other state represented more than 5%, by outstanding
principal balance as of the Cut-off Date, of the contracts.
Approximately [ ]% of the contracts by outstanding principal balance as of
the Cut-off Date are secured by manufactured homes which were new at the time
the related contracts were originated, and approximately [ ]% of the contracts
by outstanding principal balance as of the Cut-off Date are secured by
manufactured homes which were used at the time the related contracts were
originated.
Approximately [ ]%, by principal balance, of the contracts are Land Home
contracts or Land-in-Lieu contracts. The Land Home contracts or Land-in-Lieu
contracts will be secured by either first mortgages or deeds of trust on the
real estate on which the 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 or Land-in-Lieu
contracts" in the prospectus.
The charge-off policy with respect to any particular manufactured housing
installment sales contract or installment loan agreement is determined by
GreenPoint Credit on a case by case basis.
Set forth below are tables containing certain additional characteristics of
the contracts. Entries in the tables may not add to 100% due to rounding.
S-17
<PAGE>
Geographical Distribution of Manufactured Homes as of Origination
Aggregate
Principal
Number of Balance % of contract pool By
contracts Outstanding Outstanding Principal
As of As of Balance As of
State Cut-off Date Cut-off Date Cut-off Date
----------------------- -------------- -------------- ----------------------
Alabama................
Arizona................
Arkansas...............
California.............
Colorado...............
Connecticut............
Delaware...............
District of Columbia...
Florida................
Georgia................
Idaho..................
Illinois...............
Indiana................
Iowa...................
Kansas.................
Kentucky...............
Louisiana..............
Maine..................
Maryland...............
Massachusetts..........
Michigan...............
Minnesota..............
Mississippi............
Missouri...............
Montana................
Nebraska...............
Nevada.................
New Hampshire..........
New Jersey.............
New Mexico.............
New York...............
North Carolina.........
North Dakota...........
Ohio...................
Oklahoma...............
Oregon.................
Pennsylvania...........
South Carolina.........
South Dakota...........
Tennessee..............
Texas..................
Utah...................
Vermont................
Virginia...............
Washington.............
West Virginia..........
Wisconsin..............
Wyoming................
Total...............
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<PAGE>
Years of Origination of contracts
Aggregate % of contract pool By
Number of Principal Balance Outstanding Principal
contracts As Outstanding As of Balance As of Cut-off
Year of Origination of Cut-off Date Cut-off Date Date
-------------------- ----------------- ----------------- ----------------------
2000..............
Total...........
Distribution of Original Principal Balances of contracts
<TABLE>
<CAPTION>
% of contract pool By
Aggregate Principal Outstanding Principal
Number of contracts Balance Outstanding Balance As of Cut-off
Original contract Amount As of Cut-off Date As of Cut-off Date Date
------------------------------ ------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
$0 - 5,000.........
$5,001 - 7,500.........
$7,501 - 10,000.........
$10,001 - 12,500.........
$12,501 - 15,000.........
$15,001 - 17,500.........
$17,501 - 20,000.........
$20,001 - 22,500.........
$22,501 - 25,000.........
$25,001 - 27,500.........
$27,501 - 30,000.........
$30,001 - 32,500.........
$32,501 - 35,000.........
$35,001 - 40,000.........
$40,001 - 45,000.........
$45,001 - 50,000.........
$50,001 - 55,000.........
$55,001 - 60,000.........
$60,001 - 65,000.........
$65,001 - 70,000.........
$70,001 - 75,000.........
$75,001 - 80,000.........
Total.................
</TABLE>
. The greatest original contract principal balance is $[ ], which represents
[ ]% of the outstanding principal balance of the contracts as of the Cut-
off Date.
S-19
<PAGE>
Distribution of Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
% of contract pool By
Aggregate Principal Outstanding Principal
Number of contracts As Balance Outstanding As Balance As of Cut-off
Loan-to-Value Ratio of Cut-off Date of Cut-off Date Date
------------------- --------------- --------------- ----
<S> <C> <C> <C>
Less than or equal to 50%.......
51-60%..........................
61-70%..........................
71-80%..........................
81-85%..........................
86-90%..........................
91-95%..........................
Total........................
</TABLE>
Distribution of contract rates
<TABLE>
<CAPTION>
% of contract pool By
Aggregate Principal Outstanding Principal
Number of contracts As Balance Outstanding As Balance As of Cut-off
Ranges of contracts by contract rate of Cut-off Date of Cut-off Date Date
------------------------------------ --------------- --------------- ----
<S> <C> <C> <C>
10.25-10.49%...................
10.50-10.74%...................
10.75-10.99%...................
11.00-11.24%...................
11.25-11.49%...................
11.50-11.74%...................
11.75-11.99%...................
12.00-12.24%...................
12.25-12.49%...................
Total.......................
</TABLE>
S-20
<PAGE>
Remaining Months to Maturity
<TABLE>
<CAPTION>
Aggregate % of contract pool
Principal Balance By Outstanding
Number of contracts Outstanding As of Principal Balance
Months Remaining as of Cut-off Date As of Cut-off Date Cut-off Date As of Cut-off Date
----------------------------------- ------------------ ------------ ------------------
<S> <C> <C> <C>
Greater than 15 and less than or equal to 30.....
Greater than 31 and less than or equal to 60.....
Greater than 61 and less than or equal to 90.....
Greater than 91 and less than or equal to 120....
Greater than 121 and less than or equal to 150...
Greater than 151 and less than or equal to 180...
Greater than 181 and less than or equal to 210...
Greater than 211 and less than or equal to 240...
Greater than 241 and less than or equal to 300...
Greater than 301 and less than or equal to 360...
Total.........................................
</TABLE>
S-21
<PAGE>
The Seller and Servicer
The following information supplements the information in the
prospectus under the heading "The Seller and Servicer and Servicer."
The volume of manufactured housing contracts originated by GreenPoint
Credit, or purchased from dealers on an individual basis by GreenPoint Credit,
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>
[ ] ended
[ ], 200[ ]
-----------
<S> <C>
Principal Balance of Contracts Purchased............................... $ [ .]
Number of Contracts Purchased.......................................... [ .]
Average Contract Size.................................................. $ [ .]
Weighted Average Contract Rate......................................... [ .]%
Number of Regional Offices............................................. [ .]
</TABLE>
[The above table includes only contracts originated by GreenPoint
Credit or purchased from dealers and does not include any portfolios acquired in
bulk from third parties. 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 Credit, through the manufactured housing regional office system, as
of the dates indicated:
Size of Serviced Portfolio
(Dollars in Thousands)
<TABLE>
<CAPTION>
[ ] ended
[ ], 200[ ]
-----------
<S> <C>
Unpaid Principal Balance of Contracts Being Serviced................... $ _____
Average Contract Unpaid Principal Balance.............................. $ _____
Number of Contracts Being Serviced _____
</TABLE>
S-22
<PAGE>
[Under certain limited circumstances, as set forth in the pooling and
servicing agreement, the servicer may make a one-time modification to the
contract rate with respect to any contract by an amount equal to the lesser of
(i) 5% of contract rate of the related contract and (ii) 0.50%.]
GreenPoint Credit Management"s Discussion and Analysis of Delinquency,
Repossession and Loan Loss Experience
[Management of GreenPoint Credit has not observed any material
economic development in the general business environment of the county or in
local areas where GreenPoint Credit originates its manufactured housing
contracts which has unfavorably affected portfolio performance in relation to
delinquencies, repossessions and loan losses during this period. 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.]
S-23
<PAGE>
Prepayment And Yield Considerations
The general prepayment and yield considerations discussed in the
prospectus under "Prepayment and Yield Considerations" should be read carefully
in connection with a decision to invest in any of the offered certificates. The
following discussion supplements, and does not replace or supersede the
discussion under "Prepayment and Yield Considerations" in the prospectus, unless
the context expressly so provides.
The contracts had maturities at origination ranging from [ ] months to
[ ] months, but 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
offered certificates. GreenPoint Credit does not maintain statistics with
respect to the rate of prepayment of manufactured housing contracts in its
servicing portfolio [, except for contracts in certain pools of securitized
manufactured housing contracts that its is servicing for others for which at
least [ ] months of prepayment information is available, as described in this
prospectus supplement]. Any pool of contracts, including the 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
in this prospectus supplement. As a result, the prepayment experience of the
contracts contained in any contract pool, including the contract pool, might be
faster or slower than the prepayment experience of the contracts reflected in
the historical data. In addition, although management of GreenPoint Credit is
aware of limited publicly available information relating to historical rates of
prepayment on manufactured housing contracts, management of GreenPoint Credit
believes that the limited publicly available information is not necessarily
indicative of the rate of prepayment that may be expected to be exhibited by the
contracts. Nevertheless, management of GreenPoint Credit anticipates that a
number of contracts will be prepaid in full in each year during which the
offered certificates are outstanding. See "Prepayment and Yield Considerations -
Prepayment Considerations, "Description of the Securities - Optional and
Mandatory Repurchase of Securities; Optional Termination and Termination
Auction" and "Certain Legal Aspects of the Contracts - The Contracts (other than
the Land Home Contracts and Land-in-Lieu Contracts) - Transfers of Manufactured
Homes; Enforceability of Restrictions on Transfer" in the prospectus [and
"Description of the Certificates - Optional Termination and Termination Auction"
in this prospectus supplement] for a discussion of certain factors that may
influence prepayments, including homeowner mobility, general and regional
economic conditions, prevailing interest rates, provisions in the contracts
prohibiting the owner from selling the manufactured home without the prior
consent of the holder of the related contract, the early termination of the
trust pursuant to a successful Termination Auction and the option of the
servicer, whether or not GreenPoint Credit remains the servicer, to purchase the
contracts and any other property constituting the trust or to direct the trustee
to solicit bids for an auction at which to sell the contracts and any other
property constituting the trust. 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 prepaying the contracts and therefore will affect the average life of
the certificates.
S-24
<PAGE>
[The Class A-1 Certificates will be prepaid in part on the first
distribution date after the pre-funding period, in no event later than [ ], in
the event that any pre-funded amount remains in the pre-funding account on the
related distribution date. Any amounts remaining which have not been used to
purchase subsequent contracts will be paid to the Class A-1 Certificateholders.
GreenPoint Credit believes that substantially all of the pre-funded amount will
be used to acquire the subsequent contracts. It is unlikely, however, that the
aggregate principal amount of subsequent contracts purchased by the trust will
be identical to the pre-funded amount, and that consequently, Class A-1
Certificateholders will receive some prepayment of principal.]
The allocation of distributions to the certificateholders in
accordance with the pooling and servicing agreement will have the effect of
accelerating the amortization of certain of the classes of the series 200[ ]-[ ]
regular certificates. The allocations will also have the effect of delaying the
amortization of certain other classes of the series 200[ ]-[ ] regular
certificates from the amortization that otherwise would be applicable if
distributions in respect of the Total Regular Principal Amount were made pro
rata according to the outstanding principal balances of the series 200[ ]-[ ]
regular certificates. 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 distributions of principal on the related class of
offered 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. See "Description of the Certificates - Distributions" in this
prospectus supplement and "Prepayment and Yield Considerations" in the
prospectus.
The Class A-IO Certificates, which pay interest only, are extremely
sensitive to the repurchase, prepayment and default experience of the contracts.
If principal distributions on the contracts occur at a rate faster than
anticipated at the time of purchase, the purchaser"s actual yield to maturity
could be significantly lower than that assumed at the time of purchase. A Class
A-IO Certificateholder could, under some prepayment scenarios, fail to recoup
the original investment. See "- Sensitivity of the Class A-IO Certificates."
There can be no assurance that as to what the delinquency or
repossession experience of GreenPoint Credit on a going forward basis will be.
See "Prepayment and Yield Considerations" in the prospectus for a discussion of
the effect delinquencies and repossessions on the contracts would have on the
average life of the certificates.
The expected final scheduled payment date on the contract with the
latest maturity is in [ ].
The last scheduled distribution dates for the series 200[ ]-[ ]
regular certificates are set forth on the cover of this prospectus supplement.
However, the actual last distribution date for each class of offered
certificates could occur significantly earlier than the scheduled distribution
dates. In particular, when the Pool Scheduled Principal Balance falls below 10%
of the Cut-off Date Pool Principal Balance and certain other conditions are met,
the trust could be terminated pursuant to the [servicer/other party]"s exercise
of an option call or pursuant to a successful Termination Auction. See
"Description of the Certificates - Optional Termination and Termination Auction"
in this prospectus supplement. Either of these events, if they occur, would
result in the early retirement of the then outstanding certificates.
S-25
<PAGE>
As described in this prospectus supplement under "Description of the
Certificates - Subordination" and "Description of the Certificates - Losses on
liquidated contracts," to the extent that, on any distribution date, the
Available Distribution Amount is not sufficient to permit a full distribution of
the Total Regular Principal Amount to the holders of any class of offered
certificates, other than the Class A-IO Certificates, the effect will be to
cause the offered certificates, other than the Class A-IO Certificates, to be
amortized more slowly than they otherwise would have been amortized, and losses
on liquidated contracts and delinquencies on the contracts, if not covered by
monthly advances, will be borne by the holders of the class of offered
certificates for which there is a shortfall in the manner described thereunder
and as described below.
In the event there is a sufficiently large number of delinquencies on
the contracts in any Collection Period that were not covered by monthly advances
as described in this prospectus supplement, the amounts distributed to the
holders of the offered certificates could be less than the amount of principal
and/or interest that otherwise would be payable on the certificates on the
related distribution date. Even if delinquent payments on the contracts were
eventually recovered upon liquidation, if the amounts received do not include
interest on delinquent interest payments, the effective yield on the contracts
would be reduced. Further, under certain circumstances it is possible that
sufficient Available Distribution Amounts might not be available to provide, in
the case of the offered certificates other than the Class A-IO Certificates, for
aggregate distributions equal to the sum of their initial outstanding
certificate balances plus accrued interest thereon, and in the case of the Class
A-IO Certificates, for aggregate distributions equal to the accrued interest
thereon, thereby reducing the effective yield on the certificates.
obligors are not required to pay interest on the contracts after the
date of full prepayment of principal or the date of a partial prepayment of
principal, to the extent of the applicable partial prepayment. As a result,
partial or full prepayments in advance of the related due dates for the related
contracts in any Collection Period will reduce the amount of interest received
from the related obligors during such Collection Period to less than one month"s
interest. However, when a partial prepayment is made on a contract or a contract
is prepaid in full during any Collection Period, but after the due date for such
contract in the related 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 amount of partial
prepayments are made or a sufficient number of contracts are prepaid in full in
a given Collection Period in advance of their respective due dates, interest
received on all of the contracts during that Collection Period, after netting
out the Monthly Servicing Fee [if GreenPoint Credit is not acting as servicer],
and other expenses of the trust, may be less than the interest payable on the
Senior and/or subordinate certificates on the related distribution date. As a
result, the Available Distribution Amount for the related distribution date may
not be sufficient to distribute the interest on the offered certificates in the
full amount set forth in this prospectus supplement under "Description of the
Certificates - Distributions" and to make a full distribution of the Total
Regular Principal Amount to the Senior, other than the Class A-IO, and/or
subordinate certificateholders. Although no assurance can be given in this
matter, GreenPoint Credit does not anticipate that the net shortfall of interest
caused by partial prepayments or prepayments in full in any Collection Period
would be great enough, in the absence of delinquencies or liquidation losses, to
reduce the Available Distribution Amount for a
S-26
<PAGE>
distribution date below the amount that would have been required to be
distributed to the holders of the offered certificates on that distribution date
in the absence of any prepayment interest shortfalls.
Because the contracts are [actuarial] contracts, the outstanding
principal balances thereof will reduce, for purposes of accrual of interest
thereon, by a precomputed amortization amount on each due date whether or not
the scheduled payment for the related due date is received in advance of or
subsequent to the related due date, except as described above with respect to
prepayments. See "The Contract Pools" in the prospectus. Thus, the effect of
delinquent scheduled payments, even if they are ultimately paid by the obligor,
will be to reduce the yields on the related contracts below their respective
contract rates (because interest will not have accrued on the principal portion
of any scheduled payment while it is delinquent). If the servicer does not make
an advance with respect to the delinquent contracts as described in this
prospectus supplement, the result will be to reduce the effective yield to the
trust derived from the delinquent contracts to a yield below their contract
rates. Under certain circumstances, the yield reductions described in the
previous sentence could cause the aggregate yield to the trust derived from the
contract pool to be insufficient to support the distribution of interest on the
offered certificates, after netting out other expenses of the trust.
[The table relates to [ ] sold pools for which prepayment information
is available covering a period of at least [ ] months and which had an aggregate
principal balance as of the first day of the month of sale of at least $[ ]. In
evaluating whether the data contained in the table contains useful information
with respect to the expected prepayment behavior of any particular contract
pool, prospective certificateholders should consider that GreenPoint Credit has
not performed statistical analysis to determine whether the contracts to which
the table relates constitutes a statistically significant sample of manufactured
housing contracts for purposes of determining expected prepayment behavior.
Furthermore, no assurance can be given that the contracts in the contract pool
will have characteristics similar to the contracts in any sold pool to which the
following table relates. For these reasons, and because of the unpredictable
nature of the factors described under "Weighted Average Life of the Offered
Certificates" in this prospectus supplement, which may influence the amount of
prepayments of manufactured housing contracts, no assurance can be given that
the prepayment experience for the contract pool with an average age as of the
Cut-off Date similar to the average ages (as of the first day of the month of
sale) of the pools to which the table relates will exhibit prepayment behavior
similar to the behavior summarized in the table for the periods covered by the
table.
In addition to the foregoing, prospective certificateholders should
consider that the table set forth below is limited in the periods which are
covered thereby and thus cannot reflect the effects, if any, of aging on the
prepayment behavior of manufactured housing contracts beyond the periods covered
thereby.
The table below sets forth with respect to certain pools of contracts:
. the initial aggregate principal balance of the contracts in the
pool (calculated as of the first day of the month of the sale);
S-27
<PAGE>
. the WAC of the contracts in the pool as of the first day of the
month of the sale of the pool;
. the WAM of the contracts in the pool as of the first day of the
month of the sale of the pool;
. the estimated average age of the pool as of the first day of the
month of the sale of the pool;
. the aggregate principal balance of the pool as of [ ],
. the WAC of the contracts in the pool as of [ ]; and
. the percentage of the prepayment model (as described in "--
Weighted Average Life of the Offered Certificates" below) for the
life of each pool through [ ].
The prepayment performance of the contract pools described in the
following table is not indicative of the prepayment performance of the contracts
in the trust, and no assurance can be given that the prepayment performance of
the contracts in the trust will correspond with the prepayment performance of
any of the pools described below.
<TABLE>
<CAPTION>
Month Aggregate Estimated % of the
and Original Average Aggregate WAC as prepayment
Year of Principal Original Original WAM Age at Sale Principal of [ ], model as of
Sale Balance WAC (months) (months) Balance 2000[] [ ], 200[]
---------- ------------ ----------- -------------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Weighted Average Life of the Offered Certificates
The following information is given solely to illustrate the effect of
prepayments of the contracts on the weighted average life of the offered
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 the related
security is repaid to the investor. The weighted average life of an offered
certificate, other than the Class A-IO Certificates, is determined by:
(1) multiplying the amount of each cash distribution in reduction of
the certificate balance of the certificate by the number of years
from the date of issuance of the certificate to the stated
distribution date,
S-28
<PAGE>
(2) adding the results, and
(3) dividing the sum by the Initial certificate balance of the
certificate.
The weighted average life of the offered certificates, other than the
Class A-IO 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, other than from scheduled amortization, and liquidations
due to default or other dispositions of contracts. Prepayments on contracts may
be measured by a prepayment standard or model. 100% of the prepayment model
assumes prepayment rates of [ ]% per annum of the then unpaid principal balance
of the contracts in the first month of the life of the contracts and an
additional [ ]% per annum in each month thereafter ,for example, [ ]% per annum
in the third month, until the [ ]th month. Beginning in the [ ]th month and in
each month thereafter during the life of the contracts, 100% of the prepayment
model assumes a constant prepayment rate of [ ]% per annum.
As used in the following table, "0% of the prepayment model" assumes
no prepayments on the contracts; "100% of the prepayment model" assumes the
contracts will prepay at rates equal to 100% of the prepayment model assumed
prepayment rates; "150% of the prepayment model" assumes the contracts will
prepay at rates equal to 150% of the prepayment model assumed prepayment rates;
"170% of the prepayment model" assumes the contracts will prepay at rates equal
to 170% 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 "300% of the prepayment model" assumes the
contracts will prepay at rates equal to 300% 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. In the case of mortgage loans secured by site-built homes, in general, if
prevailing interest rates fall significantly below the interest rates on the
mortgage loans, the mortgage loans are likely to be subject to higher prepayment
rates than if prevailing interest rates remained at or above the rates borne by
the related mortgage loans. Conversely, if prevailing interest rates rise above
the interest rates on the related mortgage loans, the rate of prepayment would
be expected to decrease. In the case of manufactured housing contracts, however,
because the outstanding principal balances are, in general, smaller than
mortgage loan balances and the original term to maturity of each related
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 smaller. Consequently,
changes in prevailing interest rates may not have a
S-29
<PAGE>
similar effect, or may have a similar effect, but to a smaller degree, on the
prepayment rates on manufactured housing contracts.
The percentages and weighted average lives in the following tables
were determined using the following assumptions (the "structuring assumptions"):
(1) scheduled interest and principal payments on the contracts are
received in a timely manner and prepayments are made at the
indicated percentages of the prepayment model set forth in the
tables;
(2) the servicer does not exercise its right of optional termination
described above but the trust is terminated pursuant to a
Termination Auction as described in "Description of the
Certificates -- Optional Termination and Termination Auction" in
this prospectus supplement;
(3) the contracts, as of the Cut-off Date, will be grouped into
[four] groups having the additional characteristics set forth in
the table entitled "Assumed Contract Characteristics" below;
(4) the Class A-1 Certificates initially represent [ ]% of the entire
ownership interest in the trust and have a Class A Pass-Through
Rate of [ ]% per annum, the Class A-IO Certificates have a Pass-
Through Rate of [ ]% per annum, the Class M Certificates
initially represent [ ]% of the entire ownership interest in the
trust and have a Class M Pass-Through Rate of [ ]% per annum and
the Class B certificates initially represent [ ]% of the entire
ownership interest in the trust and have a Class B Pass-Through
Rate of [ ]% per annum;
(5) no interest shortfalls will arise in connection with prepayment
in full of the contracts;
(6) there will be no repurchases of any contracts due to a breach in
a representation or warranty with respect thereto; and
(7) a servicing fee of [ ]% per annum will be paid to the servicer.
The tables assume that there are no losses or delinquencies on the
contracts. No representation is made that losses or delinquencies on the
contracts will be experienced at the rate assumed in the preceding sentence or
at any other rate.
S-30
<PAGE>
Assumed Contract Characteristics
<TABLE>
<CAPTION>
Remaining
Current Original Term Term to
Principal to Maturity Maturity
Pool Balance contract rate (Months) (Months)
----------------------------------- ----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
1..................................
2..................................
3..................................
4..................................
Total or weighted average..........
</TABLE>
Since the tables were prepared on the basis of the structuring
assumptions in the preceding paragraph, there are discrepancies between the
characteristics of the actual contracts and the characteristics of the contracts
assumed in preparing the tables. Any discrepancy may have an effect upon the
percentages of the Initial certificate balance of each class of offered
certificates outstanding and weighted average lives of the certificates set
forth in the tables. In addition, since the actual contracts and the trust have
characteristics which differ from those assumed in preparing the tables set
forth below, the distributions of principal on the offered certificates may be
made earlier or later than as indicated in the tables.
It is not likely that contracts will prepay at any constant percentage
of the prepayment model to maturity or that all contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the
contracts, which include recently originated contracts, could produce slower
distributions of principal than indicated in the tables at the various
percentages of the prepayment model specified even if the weighted average
remaining term to maturity of the contracts is [ ] months.
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 structuring assumptions, the following tables indicate
the resulting weighted average lives of the offered certificates and sets forth
the percentage of the Initial Class A certificate balance, the initial Class M
certificate balance and the initial Class B certificate balance that would be
outstanding after each of the dates shown at the indicated percentages of the
prepayment model.
S-31
<PAGE>
Percent of the Initial Class A certificate balance at the
Respective Percentages of the prepayment model
<TABLE>
<CAPTION>
Prepayments (% of prepayment model)
-----------------------------------
Date 0% 100% 150% 170% 200% 250% 300%
---- -- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Percentage................................ 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)..............
[ ], 19[ ] (anniversary of first distribution
date)..................................
[ ], 19[ ]........................................
[ ], 19[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
Weighted Average Life (years).....................
</TABLE>
Percent of the initial Class M certificate balance at the
Respective Percentages of the prepayment model
<TABLE>
<CAPTION>
Prepayments (% of prepayment model)
-----------------------------------
Date 0% 100% 150% 170% 200% 250% 300%
---- -- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Percentage................................ 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)..............
[ ], 19[ ] (anniversary of first distribution
date)..................................
[ ], 19[ ]........................................
[ ], 19[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
Weighted Average Life (years).....................
</TABLE>
S-32
<PAGE>
Percent of the Initial Class B-1 Certificate balance at the
Respective Percentages of the prepayment model
<TABLE>
<CAPTION>
Prepayments (% of prepayment model)
-----------------------------------
Date 0% 100% 150% 170% 200% 250% 300%
---- -- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Percentage................................ 100 100 100 100 100 100 100
--- --- --- --- --- --- ---
[ ], 19[ ] (first distribution date)..............
[ ], 19[ ] (anniversary of first distribution
date)..................................
[ ], 19[ ]........................................
[ ], 19[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
[ ], 20[ ]........................................
Weighted Average Life (years).....................
</TABLE>
[Sensitivity Of The Class A-IO Certificates]
[The yield to maturity of the Class A-IO Certificates will be highly
sensitive to the principal prepayment, repurchase and default experience of the
contracts. Investors should carefully consider the risk that a rapid rate of
principal prepayments on the contracts or repurchases of contracts will have an
adverse effect on the yield to investors in the Class A-IO Certificates and,
under certain scenarios, could result in the failure of investors to recover
their initial investments. The yield to holders of the Class A-IO Certificates
would also be adversely affected in the event that the servicer exercises the
right under the pooling and servicing agreement to repurchase all remaining
contracts in the trust and thereby effect the early termination of the
certificates, or if there is a successful Termination Auction, as described in
"Description of the Certificates " Optional Termination and Termination Auction"
in this prospectus supplement.]
[The following table demonstrates the sensitivity of the pre-tax
yields on the Class A-IO Certificates to various constant rates of prepayment by
projecting the aggregate payments of interest on the certificates and the
corresponding pre-tax yields on a corporate bond equivalent basis, assuming
distributions on the contracts are made as set forth in the pooling and
servicing agreement. The following table is also based on the assumption set
forth above under "Description of the Certificates " Weighted Average Life of
the Offered Certificates."]
[Pre-Tax Yields on the Class A-IO Certificates]
<TABLE>
<CAPTION>
Percentage of Prepayment Assumption
-----------------------------------
Assumed Purchase Price 0% 50% 75% 100% 150% 200%
<S> <C> <C> <C> <C> <C> <C>
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
$[ ] [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
</TABLE>
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[The pre-tax yields set forth in the preceding table were calculated
by determining the monthly discount rates which, when applied to the assumed
streams of cash flows to be paid on the Class A-IO Certificates, would cause the
discounted present value of the assumed stream of cash flows to the closing date
to equal the assumed purchase prices, which include accrued interest, and
converting the monthly rates to corporate bond equivalent rates. Such
calculation does not take into account the interest rates at which funds
received by holders of the Class A-IO Certificates may be reinvested and
consequently does not purport to reflect the return on any investment in the
Class A-IO Certificates when reinvestment rates are considered.]
[It is highly unlikely that the contracts will prepay at the same rate
until maturity or that all of the contracts will prepay at the same rate or
time. As a result of these factors, the pre-tax yield on the Class A-IO
Certificates is likely to differ from those shown in the tables, even if all of
the contracts prepay at the indicated percentages of the prepayment assumption.
No representation is made as to the actual rate of principal payments on the
contracts, or the contract rates thereon, for any period or over the life of the
Class A-IO Certificates or as to the yield on the Class A-IO Certificates.
Investors must make their own decisions as to the appropriate prepayment
assumptions to be used in deciding whether to purchase the Class A-IO
Certificates.]
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Description Of The Certificates
The certificates will be issued pursuant to the pooling and servicing
agreement. An execution copy of the pooling and servicing agreement will be
filed with the Securities and Exchange Commission after the initial issuance of
the certificates as exhibits to a Current Report on Form 8-K. Reference is made
to the prospectus for additional information regarding the terms and conditions
of the pooling and servicing agreement. The following discussion supplements,
and does not replace or supersede the discussion under "Description of the
Securities" in the prospectus, unless the context otherwise provides.
Set forth below are summaries of the specific terms and provisions
pursuant to which the certificates will be issued. The following summaries do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the provisions of the pooling and servicing agreement.
When particular provisions or terms used in the pooling and servicing agreement
are referred to, the actual provisions, including definitions of terms, are
incorporated by reference.
General
[All the offered certificates initially will be issuable in one or
more Global Securities registered in the name of Cede as the nominee of DTC.
ownership in offered certificates represented by Global Securities will only be
available in the form of book-entries on the records of DTC and participating
members thereof. All references to "holders" or "certificateholders," and to
authorized denominations, when used with respect to the offered certificates
issued as Global Securities, shall reflect the rights of beneficial owners of
the offered certificates, and limitations thereof, as they may be indirectly
exercised through DTC and its participating members, except as otherwise
specified in this prospectus supplement. See "Description of the Securities --
Global Securities" in the prospectus. See the prospectus under "Description of
the Securities -- Global Securities" for a description of the circumstances in
which definitive certificates in the future may be issued. Any offered
certificates issued as definitive certificates will be transferable and
exchangeable at the corporate trust office of the trustee at its Corporate trust
Department in [ ] or, if it so elects, at the office of an agent in [New York,
New York]. 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 offered certificates will be issued in fully registered form only,
in denominations equal to [$1,000] or any integral multiple of [one dollar] in
excess thereof.
The trust includes:
(1) the contract pool, including certain rights to receive payments on
the contracts on and after the Cut-off Date,
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(2) the amounts held from time to time in the "Payment Account," as
described below under "--Payment on contracts; Payment Account,"
maintained by the trustee pursuant to the pooling and servicing
agreement,
(3) any property which initially secured a contract and which is
acquired in the process of realizing thereon,
(4) the obligations of the seller, under certain conditions, to
repurchase contracts sold by it with respect to which certain
representations and warranties have been breached and not cured
and
(5) the proceeds of all insurance policies described in this
prospectus supplement.
The seller will convey the contracts to the trustee. See "The Contract
Pool" in this prospectus supplement and "--Conveyance of Contracts" below. The
servicer will service the contracts pursuant to the pooling and servicing
agreement. The contract documents will be held for the benefit of the trustee by
the servicer.
Distributions of principal, interest or both to the holders of the
certificates will be made on each distribution date beginning in [ ], 200[ ], to
the persons in whose names the certificates are registered on the record date.
Pass-Through Rates
The Pass-Through Rates for the class [ ] and class [ ] certificates
will be [ ] and [ ] respectively.
[The Pass-Through Rate for each of the certificates of class [ ] on
any distribution date will be adjusted so as not to exceed the weighted average
of the net contract rates of the contracts in the contract pool at the beginning
of the month preceding the month of the related distribution date. The weighted
average net contract rate of the contract pool as of the Cut-off Date was
approximately [ ]%.]
[The class [ ] Pass-Through Rate on each distribution date will be [
]% per annum, subject to a maximum rate equal to the weighted average of the net
contract rates on the contracts in the contract pool, computed on the basis of a
360-day year of twelve 30-day months. In all but the most unusual prepayment
scenarios, it is anticipated that the class [ ] Pass-Through Rate will remain at
the initial rate of [ ]%. However, disproportionate prepayments of contracts
with higher net contract rates will lower the weighted average net contract rate
on the outstanding contracts remaining in the contract pool. If a larger
principal amount of contracts having contract rates equal to or higher than [ ]%
were to prepay while a proportionate principal amount of the contracts having
contract rates lower than [ ]% did not prepay, to the extent that the weighted
average net contract rate fell below the initial class [ ] Pass-Through Rate of
[ ]%, then the class [ ] Pass-Through Rate would automatically be reduced to a
level equal to the weighted average of the net contract rates on the contracts
remaining in the contract pool. Of the initial contracts, [ ]% by aggregate
principal balance as of the Cut-off Date had contract rates equal to or higher
than [ ]%.]
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Conveyance of Contracts
On the date of initial issuance of the certificates, 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 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 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 the GreenPoint Credit will be required to complete a
review of 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 and any assignments or modifications of the foregoing
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 certificateholders will be
repurchased by the seller, or replaced with another contract. However, if the
discrepancy relates to the principal balance of a contract, determined as
described above, the seller may, under certain conditions, deposit cash in the
Payment Account in an amount sufficient to offset the discrepancy. The trustee
will not review the files relating to the contracts in the contract pool.
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. See "Risk Factors -- Security
Interests of the Seller in the Manufactured Homes; Transfer of contracts and
Security Interests" and "Certain Legal Aspects of the Contracts - The Contracts
(other than the Land Home Contracts and Land-in-Lieu Contracts) -- Security
Interests of the Seller in the Manufactured Homes" and "Land Home Contracts 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 the
related 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" 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 assignment,
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:
(1) as of the Cut-off Date, no contract is more than 59 days
delinquent;
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(2) 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;
(3) 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;
(4) the contract is not subject to any right of rescission, set-off,
counterclaim or defense;
(5) the contract is covered by hazard insurance described under
"Description of the Securities -- Servicing Compensation and
Payment of Expenses; Certain Matters Regarding the servicer --
Hazard Insurance Policies" in the prospectus;
(6) the contract was either:
(a) 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, [or]
(b) originated by the seller in the ordinary course of its
business [or]
(c) purchased by the seller as part of bulk purchases of
manufactured housing contracts from other private lenders or
finance companies, or from governmental agencies or
instrumentalities or from other entities];
(7) 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
pooling and servicing agreement or pursuant to the certificates
unlawful;
(8) the contract complies with all requirements of law;
(9) 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;
(10) the contract creates a valid and enforceable first-priority
security interest in favor of GreenPoint Credit in the
manufactured home and real property securing the contract, if
any;
(11) the security interest has been assigned to the trustee, and,
after such assignment, the trustee has a valid and perfected
first-priority security interest in the manufactured home and
real property securing the related contract, if any;
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(12) 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 contracts 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;
(13) 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 (1) above, the seller has not waived any of the
foregoing;
(14) 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 related contract, which are or may be liens prior to
or equal with or subordinate to the lien of the contract;
(15) the contract is a fully-amortizing loan with a [fixed] contract
rate and provides for level payments over the term of the
contract;
(16) the contract contains customary and enforceable provisions that
render the rights and remedies of the holder thereof adequate for
realization against the collateral of the benefits of the
security;
(17) the information contained in the contract schedule with respect
to the contract is true and correct;
(18) there is only one original of the contract;
(19) the contract did not have a loan-to-value ratio at origination
greater than 100%;
(20) the related manufactured home 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
related manufactured home is, to the knowledge of the seller free
of damage and in good repair;
(21) the contract is a "qualified mortgage" under Section 860G(a)(3)
of the Code;
(22) the related manufactured home is a "manufactured home" within the
meaning of Section 5402(6) of Title 42 of the United States Code
and, as to each contract sold by the seller to the trust, the
seller is an approved mortgagee as of the time of the contract"s
origination as required under Section 3(a)(41)(A)(ii) of the
Exchange Act;
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(23) the contract is secured by a "single family residence" within the
meaning of Section 25(e)(10) of the Code;
(24) the contract has been stamped to indicate its assignment to the
trustee within 60 days of the closing date; and
(25) the contract with the lowest contract rate has a contract rate of
[ ]% and the contract with the highest contract rate has a
contract rate of [ ]%.
Under the terms of the pooling and servicing agreement, and subject to
the relevant seller's option to effect a substitution with respect to contracts
sold by it as described in the last paragraph under this subheading, the seller
will be obligated to repurchase, at the price described below, any contract sold
by it 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 pooling and servicing agreement
that materially and adversely affects the trust's interest in any contract it
sold thereto unless the 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 related contract, if any, located in any
jurisdiction on account of a breach of the representation and warranty described
in clause (11) 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 manufactured home
or to execute any transfer instrument relating to any manufactured home or real
property, if any, other than a notation or transfer instrument necessary to show
the seller as lienholder or legal title holder, unless:
(1) a court of competent jurisdiction has adjudged that, because of
the failure by the seller to cause a notation to be made on the
related document of title, the trustee does not have a perfected
first-priority security interest in the related manufactured home
or
(2) (A) 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 the 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 that jurisdiction and which is subject to the same laws
regarding the perfection of security interests therein applicable
to the manufactured homes located in that jurisdiction and
(B) the servicer shall not have completed all appropriate remedial
action with respect to the related manufactured home within 180
days after receipt of the written advice.
Any advice 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
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question. The servicer will have no ongoing obligation to seek advice with
respect to the matters described in clause (2) above. However, the servicer is
required to seek advice with respect to the matters described in clause (2)
above whenever information comes to the attention of its counsel which causes
such counsel to determine that a holding of the type described in clause (2)(A)
might exist. If any counsel selected by the servicer informs the servicer that
no holding of the type described in clause (2)(A) exists, the advice will be
conclusive and binding on the parties to the pooling and servicing 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 receiver or conservator of the seller, it
is likely that the receiver or conservator of the seller 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 certificateholders for a breach of a
representation or warranty under the pooling and servicing 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 Payment 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 it sold being substituted as of the beginning of the month.
[Conveyance of [subsequent contracts and] [pre-funding account]
[The pre-funding account will be used to purchase subsequent contracts
during the pre-funding period.]
[The pre-funded amount will be reduced during the pre-funding period
by the amount used to purchase subsequent contracts in accordance with the
pooling and servicing agreement. [The pre-funding account will be part of the
trust but not part of the REMIC.] Any reimbursement income earned on amount on
deposit in the pre-funding account will be taxable to GreenPoint Credit.]
[Under the pooling and servicing agreement, following the initial
issuance of the certificates, the trust will be obligated to purchase subsequent
contracts from GreenPoint Credit during the pre-funding period, subject to the
availability thereof. Each subsequent contract will have been underwritten in
accordance with GreenPoint Credit"s standard underwriting criteria. subsequent
contracts will be transferred to the trust pursuant to subsequent transfer
instruments between GreenPoint Credit and the trust. In connection with the
purchase of subsequent
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contracts on the related dates of transfer, the "subsequent transfer dates," the
trust will be required to pay to GreenPoint Credit from amounts on deposit in
the pre-funding account a cash purchase price of 100% of the principal balance
thereof. GreenPoint Credit will designate the subsequent transfer date as the
Cut-off Date with respect to the related subsequent transfer date will not
include accrued interest on the related subsequent contracts in the trust will
increase by an amount equal to the aggregate principal balance of the contracts
so purchased and the amount in the pre-funding account will decrease
accordingly. Any pre-funded amount remaining after the purchase of subsequent
contracts will be applied on the first distribution date on or after the last
day of the pre-funding period to prepay principal on the [Class A-1
Certificates].
[Any conveyance of subsequent contracts on a subsequent transfer date
is subject to certain conditions including, but not limited to:
(1) each subsequent contract must satisfy the representations and
warranties specified in the related subsequent transfer
instrument and the pooling and servicing agreement;
(2) GreenPoint Credit will not select subsequent contracts in a
manner that it believes is adverse to the interests of the
certificateholders;
(3) [as of its respective Cut-off Date, each subsequent contract must
satisfy the following criteria:
(a) no subsequent contract may be more than [ ] days
contractually delinquent;
(b) the remaining stated term to maturity of each subsequent
contract may not exceed [ ] months;
(c) each subsequent contract must be underwritten in accordance
with GreenPoint Credit"s standard underwriting criteria; and
(d) no subsequent contract may have a loan-to-value ratio
greater than 100%;
(4) the contract pool following the addition of the subsequent
contracts must satisfy the following criteria:
(a) the weighted average contract rate must not be less than
[ ]%;
(b) the weighted average loan-to-value ratio must not be greater
than [ ]%;
(c) not less than [ ]% of the Cut-off Date Pool Principal
Balance must be attributable to loans to purchase new
manufactured homes; and
(d) at least [ ]% of the Cut-off Date Pool Principal Balance
must consist of Land Home Contracts;
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(5) as a result of the purchase of the subsequent contracts, the
Class A certificates will not receive from [Rating Agencies] a
lower credit rating than the rating assigned at the initial
issuance of the Class A certificates; and
(6) an independent accountant will provide a letter stating whether
or not the characteristics of the subsequent contracts conform to
the Characteristics described in this prospectus supplement].]
Payments on the Contracts; Payment Account
The trustee will initially establish and maintain the Payment Account
at an Eligible Institution. The funds in the Payment Account are required to be
invested by the trustee in common trusts, collective 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, as defined below, are required to be paid into the Payment
Account not later than the second business day following receipt thereof. [For
as long as GreenPoint Credit remains the servicer under the pooling and
servicing agreement and GreenPoint Credit maintains a short-term rating of at
least [ ] from [the rating agency], which is currently the case, the servicer
need not deposit collections into the Payment Account within two business days
of receipt but may use for its own benefit all collections until the related
distribution date without an obligation to pay interest or any other investment
return thereon. It is understood that any benefit to the servicer from this
arrangement shall be additional servicing compensation. While the rating is
maintained, on or prior to each distribution date, the servicer will deposit in
the Payment Account amounts which are to be included in the funds available for
the related distribution date. [Amounts deposited in the Payment Account may be
invested in permitted investments, as described in the pooling and servicing
agreement, maturing no later than the related distribution date.]]
[At any time that the short-term rating of the servicer does not
satisfy the rating requirements specified above, the servicer may continue to
hold collections prior to distribution as described above so long as it causes
to be maintained an irrevocable letter of credit or surety bond or other credit
enhancement instrument in form and substance satisfactory to the rating agency.
Further, any credit enhancement described in the previous sentence, must be
issued by a depository institution or insurance company having a rating on its
short-term obligations of at least [ ] and long-term obligations of at least [ ]
by [the rating agency] or other ratings if approved by [the rating agency]. The
credit enhancement must also provide that the trustee may draw thereon in the
event that the servicer, fails to make any deposit or payment required under the
pooling and servicing agreement.]
Amounts received as late payment fees, fees in connection with checks
returned for insufficient funds, 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
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repurchased by it as a result of a reach of a representation or warranty under
the pooling and servicing agreement, and amounts required to be deposited upon
substitution of an eligible substitute contract because of a breach of a
representation or warranty as described under "--Conveyance of Contracts" above,
are required to be paid into the Payment Account. The amounts described in the
preceding sentence will be treated as partial principal prepayments.
On the Determination Date, the servicer will determine the Available
Distribution Amount and the amounts to be distributed on the certificates on the
related distribution date. The "Available Distribution Amount" for any
distribution date is the sum of:
(1) the monthly advance for the related distribution date, as defined
below under "-- Advances;" and
(2) the amount in the Payment Account on the close of business on the
last day of the immediately preceding Collection Period, less the
sum of:
(a) any repossession profits, of which there are expected to be
a de minimis amount, on defaulted contracts,
(b) payments on contracts 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,
(c) excess contract payments and any other payments not required
to be distributed to certificateholders on the related
distribution date,
(d) reimbursements to the servicer in the amount of expenses
incurred in connection with the liquidation of a contract,
the "liquidation expenses," and certain taxes and insurance
premiums advanced by the servicer in respect of manufactured
homes (as described below under ""Advances"),
(e) reimbursements to the servicer for nonrecoverable advances
in respect of contracts and monthly advances to the extent
permitted by the pooling and servicing agreement (as
described below under "--Advances"), and
(f) [if GreenPoint Credit is not acting as servicer,] the
Monthly Servicing Fee.
An "excess contract payment" is 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 Payment Account and may be applied as described
under " -- Advances" below.
The trustee or its paying agent will withdraw funds from the Payment
Account on each distribution date, but only to the extent of the related
Available Distribution Amount, to
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<PAGE>
make payments to certificateholders as specified under " -- Distributions"
below. From time to time, as provided in the pooling and servicing agreement,
the servicer will also withdraw funds from the Payment Account to make payments
to it the seller as permitted by the pooling and servicing agreement and
described in subclauses (a), (b), (d), (e) and (f) of clause (2) in the second
preceding paragraph.
Distributions
Distributions to the holders of the series 200[ ]-[ ] regular
certificates will be applied first to the holders of the senior certificates,
second to the holders of the Class M Certificates and then to the holders of the
Class B certificates. The Available Distribution Amount for each distribution
date will be applied in the amounts and the order of priority set forth below.
Distributions of principal and interest to holders of each class of
certificates[, other than the Class A-IO Certificates,] will be made on each
distribution date in an amount equal to their respective Percentage Interests
multiplied by the aggregate amount distributed to the class of certificates on
the related distribution date. [Interest will be calculated on the Class A-IO
Certificates on the basis of a "notional principal amount" [equal to the Pool
Scheduled Principal Balance]. Reference to the notional principal amount of the
Class A-IO Certificates is solely for convenience in certain calculations and
does not represent the right to receive any distribution allocable to
principal.] Interest on each class of the series 200[ ]-[ ] regular certificates
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.
Each distribution with respect to book-entry certificates 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 beneficial 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 beneficial owners that it
represents. All credits and disbursements with respect to book-entry
certificates are to be made by DTC and its participants in accordance with DTC"s
rules. See "Description of the Certificates " Global Securities" below.
Priorities. On each distribution date, the Available Distribution
Amount will be distributed in the following amounts and in the following order
of priority:
(1) to the Class A certificateholders, the Class A Interest
Distribution Amount, payment to be distributed among the Class A-
1 and Class A-IO Certificates pro rata, based on entitlement;
(2) to the Class A-1 Certificateholders, the Formula Principal
Distribution Amount until the Class A certificate balance is
reduced to zero [and on the [ ] distribution date any amounts
remaining in the pre-funding account].
(3) to the Class M Certificateholders, the Class M interest
distribution amount;
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(4) to the Class M Certificateholders, any remaining Formula
Principal Distribution Amount after distribution to the Class A
certificateholders until the Class M Certificate balance is
reduced to zero;
(5) to the Class B-1 Certificateholders, the Class B-1 interest
distribution amount;
(6) to the Class B-1 Certificateholders, any remaining Formula
Principal Distribution Amount until the Class B-1 Certificate
balance is reduced to zero;
(7) to the Class B-2 certificateholders, the Class B-2 interest
distribution amount;
(8) to the Class B-2 certificateholders, any remaining Formula
Principal Distribution Amount until the Class B-2 certificate
balance is reduced to zero; and.
(9) to the Class R certificateholders, any remaining Available
Distribution Amount.
[The Class A-IO Certificates are interest-only and are not entitled to
receive distributions of principal, but the notional principal amount decreases
as the certificate balance of all senior certificates is reduced.]
[Reserve Account]
[On the closing date, the trustee shall establish a reserve account
for the benefit of the certificateholders. The reserve account shall have an
initial balance of [$ ] [zero] on the closing date. Commencing on the
distribution date which is the earlier of: (a) the distribution date in [ ]; and
(b) the first distribution date on which the percentage equivalent of a
fraction, the numerator of which is the Pool Scheduled Principal Balance, after
giving effect to distribution with respect to principal, for the related
distribution date and the denominator of which is the Cut-off Date Pool
Principal Balance, is less than or equal to [ ]%, the trustee shall make a
deposit into the reserve account up to the reserve account cap. On each
distribution date, the trustee will withdraw from the reserve account an amount,
referred to as the reserve account draw amount, equal to the lesser of (a) the
amount then on deposit in the reserve account and (b) the amount by which the
aggregate of amounts due to certificateholders in clauses (1) through (6) under
"Distributions" above exceeds the Available Distribution Amount on the related
distribution date and distribute that amount, together with the Available
Distribution Amount.]
[Funds in the reserve account will be invested in Eligible Investments
as directed by the trustee, and the net investment earnings, if any, will be
paid to the Class R certificateholders.]
On any distribution date, any funds on deposit in the reserve account
in excess of the reserve account cap, after giving effect to any reserve account
draw amount paid to the
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certificateholders on that distribution date, will be withdrawn from the reserve
account and paid to the Class R certificateholders.]
[Amounts paid to the Class R certificateholders pursuant to the two
immediately preceding paragraphs will not be available to offset shortfalls in
distributions to holders of other classes of certificates.] [The reserve account
is intended to enhance the likelihood of regular receipt by the holders of the
Series 200[ ]-[ ] regular certificates of the full amount of the distributions
due them and to afford certificateholders protection against losses on
liquidated contracts, but no assurance can be given that the reserve account
will be sufficient for this purpose.]
[The reserve account cap shall be (a) as to any distribution date,
after giving effect to distributions due thereon, after the closing date and
until none of the offered certificates remain outstanding, $[ ] (which is [ ]%
of the Cut-off Date Pool Principal Balance) and (b) as to any distribution date,
after giving effect to distributions due thereon, after none of the offered
certificates remain outstanding, the lesser of the then outstanding Class B-[ ]
certificate balance and $[ ], which is [ ]% of the Cut-off Date Pool Principal
Balance.]
[Subordination]
[The rights of the holders of the subordinate certificates to receive
distributions of available amounts in the trust will be subordinate, to the
extent described in this prospectus supplement, to the rights of the holders of
the senior certificates. This subordination is intended to enhance the
likelihood of regular receipt by the holders of the senior certificates of the
full amount of interest and principal distributable thereon and to afford
certificateholders protection against losses on liquidated contracts.]
[Similarly, the rights of the holders of the Class B certificates to
receive distributions due them from available amounts in the trust will be
subordinated, to the extent described in this prospectus supplement, to the
rights of the holders of the Class M Certificates. Subject to the subordination
of the subordinate certificates to the senior certificates, this subordination
of the Class B certificates to the Class M Certificates is intended to enhance
the likelihood of regular receipt by the holders of the Class M Certificates of
the full amount of the distributions due them and to afford certificateholders
protection against losses on liquidated contracts.]
[The protection afforded to the holders of senior certificates by
means of the subordination of the subordinate certificates and to the Class M
Certificateholders by the subordination of the Class B certificates, in each
case, to the extent described in this prospectus supplement, will be
accomplished by the application of the Available Distribution Amount in the
order specified under "Distributions" above.]
Losses on liquidated contracts
As described above, the Total Regular Principal Amount distributable
to the holders of the series 200[ ]-[ ] regular certificates on each
distribution date includes the
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Scheduled Principal Balance of each contract that became a liquidated contract
during the immediately preceding Collection Period. The liquidation proceeds,
net of:
(1) certain expenses incurred to liquidate the liquidated contract;
(2) all accrued and unpaid interest thereon; and
(3) all monthly advances required to be made in respect of the
liquidated contract, the "Net liquidation proceeds," may be less
than the Scheduled Principal Balance of the liquidated contract.
Under the circumstances described in the preceding sentence, the loss
on the liquidated contract during a Collection Period, in the amount of the
deficiency between the Net liquidation proceeds and the Scheduled Principal
Balance of the liquidated contract, may be covered to the extent of the amount,
the "Excess Interest," if any, by which the interest collected on nondefaulted
contracts during the same Collection Period exceeds interest distributions due
to holders of the series 200[ ]-[ ] regular certificates and the Monthly
Servicing Fee.
The effect of any losses on liquidated contracts during a Collection
Period in excess of the aggregate of Excess Interest generally will be to cause
shortfalls, losses or both with respect to the certificates, which shortfalls or
losses will be borne by the Class B certificateholders, the Class M
Certificateholders and the Class A certificateholders, in that order.
Example of Distributions
The following chart sets forth an example of the flow of funds on the
certificates for the distribution date occurring in [August 2000]:
[June 30]............................. (A) Cut-off Date.]
[July 1-31]........................... (B) servicer receives scheduled
payments on the contracts and any
principal prepayments made by
obligors and applicable interest
thereon.]
[August 13]........................... (C) record date.]
[August 12]........................... (D) Determination Date.]
[August 15]........................... (E) (distribution date is the 15th day
of each month or, if the 15th day
is not a business day, the next
business day.)]
[Succeeding months follow the pattern
of (B) through (E)....................]
(A) The Cut-off Date Pool Principal Balance on [June 30, 2000] will be computed
as described under " -- Conveyance of Contracts" above.
(B) scheduled payments, principal prepayments and liquidation proceeds (net of
liquidation expenses) and amounts for the repurchase of contracts may be
received at any time during this period and will be distributed to
certificateholders on [August 15, 2000].
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When a partial prepayment is made or a contract is prepaid in full,
interest on the amount prepaid is collected from the obligor only to
the date of payment. The Available Distribution Amount for the
distribution on [August 15, 2000] are described under " --Payments on
contracts; Payment Account" above.
(C) Distributions on [August 15, 2000] will be made to certificateholders
of record at the close of business on [August 13, 2000].
(D) On [August 12, 2000] (three business days prior to the distribution
date), the servicer will determine the amounts of principal and
interest which will be passed through on [August 15, 2000] to
certificateholders.
(E) On [August 15, 2000], the amounts determined on [August 12, 2000] will
be distributed to certificateholders.
Advances
For each distribution date, the servicer will be obligated to
make an advance, a "monthly advance," equal to the lesser of (a) delinquent
scheduled payments of principal and interest on the contracts that were due in
the preceding Collection Period and (b) the amount, if any, by which scheduled
distributions of principal and interest due on the series 200[ ]-[ ] regular
certificates exceeds the amount specified in clause (b) of the definition of
Available Distribution Amount (as set forth above under " --Payments on
contracts; Payment Account"), except to the extent, in the servicer"s judgment,
the advance would not be recoverable from related late payments, liquidation
proceeds or otherwise, a "nonrecoverable advance."
The aggregate amount of any additional advances made by the
servicer that have not been reimbursed to the servicer as described below is
referred to in this prospectus supplement as the "outstanding amount advanced."
The servicer may apply any excess contract payments in the Payment Account,
rather than its own funds, to make all or a portion of a monthly advance, but
must replace the 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, but only to the extent of the outstanding amount
advanced, out of funds in the Payment Account for the delinquent scheduled
payments on the contract or out of any other funds in the Payment Account.
In making monthly advances, the servicer will be attempting to
maintain a regular flow of scheduled interest and principal to the series
200[ ]-[ ] regular certificateholders 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 or otherwise, in respect of
certain taxes and insurance premiums not paid by an obligor on a timely basis.
Funds so advanced are reimbursable to the servicer as provided in the pooling
and servicing agreement.
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[The Letter of Credit]
[The letter of credit will be an asset of the trust and the
trustee will maintain possession of and make claims for payment pursuant to the
letter of credit for the benefit of the trust.]
[The obligations of [LETTER OF CREDIT PROVIDER] under the
letter of credit will be irrevocable, primary, absolute and unconditional,
except as expressly provided therein, and neither the failure of the trustee,
the servicer, or any other person to perform any covenants or obligations in
favor of [LETTER OF CREDIT PROVIDER], 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, the
servicer, or any other person shall in any way affect or limit [LETTER OF CREDIT
PROVIDER]'s obligations under the letter of credit. If an action or proceeding
to enforce the letter of credit is brought, the trustee will be entitled to
recover from [LETTER OF CREDIT PROVIDER] costs and expenses reasonably incurred,
including without limitation reasonable fees and expenses of counsel.]
[The Certificate Guaranty Insurance Policy]
[The offered certificates will be entitled to the benefit of
the certificate guaranty insurance policy. As of any determination date, the
aggregate amount available under the certificate guaranty insurance policy will
be equal to the aggregate certificate balance of the offered certificates plus
interest thereon. With respect to any distribution date, an enhancement payment
will be payable under the certificate guaranty insurance policy equal to the
amount by which the aggregate amount distributable to the offered certificates
described in "--Priority of Distributions" above exceeds the sum of the
Available Distribution Amount for the offered certificates plus the letter of
credit draw amount, if any, and any amounts received from the Payment Account
pursuant to "--Priority of Distributions" above.]
[The certificate guaranty insurance policy will be issued pursuant to
the insurance agreement entered into by and between the seller, the servicer,
the trustee and [INSURER].
Reports to Certificateholders
The trustee will include with each distribution to a
certificateholder a statement as of the related distribution date setting forth,
among other things:
. the aggregate amount distributed on each class of
certificates on the related distribution date;
. the amount of the distribution on each class of
certificates which constitutes principal;
. the amount of the distribution on each class of
certificates which constitutes interest;
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. the remaining certificate balance;
. the Monthly Servicing Fee payable on the related
distribution date and the amount of any other fees
payable out of the trust;
. 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;
. (1) the number of contracts that were repurchased or
replaced by a seller in accordance with the pooling and
servicing agreement during the prior Collection Period,
identifying the contracts, (2) the repurchase price of
the contracts and (3) the amount, if any, paid by the
seller due to the differences, if any, between the
remaining principal balances of the replaced contracts
and the eligible substitute contracts;
. the aggregate principal balances of all contracts that
are not liquidated contracts and in respect of which
the related manufactured homes have been repossessed or
foreclosed upon;
. the aggregate liquidation losses, less costs of
liquidation, realized by the trust through the
Collection Period immediately preceding the related
distribution date, expressed in dollars;
. the aggregate liquidation losses, less costs of
liquidation, realized by the trust through the
Collection Period immediately preceding the related
distribution date, expressed as a percentage of the
Cut-off Date Pool Principal Balance;
. the amount of any monthly advance for the related
distribution date and the aggregate amount of monthly
advances that remain outstanding as of the distribution
date;
. the weighted average contract rate for the contract
pool for the Collection Period immediately preceding
the month of the related distribution date; and
. the number of manufactured homes currently held by the
servicer due to repossessions and the aggregate
principal balance of the related defaulted contracts.
In addition, within a reasonable period of time after the end
of each calendar year, the trustee will furnish a report to each holder of a
series 200[ ]-[ ] regular certificate of record at any time during the calendar
year as to the aggregate of amounts reported pursuant to clauses (a) and (b)
above for the calendar year.
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Optional Termination and Termination Auction
The pooling and servicing agreement provides that 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/other party] will have the option to repurchase, upon giving
notice mailed no later than the 10th day of the month next preceding the month
of the exercise of the option to repurchase, all outstanding contracts at a
price equal to the greater of (a) the sum of (x) 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 (y) below, as of the final
distribution date, and (y) the fair market value of the acquired property, 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, 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. The servicer's option shall not be exercisable if there will not be
distributed to the Class A certificateholders an amount equal to the Class A
certificate balance together with any shortfall in interest due to the Class A
certificateholders in respect of prior distribution dates and one month's
interest on the Class A certificate balance [or the notional principal amount,
as the case may be,] at the Class A Pass-Through Rate, to the Class M
Certificateholders an amount equal to the Class M Certificate balance together
with any shortfall in interest due to the Class M Certificateholders in respect
of prior distribution dates and one month's interest on the Class M Certificate
balance at the Class M Pass-Through Rate, to the Class B-1 Certificateholders an
amount equal to the Class B-1 Certificate balance together with any shortfall in
interest due to the Class B-1 Certificateholders in respect of prior
distribution dates and one month's interest on the Class B-1 Certificate balance
at the Class B-1 Pass-Through Rate and to the to the Class B-2
certificateholders an amount equal to the Class B-2 certificate balance together
with any shortfall in interest due to the Class B-2 certificateholders in
respect of prior distribution dates and one. The amount referred to in this
paragraph 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/other party] may also direct the trustee to
conduct a Termination Auction for the sale of all contracts then outstanding in
the trust, and in any case the servicer shall be obligated to direct 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% of the Cut-off Date
Pool Principal Balance, unless the servicer has exercised the repurchase option
described above. The servicer shall give notice mailed no later than [ ] 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 Credit 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 (1) the
requirement that the highest bid equal or exceed the Minimum Termination Amount,
and (2) 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 Credit. If the foregoing
requirements are satisfied, the successful bidder or bidders shall deposit the
aggregate purchase price for the contracts in the Payment Account. If the
foregoing requirements are not satisfied, the purchase shall not occur and
distributions will continue to be
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made on the certificates. Any sale and consequent termination of the trust as a
result of a Termination Auction must constitute a "qualified liquidation" of the
trust under Section 860F of the Code.
Termination of the Pooling and Servicing Agreement
The pooling and servicing agreement will terminate upon the
last action required to be taken by the trustee on the final distribution date
following the earlier of (1) the purchase by the servicer of all contracts and
all property acquired in respect of any contract remaining in the trust as
described above under " -- Optional Termination and Termination Auction"[,/or]
(2) the final payment or other liquidation, or any advance with respect thereto,
of the last contract remaining in the trust or the disposition of all property
acquired upon repossession of any manufactured home [or (3) the sale in a
Termination Auction of all contracts and all other property acquired in respect
of any contract remaining in the trust as described above under " -- Optional
Termination and Termination Auction"].
Upon presentation and surrender of the series 200[ ]-[ ]
regular certificates, the trustee shall cause to be distributed, to the extent
of funds available, to certificateholders on the final distribution date in
proportion to their respective Percentage Interests an amount equal to the
respective unpaid certificate balances of the series 200[ ]-[ ] regular
certificates, together with any unpaid interest on the certificates due on prior
distribution dates and one month's interest at the applicable pass-through rates
on the unpaid certificate balances; provided that funds will be distributed in
the applicable order of priority specified under " -- Distributions" above. If
the pooling and servicing agreement is then being terminated, any amount which
remains on deposit in the Payment Account, other than amounts retained to meet
claims, after distribution to the holders of the series 200[ ]-[ ] regular
certificates 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.
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
the 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 [ ]% and the Pool Scheduled Principal
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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; Payment Account" above. [For so long as the
servicer is entitled to delay deposits to the Payment Account until on or prior
to the distribution date, any earnings on the amounts retained by the servicer
will constitute additional servicing compensation. ]
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 in
connection with checks returned for insufficient funds, 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 the contracts, if any.
The Trustee
[TRUSTEE] has its corporate trust offices at [ ]. The trustee
may resign at any time, in which event the seller[s] will be obligated to
appoint a successor trustee. The seller[s] may also remove the trustee if the
trustee ceases to be eligible to continue as trustee under the pooling and
servicing agreement or if the trustee becomes insolvent. In the circumstances
described in the preceding sentence, the seller[s] 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.
The pooling and servicing agreement requires the trustee to
maintain, at its own expense, an office or agency in New York City or [ ] 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 pooling and servicing 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 pooling and servicing agreement.
[Registration of the Offered Certificates
The offered certificates will be book-entry certificates.
Persons acquiring beneficial ownership interests in the offered certificates
will hold their offered certificates through DTC in the United States, or Cedel
Bank, societe anonyme or 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 principal balance of the offered
certificates and will initially be registered in the name of Cede & Co., the
nominee of DTC. Cedel and Euroclear will
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hold omnibus positions on behalf of their participants through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries which in turn will hold positions in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank
will act as depositary for Cedel and The Chase Manhattan Bank will act as
depositary for Euroclear, in such capacities, individually the "relevant
depositary" and collectively the "European depositaries" Except as described
below, no beneficial owner of a book-entry certificate will be entitled to
receive a physical certificate, a "definitive certificate" Unless and until
definitive certificates are issued, it is anticipated that the only
"certificateholder" of the offered certificates will be Cede & Co., as nominee
of DTC. Beneficial owners of certificates will not be certificateholders as that
term is used in the pooling and servicing agreement. Beneficial 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. In turn, the financial intermediary's ownership
of the 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 DTC participant and on the records of
Cedel or Euroclear, as appropriate.
Beneficial owners will receive all distributions of principal
of and interest on the offered certificates from the trustee through DTC and DTC
participants. While the offered certificates are outstanding, except under the
circumstances described below, under the rules, regulations and procedures
creating and affecting DTC and its operations, or the DTC rules, DTC is required
to make book-entry transfers among Participants on whose behalf it acts with
respect to the offered certificates and is required to receive and transmit
distributions of principal of, and interest on, the offered certificates.
Participants and indirect participants with whom beneficial owners have accounts
with respect to offered certificates are similarly required to make book-entry
transfers and receive and transmit distributions on behalf of their respective
beneficial owners. Accordingly, although beneficial owners will not possess
certificates representing their respective interests in the offered
certificates, the DTC rules provide a mechanism by which beneficial 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 offered
certificates, except under the limited circumstances described below. Unless and
until definitive certificates are issued, certificateholders who are not
Participants may transfer ownership of offered certificates only through
Participants and indirect participants by instructing Participants and indirect
participants to transfer offered certificates, by book-entry transfer, through
DTC for the account of the purchasers of the offered 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 offered
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.
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Because of time zone differences, credits of securities
received in Cedel 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. The credits or any transactions
in the securities settled during the processing will be reported to the relevant
Euroclear or Cedel Participants on the same business day. Cash received in Cedel
or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear Participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
For information with respect to tax documentation procedures relating to the
certificates, see "Federal Income Tax Consequences--REMIC Certificates--Taxation
of regular certificates--Taxation of Certain Foreign Investors" and "--Backup
Withholding" in the prospectus and "Global Clearance, Settlement and Tax
Documentation Procedure--Certain U.S. Federal Income Tax Documentation
Requirements" in Annex I hereto.
Transfers between Participants will occur in accordance with
DTC rules. Transfers between Cedel Participants 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
Cedel Participants or Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the relevant depositary; however, cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by a counterparty in the 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. Cedel
Participants 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 DTC 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 DTC rules, as in effect from time to time.
Cedel Bank, societe anonyme, 67 Bd Grande-Duchesse Charlotte,
L-1331 Luxembourg, was incorporated in 1970 as a limited company under
Luxembourg law. Cedel is owned by banks, securities dealers and financial
institutions, and currently has about 100 shareholders, including U.S. financial
institutions or their subsidiaries. No single entity may own more than five
percent of Cedel's stock.
Cedel is registered as a bank in Luxembourg, and as such is
subject to regulation by the Institute Monetaire Luxembourgeois, the Luxembourg
Monetary Authority, which supervises Luxembourg banks.
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Cedel holds securities for its customers or "Cedel
Participants" and facilitates the clearance and settlement of securities
transactions by electronic book-entry transfers between their accounts. Cedel
provides various services, including safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedel also deals with domestic securities markets in several
countries through established depository and custodial relationships. Cedel has
established an electronic bridge with Morgan Guaranty trust as the Euroclear
operator in Brussels to facilitate settlement of trades between systems. Cedel
currently accepts over 70,000 securities issues on its books.
Cedel's customers are world-wide financial institutions
including underwriters, securities brokers and dealers, banks, trust companies
and clearing corporations. Cedel"s United States customers are limited to
securities brokers and dealers and banks. Currently, Cedel has approximately
3,000 customers located in over 60 countries, including all major European
countries, Canada, and the United States. Indirect access to Cedel is available
to other institutions which clear through or maintain a custodial relationship
with an account holder of Cedel.
Euroclear was created in 1968 to hold securities for its
participants or "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. 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
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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 any payments to the accounts of the applicable DTC
participants in accordance with DTC's normal procedures. Each DTC participant
will be responsible for disbursing 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 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 the
payments will be forwarded by the trustee to DTC, Cedel or Euroclear.
Distributions with respect to certificates held through Cedel or Euroclear will
be credited to the cash accounts of Cedel Participants 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--REMIC Certificates--Taxation of regular
certificates--Taxation of Certain Foreign Investors" and "--Backup 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 Depository
system, or otherwise take actions in respect of the book-entry certificates, may
be limited due to the lack of physical certificates for the book-entry
certificates. In addition, issuance of the book-entry certificates in the book-
entry form may reduce the liquidity of the 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 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 the Depository, and to the financial intermediaries to whose DTC
accounts the book-entry certificates of the 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 pooling and servicing 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 actions
are taken on behalf of financial intermediaries whose holdings include book-
entry certificates. Cedel or the Euroclear operator, as the case may be, will
take any other action permitted to be taken by a certificateholder under the
pooling and servicing agreement on behalf of a Cedel Participant 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 offered certificates which conflict with
actions taken with respect to other offered certificates.
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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 Credit 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 Credit
or the trustee is unable to locate a qualified successor, (b) GreenPoint Credit,
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 pooling and servicing 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 DTC
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 the 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 definitive certificates as
certificateholders under the pooling and servicing agreement.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfer of offered certificates among
participants of DTC, Cedel 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 beneficial ownership interests.
[Formation of the Grantor Trust and Grantor Trust Property]
[Manufactured Housing grantor trust 200[ ]-[ ] will be created
and established pursuant to the grantor trust agreement. [GreenPoint Credit]
will deposit into the grantor trust without recourse $[ ] of class [A-2 fixed]
certificates issued by the trust, and the grantor trust will issue the class [A-
2 floating] certificates.]
[The property of the grantor trust will include:
(1) the class [A-2 fixed] certificates issued by the trust
and all payments to the class [A-2 fixed] certificates
described in this prospectus supplement and proceeds of
the conversion, voluntary or involuntary, of the class
[A-2 fixed] certificates;
(2) amounts as may be held by the grantor trustee in the
grantor trust Account and any other accounts held by
the grantor trustee for the benefit of the owners of
the class [A-2] floating certificates [and the
certificate insurer;
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(3) the rights of the grantor trustee under the related
certificate guaranty insurance policy];
(4) the swap agreement and all payments received
thereunder; and
(5) proceeds of all of the foregoing, including, but not by
way of limitation, cash proceeds, accounts receivable,
notes, drafts, acceptances, chattel paper, checks,
deposit accounts, rights to payments of any and every
kind and other forms of obligations and receivables
which at any time constitute all or part of or are
included in the proceeds of any of the foregoing, to
pay the class [A-2 floating] certificates and to make
payments to the swap counterparty as specified in the
grantor trust agreement.]
[Prior to its formation the grantor trust will have had no
assets or obligations. Upon formation, the grantor trust will not engage in any
business activity other than acquiring, holding and collecting payments on the
class [A-2 fixed] certificates, receiving and making payments under the swap
agreement, issuing the class [A-2 floating] certificates and distributing
payments thereon. The grantor trust will not acquire any receivables or assets
other than the class [A-2 fixed] certificates, the swap agreement and the rights
appurtenant thereto and will not have any need for additional capital resources.
To the extent that payments are made on the class [A-2 fixed] certificates, and
payments are received by the grantor trustee as required under the swap
agreement [or corresponding amounts are received from the certificate insurer],
the grantor trust will have sufficient liquidity to make interest distributions
on the [Class A-2 floating] certificates. Principal distributions on the [Class
A-2 floating] certificates are not insured by the certificate guaranty insurance
policy issued with respect to the class [A-2 floating] certificates[, although
the principal distributions on the [Class A-2 fixed] certificates are insured by
the certificate guaranty insurance policy related to the trust]. As the grantor
trust does not have any operating history and will not engage in a business
activity other than as described above, there has not been included any
historical or pro forma ratio of earnings to fixed charges with respect to the
grantor trust.]
[In addition to the provisions of the grantor trust agreement
summarized elsewhere in this prospectus supplement, there is set forth below a
summary of certain other provisions of the grantor trust agreement.]
[Assignment of class [A-2 fixed] certificates]
[Pursuant to the grantor trust agreement, [GreenPoint Credit]
on the closing date will transfer, assign, set over and otherwise convey without
recourse to the grantor trustee in trust all of its respective right, title and
interest in and to the class [A-2 fixed] certificates and all its respective
right, title and interest in and to principal and interest due on each class [A-
2 fixed] certificate, together with the swap agreement, the amounts on deposit
in the grantor trust Account [and the related certificate guaranty insurance
policy], the "grantor trust estate" Purely as a protective measure and not to be
construed as contrary to the parties' intent that the transfer on the closing
date is a sale, [GreenPoint Credit] has been deemed to have granted to the
grantor trustee a security interest in the grantor trust estate in the event
that the transfer of the grantor trust estate is deemed to be a loan and not a
sale.]
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[In connection with the transfer and assignment of the Class
A-2 fixed certificates on the closing date, [GreenPoint Credit] will deliver to
the grantor trustee without recourse the Class A-2 fixed certificates.]
[Servicing]
[Under the terms of the pooling and servicing agreement, the
servicer will be required to pay all "out of pocket" costs and expenses incurred
in the performance of its servicing obligations under the grantor trust
agreement.]
[Under the terms of the pooling and servicing agreement ,the
servicer agrees to indemnify and hold the grantor trustee[, the certificate
insurer] and each owner of a class [A-2 floating] certificate harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
grantor trustee, the certificate insurer and any owner of a class [A-2 floating]
certificate may sustain in any way related to the failure of the servicer to
perform its duties. The servicer shall immediately notify the grantor trustee[,
the certificate insurer] and each owner if a claim is made by a third party with
respect to the grantor trust agreement. The servicer shall assume, with the
consent of the grantor trustee, the defense of any claim and pay all expenses in
connection therewith, including reasonable counsel fees. The servicer shall also
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the servicer, the grantor trustee[, the certificate insurer] and/or
owner in respect of a claim.]
[Removal and Designation of Servicer]
[The [certificate insurer or the] owners[, with the consent of
the certificate insurer,] will have the right pursuant to the pooling and
servicing agreement, to remove the servicer under the pooling and servicing
agreement upon the occurrence of the following:
. certain acts of bankruptcy or insolvency on the part of
the servicer;
. certain failures on the part of the servicer to perform
its obligations under the pooling and servicing
agreement; or
. the failure to cure material breaches of the servicer's
representations in the pooling and servicing
agreement.]
[The pooling and servicing agreement also provides that the
certificate insurer may remove the servicer if delinquencies and/or losses
exceed certain levels set forth in the pooling and servicing agreement, referred
to in this prospectus supplement as the "servicer termination event."]
[The removal of the servicer pursuant to the pooling and
servicing agreement shall also constitute a removal of the servicer under the
grantor trust agreement.]
[The servicer is not permitted to resign from the obligations
and duties imposed on it under the grantor trust agreement except upon
determination that its duties thereunder are
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no longer permissible under applicable law or are in material conflict by reason
of applicable law with any other activities carried on by it. The other
activities of the servicer described in the preceding sentence so causing any
conflict must be of a type and nature carried on by the servicer on the date of
the grantor trust agreement. Any determination permitting the resignation of the
servicer is required to be evidenced by an opinion of counsel to that effect
which shall be delivered to the grantor trustee [and the certificate insurer] by
the servicer at its expense [,provided that if the certificate insurer and such
owners of the class [A-2 floating] certificates cannot agree as to the
acceptability of such successor servicer, the decision of the certificate
insurer shall control.]]
[The successor servicer appointed pursuant to the pooling and
servicing agreement shall become the successor servicer under the grantor trust
agreement.]
[No removal or resignation of the servicer will become
effective until the trustee or a successor servicer shall have assumed the
servicer's responsibilities and obligations in accordance with the pooling and
servicing agreement.]
[The Grantor Trustee]
[[ ], having its principal corporate trust office at [ ]
will be named as grantor trustee under the grantor trust agreement.]
[Reporting Requirements]
[On each distribution date the grantor trustee is required to
report in writing to each owner of a class [A-2 floating] certificate, each
rating agency and the certificate insurer the same information with respect to
the manufactured housing installment contracts required to be reported by the
trustee as described in the pooling and servicing agreement and with respect to
the class [A-2 floating] certificates, the following information:]
[(1) the amount of the distribution with respect to the
each Class A-2 floating certificates, based on a certificate in the original
principal amount of $1,000;]
[(2) the principal amount and the planned principal
balance, if any, of the class [A-2 floating] certificates, based on a
certificate in the original principal amount of $1,000, which will be
outstanding after giving effect to any payment of principal on the related
distribution date;]
[(3) based upon information furnished by the seller, the
information as may be required by Section 6049(d)(7)(C) of the Code and the
regulations promulgated thereunder to assist the owners in computing their
market discount;]
[(4) whether a delinquency trigger event, cumulative
realized loss trigger event and/or the servicer termination event has occurred
under the pooling and servicing agreement;]
[(5) the senior enhancement percentage;
[(6) the overcollateralization amount;]
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[(7) the amount of any applied realized loss amount,
realized loss amortization amount and unpaid realized loss amount for the
subordinate certificates as of the close of the related distribution date;]
[(8) the Pass-Through Rate for the Class A-2 floating
certificates; and]
[(9) the amount of any Insured Payment included in the
distribution to owners of Class A-2 floating trust certificates.]
[Certain obligations of the grantor trustee to provide
information to the owners are conditioned upon such information being received
from the servicer.]
[In addition, on each distribution date the grantor trustee
will be required to distribute to each owner [and the certificate insurer],
together with the information described above, the same information distributed
to owners by the trustee under the pooling and servicing agreement.]
[Termination of the Trust]
[The grantor trust agreement provides that the grantor trust
will terminate upon the payment to the owners of all class [A-2 floating]
certificates from amounts [other than those available under the related
certificate guaranty insurance policy] of all amounts required to be paid to the
owners upon the final payment of the class [A-2 fixed] certificate.]]
Calculation of LIBOR
On each LIBOR determination date, the trustee will determine
LIBOR for the next accrual period for each class of the floating Rate
certificates.
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 pooling and servicing agreements:
. the electing portion of the trust will qualify, for
federal income tax purposes, as a "real estate mortgage
investment conduit" or "REMIC" within the meaning of
Sections 860A through 860G of the Code;
. the offered certificates, together with the Class B-2
certificates, evidence the "regular interests" in the
REMIC; and
. the Class R certificates is the sole class of "residual
interests" in the REMIC, respectively, each within the
meaning of the REMIC Provisions in effect on the date
hereof. Sections 860A through 860G of the Code are
referred to in this prospectus supplement as the "REMIC
Provisions."
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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 offered
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 the statements in the prospectus as supplemented by the
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 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." 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 the offered certificates under the accrual method of accounting, regardless
of their normal tax accounting method.
For federal income tax reporting purposes, the class __ and
class __ certificates will be treated as having been issued with original issue
discount. All other classes of offered certificates will be treated as not
having been issued with original issue discount for federal income tax reporting
purposes. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes will be based on the assumption that, subsequent to
the date of any determination the contracts will prepay at a rate equal to __%
of the Prepayment Assumption. No representation is made that the contracts will
prepay at that rate or at any other rate. See "Federal Income Tax
Consequences--REMIC Certificates--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
certificateholder, the amount of original issue discount allocable to the period
would be zero and such certificateholder will be permitted to offset the
negative amount only against future original issue discount, if any,
attributable to the certificates.
In certain circumstances OID Regulations 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 a 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.
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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 a class of certificates will be treated as holding a certificate with
amortizable bond premium will depend on the certificateholder's purchase price
and the distributions remaining to be made on the certificate at the time of its
acquisition by the certificateholder. Holders of such classes of certificates
should consult their tax advisors regarding the possibility of making an
election to amortize the premium. See "Federal Income Tax Consequences--REMIC
Certificates--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 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
the offered certificates are treated as "real estate assets" under Section
856(c)(4)(A) of the Code. Moreover, the offered 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. However, prospective
investors in offered certificates that will be generally treated as assets
described in Section 860G(a)(3) of the Code should note that, notwithstanding
the treatment as assets, any repurchase of a certificate pursuant to the right
of the servicer or the holder of the Class R certificates to repurchase such
certificate may adversely affect any REMIC that holds such certificate if the
repurchase is made under circumstances giving rise to a Prohibited Transaction
Tax. See "The Pooling and Servicing Agreement--Termination" 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--REMICs" in the prospectus.]
[Grantor Trust]
[Orrick, Herrington & Sutcliffe LLP, special tax counsel, is of the
opinion that for federal income tax purposes, assuming compliance with the terms
of the grantor trust agreement, the grantor trust created pursuant to the
grantor trust agreement will constitute a grantor trust under Subpart E, Part I
of Subchapter J of the Code, and not an association taxable as a corporation.
Accordingly, each holder of a Class A-2 floating certificate issued by the
grantor trust will be treated as the owner of an undivided interest in the Class
A-2 fixed certificates, which as described above are "regular interests" in a
REMIC, the swap agreement, the certificate guaranty insurance policy and other
assets held by the grantor trust. See "Federal Income Tax Consequences--REMIC
Elections" and "--Non-REMIC trusts" in the prospectus.]
[Although the Class A-2 floating certificates resemble in certain
respects variable rate debt instruments, their tax treatment can differ
substantially from that type of investment. The certificates may not be a
suitable investment for individuals, trusts or estates and certain "pass-thru
entities," the beneficial owners of which are individuals, trusts or estates.
The class [A-2 floating] certificates may not be a suitable investment for real
estate investment trusts or REMICs. Moreover, other special rules may apply to
certain investors, including dealers in
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securities, dealers in notional principal contracts, and persons holding the
class [A-2 floating] certificates or any of the assets in the grantor trust as
part of a straddle.]
[The interest in the swap agreement will not constitute a "real estate
asset" within the meaning of Section 856(c)(4)(A) of the Code if held by a real
estate investment trust, a "qualified mortgage" or "permitted investment" within
the meaning of Sections 860G(a)(3) and 860G(a)(5) of the Code, respectively, if
held by a REMIC, nor an asset described in Section 7701(a)(19)(c)(xi) if held by
a domestic building and loan association. Further, the income received under the
swap agreement will not constitute income described in Section 856(c)(3)(B) for
a real estate investment trust.]
[A purchaser of class [A-2 floating] certificates will be required to
allocate its purchase price among its ownership interest in the various assets
of the grantor trust. In general, the allocation would be based on the relative
fair market values of the assets on the date of purchase of the [Class A-2
floating] certificate. No representation is or will be made as to the relative
fair market values and holders of class [A-2 floating] certificates should
consult their tax advisors concerning the determination of the fair market
values and the taxation of the holder's interest in the swap agreement, the tax
treatment of which is generally governed by the provisions of the Code and
Treasury regulations relating to notional principal contracts and possibly those
relating to straddles.]
[Each holder of a class [A-2 floating] certificate must report on its
federal income tax return ordinary income equal to its share of the interest
payable with respect to the Class A-2 fixed certificates and a proportionate
share of the net amounts payable to the grantor trust under the swap agreement,
and may deduct the portion of the expenses incurred by the grantor trust that is
allocable to such certificate, including net payments under the swap agreement,
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 the assets held by the grantor
trust and incurred directly its share of expenses incurred by the grantor trust.
A holder of class [A-2 floating] certificates that is an individual, estate or
trust should consult its tax advisers concerning possible limitations on the
deductibility of expenses of the grantor trust. See "Federal Income Tax
Consequences -- REMIC Elections" and "--Non-REMIC trusts" in the prospectus.]
ERISA Considerations
General
The Employee Retirement Income Security Act of 1974 or
"ERISA," as amended, and Section 4975 of the Code impose certain restrictions on
employee benefit and other ERISA plans that are subject to ERISA and/or Section
4975 of the Code and on persons who are fiduciaries with respect to such ERISA
plans. See "ERISA Considerations" in the prospectus.
Prospective ERISA plan investors should consult with their
legal advisors concerning the impact of ERISA and the Code, the applicability of
the Exemption and other administrative exemptions under ERISA, and the potential
consequences in their specific circumstances, prior to making an investment in
the offered certificates. Moreover, each ERISA plan fiduciary should determine
whether under the general fiduciary standards of investment
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prudence and diversification an investment in the offered certificates is
appropriate for the ERISA plan, taking into account the overall investment
policy of the ERISA plan and the composition of the ERISA plan's investment
portfolio.
Senior Certificates
The Department of Labor or DOL has granted to [ ]
administrative exemptions, collectively, 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
ERISA 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 ERISA plan of the
senior certificates are the following:
(1) The acquisition of the senior certificates by a ERISA
plan is on terms, including the price for the senior certificates, that are at
least as favorable to the ERISA plan as they would be in an arm's-length
transaction with an unrelated party.
(2) The rights and interests evidenced by the senior
certificates acquired by the ERISA plan are not subordinated to the rights and
interests evidenced by other certificates of the trust.
(3) The senior certificates acquired by the ERISA plan have
received a rating at the time they were acquired that is in one of the three
highest generic rating categories from either S&P, Moody's or Fitch,
collectively referred to as the "Exemption Rating Agencies."
(4) The trustee is not an affiliate of the underwriters of
the offered certificates, GreenPoint Credit, the obligor under any alternative
credit enhancement, any obligor with respect to contracts included in the trust
constituting more than 5% of the aggregate unamortized principal balance of the
assets in the trust, 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 is an obligor with
respect to contracts constituting more than 5% of the aggregate unamortized
principal balance of the assets of the trust.
(5) The sum of all payments made to and retained by the
underwriters of the offered certificates in connection with the distribution of
the senior certificates represents not more than reasonable compensation for
underwriting the senior certificates. The sum of all payments made to and
retained by the seller pursuant to the sale of the contracts to the trust
represents not more than the fair market value of the related contracts. The sum
of all payments made to and retained by GreenPoint Credit, represents not more
than reasonable compensation
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for GreenPoint Credit's services under the pooling and servicing agreement and
reimbursement of GreenPoint Credit's reasonable expenses in connection
therewith.
(6) The ERISA 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 a trust pursuant to a binding
pooling and servicing agreement, subject to the foregoing general conditions and
to certain additional requirements. [The seller believes that the Exemption will
apply to the acquisition and holding of senior certificates by ERISA plans 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
senior certificates between either seller or the underwriters of the offered
certificates and a ERISA plan when the person who has discretionary authority or
renders investment advice with respect to the investment of the ERISA plan's
assets in the senior certificates, referred to in this prospectus supplement as
the "Fiduciary," is (a) an obligor with respect to 5% or less of the fair market
value of contracts in the trust 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
ERISA plan.
(2) In connection with the initial issuance of senior
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 is acquired by persons independent of the
Restricted Group.
(3) The ERISA plan's investment in the senior certificates
does not exceed 25% in Percentage Interests of any such class of certificates
outstanding at the time of acquisition.
(4) Immediately after the acquisition of the senior
certificates, no more than 25% of the assets of a ERISA plan with respect to
which the Fiduciary has discretionary authority or renders investment advice are
invested in certificates representing an interest in a trust containing assets
sold or serviced by the same entity.
(5) The Exemption also applies to the direct or indirect
acquisition or disposition of senior certificates by a ERISA plan in the
secondary market if certain conditions are met and the continued holding of
senior certificates acquired in initial or secondary markets.
On July 21, 1997, the DOL published in the Federal Register an
amendment to the Exemption, which extends exemptive relief to certain mortgage-
backed and asset-backed securities transactions using pre-funding accounts for
trusts issuing pass-through certificates. With respect to the senior
certificates, the amendment generally allows subsequent contracts
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supporting payments to certificateholders, and having a value equal to no more
than 25% of the total principal amount of the certificates, to be transferred to
the trust during the pre-funding period, instead of requiring that all the
contracts be either identified or transferred on or before the closing date. In
general, the relief applies to the purchase, sale and holding of certificates
which otherwise qualify for the Exemption, provided that the following general
conditions are met:
(1) The ratio of the amount allocated to the pre-funding
account to the total principal amount of the offered certificates must not
exceed 25%.
(2) All subsequent contracts transferred to the trust after
the closing date must meet the same terms and conditions for eligibility as the
initial contracts used to create the trust, which terms and conditions have been
approved by one of the Exemption Rating Agencies.
(3) The transfer of the subsequent contracts to the trust
during the pre-funding period must not result in the certificates receiving a
lower credit rating from an Exemption rating agency upon termination of the pre-
funding period than the rating that was obtained at the time of the initial
issuance of the certificates by the trust.
(4) Solely as a result of the use of pre-funding, the
weighted average annual percentage interest rate for all of the contracts in the
trust at the end of the pre-funding period must not be more than 100 basis
points lower than the weighted average annual percentage interest rate for the
contracts which were transferred to the trust on the closing date.
(5) Either:
(i) the characteristics of the subsequent contracts
must be monitored by an insurer or other credit support
provider which is independent of the seller; or
(ii) an independent accountant retained by the seller
must provide the seller with a letter, with copies provided to
the Exemption Rating Agencies rating the certificates, the
underwriter of the offered certificates and the trustee,
stating whether or not the characteristics of the subsequent
contracts conform to the characteristics described in the
prospectus supplement and/or pooling and servicing agreement.
In preparing such letter, the independent accountant must use
the same type of procedures as were applicable to the
contracts which were transferred to the trust as of the
closing date.
(6) The pre-funding period must end no later than three
months or 90 days after the closing date or earlier in certain circumstances if
the pre-funding account falls below the minimum level specified in the pooling
and servicing agreement or an event of default occurs.
(7) Amounts transferred to the pre-funding account and any
capitalized interest account used in connection with the pre-funding may be
invested only in cash or in investments which are permitted by the Exemption
Rating Agencies rating the certificates, and the permitted investment must be
described in the pooling and servicing agreement and must:
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(i) be direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided that the obligations
are backed by the full faith and credit of the United States; or
(ii) have been rated, or the obligor has been rated, in one of
the three highest generic rating categories by one of the Exemption
Rating Agencies.
(8) The prospectus or prospectus supplement must describe the
duration of the pre-funding period;
(9) The trustee, or any agent with which the trustee contracts to
provide trust services, must be a substantial financial institution or trust
company experienced in trust activities and familiar with its duties,
responsibilities and liabilities as a fiduciary under ERISA. The trustee, as
legal owner of the trust, must enforce all the rights created in favor of
certificateholders of the trust, including ERISA plans.
[The class [A-2 floating] certificates]
[The Exemption will not apply to the purchase, holding or subsequent
resale of the class [A-2 floating] certificates. However, Section II of DOL
Prohibited Transaction Class Exemption, or PTCE, 75-1, regarding principal
transactions by broker-dealers should be applicable to the acquisition of the
class [A-2 floating] certificates, provided that the underwriter of the offered
certificates is not a fiduciary with respect to the ERISA plan and is not a
Party in Interest, as defined in the prospectus, with respect to the ERISA plan
by reason of being a participating employer or affiliate thereof. In addition,
one or more of the following PTCEs may be applicable to the purchase, holding or
subsequent resale of the class [A-2 floating] certificates by a ERISA plan:
(1) PTCE 96-23, regarding investments determined by in-house asset
managers;
(2) PTCE 95-60, regarding investments by insurance company pooled
accounts;
(3) PTCE 91-38, regarding investments by bank collective investment
funds;
(4) PTCE 90-1, regarding investments by insurance company pooled
separate accounts; or
(5) PTCE 84-14, regarding transactions negotiated by qualified
professional asset managers.
To the extent that the acquisition of a class [A-2 floating]
certificate by or with "plan assets" of a ERISA plan is deemed for purposes of
ERISA to be a purchase of an interest in the class [A-2 fixed] certificates, the
Exemption should be applicable to the purchase, holding or subsequent resale of
the interest in class [A-2 fixed] certificates.
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Class M and Class B-1 Certificates
A ERISA plan fiduciary or other person investing "plan assets" of any
ERISA plan will not be permitted to purchase or hold the Class M and Class B-1
Certificates, unless such person delivers to the trustee the certificate or
opinion referred to below, as such actions may give rise to a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code. See "ERISA
Considerations" in the prospectus. Because the Class M and Class B-1
Certificates do not meet the requirements of the Exemption, it does not provide
exemptive relief for the purchase or holding of the Class M or Class B-1
Certificates with "plan assets" of any ERISA plan.
In addition, no transfer of a Class M or Class B-1 Certificate shall
be registered unless the prospective transferee provides the trustee[, the
seller and the servicer] with (a) a certification to the effect that the
transferee (1) is neither a ERISA plan, a person acting on behalf of any ERISA
plan nor a person using "plan assets" of any ERISA plan, or (2) if the
transferee is an insurance company, it is purchasing Class M or Class B-1
Certificates with funds contained in an "insurance company general account," as
that term is defined in Section V(e) of PTCE 95-60, and represents that the
purchase and holding of Class M or Class B-1 Certificates is eligible for the
exemptive relief available under Sections I and III of PTCE 95-60; or (b) an
opinion of counsel satisfactory to the trustee[, the seller and the servicer,]
and upon which the trustee[, the seller and the servicer] shall be entitled to
rely, to the effect that the purchase or holding of Class M or Class B-1
Certificates by the prospective transferee will not result in any non-exempt
prohibited transaction under ERISA or Section 4975 of the Code and will not
subject the trustee[, the seller or the servicer] to any obligation in addition
to those undertaken by the trustee[, the seller or the servicer] in the pooling
and servicing agreement, which opinion of counsel shall not be an expense of the
trustee[, the seller or the servicer]. owners of the Class M or Class B-1
Certificates will be deemed to have made one of the certifications in clauses
(a)(1) and (a)(2) above.
Fiduciary Review
In addition to the matters described above, purchasers of class [A-2
floating] certificates that are insurance companies should consult with their
legal advisors with respect to the United States Supreme Court case interpreting
the fiduciary responsibility rules of ERISA, JOHN HANCOCK MUTUAL LIFE INSURANCE
CO. V. HARRIS TRUST AND SAVINGS BANK, 510 U.S. 86 (1993). In JOHN HANCOCK, the
Supreme Court ruled that assets held in an insurance company's general account
may be deemed to be "plan assets" for ERISA purposes under certain
circumstances. Prospective purchasers using insurance company general account
assets should determine whether the JOHN HANCOCK decision or federal legislation
affecting insurance company general accounts (see Section 1460 of the Small
Business Job Protection Act of 1996) affects their ability to purchase of the
certificates.
Before purchasing a senior certificate, a fiduciary of a ERISA 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 exemption will be
applicable to the certificate. Any ERISA plan fiduciary or other person
considering whether to purchase a senior certificate with "plan assets" of any
ERISA plan should
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consult with its own legal advisors concerning the impact of ERISA and the Code,
the applicability of the Exemption and other administrative exemptions under
ERISA, and the potential consequences to its specific circumstances, prior to
making an investment in the certificates. Moreover, each ERISA plan fiduciary
should determine whether under the general fiduciary standards of investment
procedure and diversification an investment in the senior certificates is
appropriate for the ERISA plan, taking into account the overall investment of
the ERISA plan and the composition of the ERISA plan's investment portfolio.
Ratings
It is a condition to the issuance of the certificates that the senior
certificates be rated "[ ]" by [ ], that the Class M Certificates be rated at
least "[ ]" by [ ] and that the Class B certificates be rated at least "[ ]" by
[ ]. 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 rating of the offered certificates should be evaluated
independently of similar security ratings assigned to other kinds of securities.
The ratings assigned by [ ] to the offered certificates:
. address the likelihood of the receipt by the certificateholders
of their allocable share of principal and/or interest on the
underlying assets; and
. take into consideration:
- the credit quality of the related underlying assets,
- any credit support arrangements,
- structural and legal aspects associated with the offered
certificates, and
- the extent to which the payment stream on such underlying
assets is adequate to make payments required by the offered
certificates.
[ ] ratings on the offered certificates do not constitute a
statement:
. regarding frequency of prepayments on the underlying assets, or
. as to whether yield may be adversely affected as a result
thereof.
An explanation of the significance of such ratings may be obtained
from [ ], [ ], New York, New York [ ], telephone [( )- ].
The seller has not requested a rating on the offered certificates by
any rating agency other than [ ]. 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 rating would be assigned to the
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offered certificates by any 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 the offered certificates by [ ].
Legal Investment
The [senior certificates and Class M Certificates] offered hereby will
not constitute "mortgage related securities" under SMMEA until such time as the
balance of the pre-funding account is reduced to zero. At the time the pre-
funding account is reduced to zero, the [senior certificates and Class M
Certificates] will constitute legal investments for certain types of investors
to the extent provided in SMMEA. Investors should consult their own legal
advisors in determining whether and to what extent the senior certificates
constitute legal investments for them.
Because the Class B-1 Certificates will not, at the time of issuance,
be rated in one of the two highest rating categories of Moody's and Fitch, the
Class B-1 Certificates will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions with legal authority to invest
in more highly rated securities based on first mortgage loans may not be legally
authorized to invest in the Class B-1 Certificates. No representation is made as
to any regulatory requirements or considerations, including without limitation
regulatory capital or permissible investment requirements, applicable to the
purchase of the Class B-1 Certificates by banks, savings and loan associations
or other financial institutions. Investors should consult their own legal
advisors in determining whether and to what extent the offered certificates
constitute legal investments for them. See "Legal Investment" in the prospectus.
Method Of Distribution
Subject to the terms and conditions of the underwriting agreement, the
seller has agreed to sell, and [each of ] underwriters of the offered
certificates has agreed to purchase from the seller[s], the respective principal
amounts of the offered certificates set forth below its name in the table below.
Underwriters
------------
Principal Amount of
-------------------
Class A-1 certificates................................. $
[Class A-IO Certificates................................ $ ]
Class M Certificates.................................... $
Class B-1 Certificates.................................. $
In the underwriting agreement, the underwriters of the offered
certificates have agreed, subject to the terms and conditions set forth therein,
to purchase all of the offered certificates offered hereby if any offered
certificates are purchased. In the event of default by an underwriter of the
offered certificates, the underwriting agreement provides that, in certain
circumstances, the underwriting agreement may be terminated.
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The seller has been advised by the underwriters of the offered
certificates that they propose initially to offer the offered 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 [ %] of the
Class A-1 Certificate balance, [ %] of the Class A-IO offering price, [ %] of
the Class M Certificate balance and [ %] of the Class B-1 Certificate balance.
The underwriters of the offered certificates may allow dealers, and such dealers
may allow, a concession not in excess of [ %] of the Class A-1 Certificate
balance, [[ %] of the Class A-IO offering price,] [ %] of the Class M
Certificate balance and [ %] of the Class B-1 Certificate balance. After the
initial public offering of the offered certificates, the public offering prices
and any concessions may be changed.
The underwriting agreement provides that the seller will indemnify the
underwriters of the offered certificates against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or contribute to
payments the underwriters of the offered certificates may be required to make in
respect thereof.
The underwriters of the offered certificates will reimburse certain
expenses of the seller.
In connection with the sale of the offered certificates, the
underwriters of the offered certificates and other persons participating in the
sale may engage in transactions that stabilize, maintain or otherwise affect the
price of the offered certificates. Specifically, the underwriters of the offered
certificates may over-allot in connection with the sale, creating a short
position in the offered certificates for their own account. To cover over-
allotments or to stabilize the price of the offered certificates, the
underwriters of the offered certificates may bid for, and purchase, offered
certificates in the open market. The underwriters of the offered certificates
may also impose a penalty bid whereby they may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the offered certificates,
if the underwriters of the offered certificates repurchase previously
distributed offered certificates in transactions to cover their short position,
in stabilization transactions or otherwise. Finally, the underwriters of the
offered certificates may bid for, and purchase, offered certificates in market
making transactions. These activities may stabilize or maintain the market price
of the offered certificates above market levels that may otherwise prevail. The
underwriters of the offered certificates are 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.]
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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 underwriters of
the offered certificates by [ ].
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Annex I
Global Clearance, Settlement And
Tax Documentation Procedures
Except in certain limited circumstances, the globally offered
GreenPoint Credit Manufactured Housing contract trust [Senior/Subordinate] Pass-
Through Certificates, series 200[]-[] or "Global Securities" will be available
only in book-entry form. Investors in the Global Securities may hold Global
Securities through any of DTC, Cedel 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 Cedel 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 Cedel or Euroclear and DTC
Participants holding certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear, in such
capacity, and as DTC Participants.
Non-U.S. holders of Global Securities will be subject to U.S.
withholding taxes unless such Non-U.S. holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions noting on their
behalf as direct and indirect Participants in DTC. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable conventional eurobonds, except that
there will be no temporary global security and no "lock-up" or restricted
period. Investors securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" restricted period. Global Securities
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will be credited to the securities custody accounts on the settlement date
against payment same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade 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
DTC Participants will be settled using the procedures applicable to prior
manufactured housing contract pass-through certificates issues in same-day
funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of the actual number of days
in the relevant accrual period and a year assumed to consist of 360 days. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. Payment will then
be made by the respective Depositary of the DTC 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 Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date,
which would be the preceding day when settlement occurred in New York. If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants 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 preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or
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Euroclear Participants 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 the Global Securities earned during that one-day period may
substantially reduce or offset the amount of overdraft charges, although this
result will depend on each Cedel Participant's or Euroclear Participant's
particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective European depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC Purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel Participants or Euroclear Participants through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. In these cases Cedel or Euroclear will instruct the respective
Depositary, as appropriate, to deliver the Global Securities to the DTC
Participant's account against payment. Payment will include interest accrued on
the Global Securities from and including the last coupon payment to and
excluding the settlement date on the basis of either the actual number of days
in the relevant accrual period and a year assumed to consist of 360 days or a
360-day year of twelve 30-day months, as applicable to the related class of
Global Securities. For transactions settling on the 31st of the month, payment
will include interest accrued to and excluding the first day of the following
month. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's account would be
back-valued to the value date, which would be the preceding day, when settlement
occurred in New York. Should the Cedel Participant or Euroclear Participant have
a line of credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft 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 Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day, until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts, in accordance with the clearing system's customary procedures;
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borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give the
Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
Cedel 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, (1) 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 beneficial owner and the U.S. entity required to withhold
tax complies with applicable certification requirements and (2) the 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). 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.
If the information shown on Form W-8 changes, a new Form W-8 must be filed
within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). 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.
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial 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. If 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.
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 and Form 1001 are effective for
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three calendar years and Form 4224 is effective for one calendar year. The term
"U.S. Person" means:
(1) a citizen or resident of the United States;
(2) a corporation or partnership organized in or under the laws of
the United States or any political subdivision thereof; or
(3) 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
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 OID 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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$[ ]
(Approximate)
[GREENPOINTCREDIT, LLC LOGO]
Seller and Servicer
Manufactured Housing Contract Trust
Pass-Through Certificates, Series [ ]-[ ]
PROSPECTUS SUPPLEMENT
[_____], [__]
[UNDERWRITER]
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, for ninety days from the date of this
prospectus supplement, all dealers selling the offered certificates will deliver
a prospectus supplement and prospectus.
<PAGE>
Information contained in this prospectus supplement is subject to completion or
amendment. A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the accompanying prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to Completion, Dated [_____], 200[_]
[Form of Note] Prospectus Supplement
To Prospectus Dated [ ]
$[AMOUNT]
(Approximate)
[GREENPOINT CREDIT, LLC LOGO],
Seller and Servicer
[GREENPOINT ASSET LLC LOGO]/[TRUST]
Issuer
The securities issuer is offering the notes in the amount, at the note rate
and for the prices listed in the table below:
<TABLE>
<CAPTION>
Underwriting
Principal Balance Price to Discounts and Proceeds to
Note Rate Public Commissions Seller
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$[ ] [LIBOR + []%] [ ]% [ ]% $[ ]
</TABLE>
[The required monthly payments of interest and scheduled principal are
unconditionally guaranteed to the holders of the notes by [INSURER]. See
"[INSURER]" and "Description of the Notes--Note Guaranty Insurance Policy" in
this prospectus supplement.]
---------------------------------------------------------------------
Consider carefully the risk factors beginning on page S-[ ] in this
prospectus supplement and at page [ ] in the accompanying prospectus.
---------------------------------------------------------------------
This prospectus supplement may be used to offer and sell a series of notes only
if accompanied by the prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or determined that this
prospectus supplement or the prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
<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 to 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 notes 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 notes, and
. this prospectus supplement, which describes the specific terms of your
series of notes.
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page S-
<S> <C>
Summary Information.................................................................................................. 3
Risk Factors......................................................................................................... 10
The Contract Pool.................................................................................................... 16
The Seller........................................................................................................... 23
GreenPoint Credit, LLC's Management's Discussion and Analysis of Delinquency, Repossession and Loan Loss Experience.. 24
Prepayment And Yield Considerations.................................................................................. 26
Weighted Average Life of the Offered Notes........................................................................... 30
[Sensitivity Of The Class A-IO Notes]................................................................................ 34
[Pre-Tax Yields on the Class A-IO Notes]............................................................................. 35
Description Of The Notes............................................................................................. 36
General.............................................................................................................. 36
Note Rates........................................................................................................... 37
Conveyance of Contracts.............................................................................................. 38
[Conveyance of [subsequent contracts and] [pre-funding account]...................................................... 42
Payments on the Contracts; Payment Account........................................................................... 44
Distributions........................................................................................................ 46
[Reserve Account].................................................................................................... 47
Subordination........................................................................................................ 48
Losses on liquidated contracts....................................................................................... 48
Example of Distributions............................................................................................. 49
Advances............................................................................................................. 50
Reports to Noteholders............................................................................................... 52
Optional Termination and Termination Auction......................................................................... 53
Termination of the Indenture......................................................................................... 54
Collection and Other Servicing Procedures............................................................................ 55
Servicing Compensation; Certain Other Matters Regarding the servicer................................................. 55
The Indenture Trustee................................................................................................ 55
[Registration of the Offered Notes................................................................................... 56
[Formation of the Grantor Trust and Grantor Trust Property].......................................................... 61
[Assignment of class [A-2 Fixed] notes].............................................................................. 62
[Servicing].......................................................................................................... 62
[Removal and Designation of Servicer]................................................................................ 63
[The Grantor Indenture Trustee]...................................................................................... 63
[Reporting Requirements]............................................................................................. 63
[Termination of the Trust]........................................................................................... 64
Calculation of LIBOR................................................................................................. 64
Federal Income Tax Consequences...................................................................................... 65
[Grantor Trust]...................................................................................................... 67
ERISA Considerations................................................................................................. 69
General.............................................................................................................. 69
senior Notes......................................................................................................... 69
[The class [A-2 Floating] notes]..................................................................................... 72
Class M and Class B-1 Notes.......................................................................................... 73
Fiduciary Review..................................................................................................... 73
Ratings.............................................................................................................. 74
Legal Investment..................................................................................................... 75
Method Of Distribution............................................................................................... 75
Use Of Proceeds...................................................................................................... 76
Legal Matters........................................................................................................ 76
Global Clearance, Settlement And Tax Documentation Procedures........................................................ I-1
</TABLE>
S-2
<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 notes, 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.
Capitalized terms used in this prospectus supplement and not otherwise defined
in this prospectus supplement have the meanings assigned in the prospectus.
What The Offered Notes Represent
The notes represent indebtedness of [a trust/GreenPoint Asset LLC]. The
[trust/GreenPoint Asset LLC] will pledge a pool of manufactured housing
installment sales contracts, installment loan agreements and certain other
assets as collateral to secure indebtedness, as described under "Description of
the Notes--General" in this prospectus supplement.
The notes only represent interests in the assets pledged by [the
trust/GreenPoint Asset LLC]. All payments to noteholders will come only from the
amounts received in connection with those pledged assets.
Information About The Contract Pool
The contract pool consists of approximately [ ] contracts with an aggregate
scheduled principal balance as of [ ] of approximately $[ ]. Each contract
was either originated or purchased by GreenPoint Credit, LLC
[The contract pool consists of two contract groups. As of [ ]:
. contract group I consists of approximately [ ] fixed rate contracts with an
aggregate scheduled principal balance of approximately $[ ]; and [For a
further description of the contracts, see "The Contract Pool" in this
prospectus supplement.]
The Offered Notes
GreenPoint Credit, LLC will sell a pool of manufactured housing installment
sales contracts, installment loan agreements and certain other assets to [a
trust/GreenPoint Asset LLC]. [The trust has been created for the purpose of
issuing the Manufactured Housing Contract-Backed Notes, Series 200[]-[ ] which
will be secured by the assets purchased from GreenPoint Credit, LLC.]
[GreenPoint Asset LLC will issue the Manufactured Housing Contract-Backed Notes,
Serites 200[]-[ ] which will be secured by the assets purchased from GreenPoint
Credit, LLC.] The approximate initial principal balance, initial note rate and
last scheduled distribution date of the notes will be as follows:
initial Principal Last Scheduled
Balance Note Rate distribution date
------------ --------- -----------------
$ [ ] [LIBOR
+[]%]
_______________
. [The note rate is capped at the weighted average net contract rates of the
contracts. ]
[The trust/GreenPoint Asset LLC] will also issue one or more classes of
certificates. The certificates will not be sold to the public. The certificates
are not being offered by this prospectus supplement.
Denominations
The notes are offered in minimum denominations of $1,000 each and multiples of
$1 in excess thereof.
S-3
<PAGE>
[The Note Guaranty Insurance Policy and [Insurer]]
[INSURER] will provide a note guaranty insurance policy to protect noteholders
against certain losses. In most instances, as described in more detail in this
prospectus supplement, if funds in the [group I and group II] note account[s, as
applicable,] are insufficient to distribute interest or scheduled principal to
the noteholders on any distribution date, [INSURER] will make a payment into the
[respective] note account to cover the shortfall under a note guaranty insurance
policy. See "[INSURER]" and "Description of the Notes--Note Guaranty Insurance
Policy" in this prospectus supplement.]
[Letter of Credit]
[[LETTER OF CREDIT PROVIDER] will provide a letter of credit to protect
noteholders against certain losses. As described in more detail in this
prospectus supplement, if funds in the note account are insufficient to
distribute interest or scheduled principal to the noteholders on any
distribution date, [LETTER OF CREDIT PROVIDER] may be required to make a payment
into the note account to cover the shortfall pursuant to a draw on the letter of
credit. See "The Letter of Credit Provider" and "Description of the Notes--The
Letter of Credit" in this prospectus supplement.]
[Swap Agreement
Pursuant to a swap agreement, on each distribution date, the swap counterparty
will be entitled to receive from [the trust/GreenPoint Asset LLC]
the distributions of interest on the outstanding note principal balance of the
notes immediately prior to the related distribution date, which are calculated
at a fixed rate of [ ]% per annum. On each distribution date, the swap
counterparty will be obligated to pay to the trust an amount equal to one
months' interest at the note rate on the outstanding note principal balance
immediately prior to the related distribution date. The swap counterparty is
[].]
[Reserve Account
The indenture trustee shall establish a reserve account for the benefit of the
holders of notes. The reserve account will be funded as described under
"Description of the Notes--Reserve Account" in this prospectus supplement. ]
[pre-funding account
GreenPoint Credit, LLC will deposit an amount in the pre-funding account to
provide the trust with sufficient funds to purchase the subsequent contracts. In
no event will:
. the pre-funding account extend beyond 90 days past the date of initial
issuance of the notes;
. amounts deposited into the pre-funding account be greater than 25% of the
balance of the notes on the date of initial issuance of the notes; or
. amounts on deposit in the pre-funding account be held in anything other than
cash or invested in anything other than eligible investments as defined under
"Description of the Notes--Payments on the Contracts; Payment Account" in
this prospectus supplement.
See "Prepayment and Yield Considerations" and "Description of the Notes--
Conveyance
S-4
<PAGE>
of subsequent contracts and pre-funding account" in this prospectus supplement.]
Distributions On The Notes
General
Each month, the indenture trustee, [TRUSTEE], will make distributions of
interest and principal to the holders of the notes.
. The first distribution date with respect to the notes will be [_____] 15,
200[_].
. Thereafter, distributions on the notes will be made on the 15th day of each
month, or if the 15th day is not a business day, on the next business day.
The obligors under the contracts will pay their interest and principal during
each month to the servicer of the contracts. Within two business days of receipt
of payments from obligors, the servicer will forward these amounts to the
indenture trustee. On the distribution date occurring in the following month,
the indenture trustee will distribute the amount remitted by the servicer, less
fees and expenses owed to the servicer, to the holders of the notes, in the
amount and priority set forth in this prospectus supplement. See "Description of
the Notes--Priority of Distributions" in this prospectus supplement.
Distributions of Interest
Interest Accrual. 1/12th of the related note rate on the related principal
balance immediately prior to the related distribution date.
Interest period. For any distribution date, the calendar month preceding that
distribution date.
See "Description of the Notes--Interest Distributions" and "Risk Factors--Due to
the Delay in Payment of Fifteen Days, the Effective Yield on the Notes May Be
Lower Than What Would Otherwise Be Produced by the Applicable Note Rate of the
Offered Notes" in this prospectus supplement.
On each distribution date, interest will be distributed to noteholders in the
order described in "Description of the Notes--Priority of Distributions" in this
prospectus supplement. It is possible that, on any given distribution date,
there will be insufficient payments from the contracts to cover interest owed on
the notes. If there are insufficient payments on the contracts[, and there is a
default by [INSURER] under the note guaranty insurance policy,] the outstanding
notes may not receive the full amount of accrued interest.
The notes 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 "[INSURER]" and
"Description of the Notes--Note Guaranty Insurance Policy" and "Description of
the Notes--Priority of Distributions" in this prospectus supplement.
[LIBOR. The note rate will be adjusted each month, based on changes in LIBOR
for one-month U.S. dollar deposits, as described in "Description of the Notes--
Note Rates and Last Scheduled distribution dates" in this prospectus supplement.
]
Distributions of Principal
General. Noteholders will receive payments of principal corresponding to
payments of principal on the [related] contract[s] [group].
S-5
<PAGE>
Notes. On each distribution date, a certain portion of collections received on
the contracts will be distributed to the notes in the amounts set forth in this
prospectus supplement. See "Description of the Notes--Priority of Distributions"
in this prospectus supplement.
It is possible that there will be insufficient payments from the contracts to
cover principal payable to you. If there is a shortfall in collections [for a
contract group] [and there is a default by [INSURER] under the note guaranty
insurance policy,] a holder of a note may not receive the full amount of
principal distributions to which it is otherwise entitled. See "[INSURER]" and
"Description of the Notes--Note Guaranty Insurance Policy" and "Description of
the Notes--Priority of Distributions" in this prospectus supplement.
Allocation Of Losses
A contract suffers a loss when the servicer determines that:
. it has received all amounts it expects to recover from that contract; and
. amount of recovery is less than the sum of the outstanding principal balance
of the contract and the accrued and unpaid interest thereon.
[If there is a default by [INSURER] under the note guaranty insurance policy,
losses on the contracts in a contract group will only be allocated to the notes
related to that contract group. ]
In the event losses on the contracts would reduce the amount available for
distribution [and there is no payment under the note guaranty insurance policy,]
the notes will receive only their respective percentage interest of the proceeds
from the liquidation of the contract rather than the scheduled principal balance
thereof. See "Risk Factors--Losses on the contracts May Reduce the Yield on the
Offered Notes" and "Description of the Notes--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 notes in any month that:
. the servicer receives a payment on a contract that is less than the full
scheduled payment;
. the servicer receives no payment on a contract; and
. the servicer determines that the advances will be recoverable from future
payments or collections on that contract.
However, advances will not exceed the delinquent contract payments. See
"Description of the Notes--Advances" in this prospectus supplement.
Yield And Prepayment Considerations
The yield to maturity of the notes will depend upon, among other things:
. the price at which the notes are purchased;
. the note rate; and
. the rate of principal prepayments on the related contracts.
A higher than anticipated rate of principal prepayments would reduce the
aggregate
S-6
<PAGE>
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 notes purchased at a premium. A lower than
anticipated rate of principal prepayments could result in a lower than expected
yield to maturity on notes purchased at a discount since payments of principal
with respect to the contracts would occur later than anticipated. For a
discussion of special yield and prepayment considerations applicable to the
notes, see "Risk Factors--The Yield on Your Notes Could be Limited by a Higher
Than Expected Rate of Prepayments on the contracts Underlying the Notes" and
"Prepayment and Yield Considerations" in this prospectus supplement.
[Book-Entry Registration
The notes will be available only in book-entry form through the facilities of
DTC, Cedelbank and the Euroclear System. See "Description of the Notes--
Registration of the Notes" in this prospectus supplement and Annex I to this
prospectus supplement. ]
Tax Status
In the opinion of Orrick, Herrington & Sutcliffe LLP, special tax counsel to the
issuer, for federal income tax purposes, the notes will be characterized as
indebtedness, and [neithe]r the issuer[, nor any portion of the issuer as
created and governed pursuant to the terms and conditions of the trust
agreement,] will be characterized as an association, or a publicly traded
partnership, taxable as a corporation for federal income tax purposes, or as a
"taxable mortgage pool" within the meaning of section 7701(i) of the Internal
Revenue Code of 1986, as amended. In addition, each noteholder, by its
acceptance of a note, will agree to treat that note as debt for federal, state
and local tax purposes.
For further information regarding the federal income tax consequences of
investing in the notes, see "Federal Income Tax Consequences" in this prospectus
supplement and in the accompanying prospectus.
ERISA Considerations
The notes are eligible for purchase by pension, profit-sharing or other employee
benefit plans as well as individual retirement accounts and certain types of
Keogh Plans. However, any fiduciary or other investor of assets of a plan that
proposes to acquire or hold the notes on behalf of or with assets of any plan
should consult with its counsel with respect to the potential applicability of
the fiduciary responsibility provisions of ERISA and the prohibited transaction
provisions of ERISA and section 4975 of the Internal Revenue Code of 1986, as
amended, to the proposed investment.
We refer you to "ERISA Considerations" in this prospectus supplement and in the
attached prospectus for further information.
Ratings
The notes are required to receive the ratings of "AAA" by Standard & Poor's
Ratings Services and "Aaa" by Moody's Investors Service, Inc. The ratings do not
address whether or not the notes or the notes will receive any related net funds
cap carryover amount or the ability of the holder of the 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.
S-7
<PAGE>
Legal Investment
As of the date of their issuance, all of the notes will 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 notes
constitute legal investments for you.
S-8
<PAGE>
Risk Factors
You should carefully consider the following risk factors prior to any
decision to invest in the notes. 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 notes could General Risks Associated with Higher Than Expected Prepayments
be limited by a higher than The notes represent indebtedness of [a trust/GreenPoint Asset LLC] which will be secured
expected rate of by a pledge of manufactured housing contracts. As the obligors make payments of interest
prepayments on the and principal on the contracts, noteholders will receive payments. Because the obligors
contracts underlying the are free to make those payments faster than scheduled, noteholders may receive distributions
notes. of principal faster than expected. Therefore, the notes may be paid in full earlier than the
scheduled maturity of the notes. Interest on the notes will no longer be paid to noteholders
on any principal distributions paid to the holders of notes. There is no guarantee that
noteholders will receive principal payments on the notes 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 indenture;
-- Repurchases of variable rate contracts that have been converted to a fixed interest
rate;
-- Partial prepayments on any contract; and
-- Liquidation principal, which is the principal recovered after foreclosing on or
otherwise liquidating a defaulted contract.
For a complete discussion on the situations that might cause prepayments, see "Prepayment
and Yield Considerations" in the prospectus and in this prospectus supplement.
Offered Notes Bought at Premiums and Discounts May Receive a Lower Yield Than Expected
Offered notes purchased at a discount may receive a lower yield than expected if the rate
of principal payments is slower than expected. Offered notes purchased at a premium may
receive a lower yield than
</TABLE>
S-9
<PAGE>
you expected if the rate of principal
payments is faster than expected. See
"Prepayment and Yield Considerations" in
this prospectus supplement.
Prepayments May Limit Note Rates Due to the
Weighted Average Cap on Note Rates
The note rates for the notes will not exceed
the weighted average of the net contract
rates. Disproportionate prepayments of
contracts with net contract rates that are
higher than the initial note rates will
increase the possibility that the note rate
will be adjusted to an amount lower than the
initial note rate. There is no mechanism to
compensate the holders of the notes for any
reduction other than the payment, if any, of
the net funds cap carryover amount. See
"Description of the Notes--Priority of
Distributions" in this prospectus
supplement.
Losses on the contracts [[INSURER] has insured the payments of
may reduce the yield on principal and interest on the notes.
the notes. However, if [INSURER] has defaulted under
the note guaranty insurance policy, the
yield to maturity on the notes may be
reduced by losses on the contracts. See
"Prepayment and Yield Considerations,"
["[INSURER]" and "Description of the Notes--
Note Guaranty Insurance Policy"] in this
prospectus supplement.]
[Due to the delay in Because the distribution date on the notes
payment on the notes for is the 15th day of each month, the yield to
[fifteen] days, the yield on each holder of a note, will be lower than it
the notes may be lower. would if the distribution date was on the
first day of the month. The reason for this
is interest on the notes will accrue from
the first day of the month to the last day
of the month, but the accrued interest will
not be paid until the distribution made on
the 15th day, or, if the 15th day is not a
business day, the next succeeding business
day, of the following month. In addition,
distributions of principal on any
distribution date will have the effect of
reducing the outstanding principal balance
as of the open of business on the first day
in the month in which the related
distribution occurs. Therefore, interest on
the notes will accrue on a lower outstanding
balance beginning on the first day of the
related collection period, but the
noteholders will not receive their
distribution until the 15th day of the
related collection period. See "Prepayment
and Yield Considerations" in this prospectus
supplement.]
[The notes may have a The contracts are variable rate contracts.
lower yield if LIBOR is The contracts:
greater than the interest
rate accruing on the . provide for periodic adjustments to
contracts. their interest rates;
. will not have their first interest
adjustment date until after the date
indicated by the index under which the
contracts are adjusted;
. bear interest at a fixed rate set at the
origination of the contract until its
first adjustment date; and
S-10
<PAGE>
. after the first adjustment dates, only
adjust every 12 months thereafter.
However, the notes adjust monthly based
on the LIBOR index. The LIBOR index:
. is a different index than the index with
which the contracts adjust; and
. may be higher or move differently than
the index under which the contracts are
adjusted.
Because the note rate on the notes may be
capped by the weighted average of the
interest rates on the contracts, the yield
to the holders of the notes may be lower
than a yield based upon the LIBOR index.]
[The notes may have a [The contracts accrue interest at a fixed
lower yield if LIBOR is rate. If interest rates, including LIBOR,
greater than the interest increase, the rate of interest on the
rate accruing on the contracts will not. As a result, the note
contracts.] rate on the notes will be increasing, up to
its cap, while the interest rates on the
related contracts will not be increasing.
Since the note rate on the notes may be
capped by the weighted average of the
interest rates on the contracts, the yield
to the notes may be lower than a yield based
upon the LIBOR index.]
[There may not be [Although holders of the notes, notes and
sufficient funds to pay notes will be entitled to any related
holders of notes amounts interest shortfalls resulting from the
in respect of interest weighted average caps on the contracts from
shortfalls resulting from and to the limited extent of funds available
the weighted average cap therefor as provided in this prospectus
on the contracts.] supplement, there can be no assurance that
funds will be available or sufficient for
payment of any interest shortfalls resulting
from the weighted average cap on the
contracts. In addition, the note guaranty
insurance policy does not cover, and the
ratings of the notes, notes and notes do not
address, the likelihood of payment of any
interest shortfalls resulting from the
weighted average cap on the contracts.]
[Some variable rate [Although all of the contracts are variable
contracts can convert to rate, the obligor on each of the contracts
fixed rates of interest can convert a variable rate to a fixed rate
which may reduce the as long as the obligor is current in payment
yield to holders of the on the obligor's contract. If an obligor
notes.] converts a contract from a variable rate to
a fixed rate, the holder of the certificates
is obligated to purchase the contract. The
fixed rate may be lower than the LIBOR index
or the note rate produced by an auction.
Since the note rates on the notes and notes
may be capped by the weighted average of the
interest rates on the contracts, any
conversion to a fixed rate of a contract
that has not been purchased by the holder of
the certificates may make it more likely
that the note rates on the notes and notes
will be lower than the LIBOR index or the
rate produced by the auction procedures.]
[Upon the occurrence of [So long as [INSURER] is not in default in
events of default of the payment under the note guaranty insurance
servicer under the pooling policy, upon the occurrence of an event of
and servicing agreement, default of the servicer under the pooling
and servicing agreement, neither the
indenture trustee nor the noteholders may
exercise any remedies provided for in the
pooling and
S-11
<PAGE>
[INSURER] will have the and servicing agreement. [INSURER] will
sole right to exercise any generally have the right to control all
remedies.] remedies provided for in the pooling and
servicing agreement. See "[INSURER]" and
"Description of the Notes--Note Guaranty
Insurance Policy" in this prospectus
supplement.]
Noteholders must rely soley [The trust/GreenPoint Asset LLC] will not
on the limited assets that pledge as collateral for the notes any
are pledged by [the trust/ significant assets or sources of funds other
GreenPoint Asset LLC] to than the contracts and related assets, [two]
secure the notes for payment note accounts [and the note guaranty
on the notes and will have no insurance policy]. Noteholders must rely
recourse against [the trust/ solely upon payments on the contracts
GreenPoint Asset LLC,] pledged pledged by [and payments of claims made
by the seller or the servicer under the note guaranty insurance policy]
if the notes incur shortfalls for payments on their notes and will have no
and/or losses. recourse against [the trust/GreenPoint Asset
LLC,] the seller or the servicer if the
notes incur shortfalls and/or losses.
[Although the note guaranty insurance policy
will be available for the notes to cover
shortfalls in distributions of interest and
scheduled principal due thereon, if
[INSURER] defaults in its obligations under
the note guaranty insurance policy, the
indenture trustee will depend solely on
current distributions on the contracts to
make payments on the notes. See "[INSURER]"
and "Description of the Notes--Note Guaranty
Insurance Policy" in this prospectus
supplement.]
The notes will not represent interests in or
obligations of the seller or the servicer.
None of the notes nor the underlying
contracts or any collections thereon will be
insured or guaranteed against losses by any
governmental agency or instrumentality, the
underwriters or any of their affiliates,
[GreenPoint Asset LLC or any of its
affiliates,] GreenPoint Credit, LLC or any
of its affiliates. [Except for the note
guaranty insurance policy], collections on
the contracts will constitute the only
source of funds for payment on the notes.
Any shortfalls in the collections on
contracts will be borne by the holders of
the notes [,except to the extent of the note
guaranty insurance policy].
[Random lot procedures [Distributions of principal on the [AUCTION]
make timing and amount notes will be made in round lots of $25,000
of distributions on the and integral multiples thereof. Further,
[AUCTION] notes distributions will be allocated to specific
uncertain.] [AUCTION] notes in accordance with the then-
applicable established random lot procedures
of DTC, and the then-applicable established
procedures of its participating
organizations and indirect participating
organizations, which may or may not be by
random lot. Investors may ask participating
organizations and indirect participating
organizations which allocation procedures
they use. On any distribution date on which
principal is to be distributed to the
[AUCTION] notes, one or more holders of
[AUCTION] notes may receive no distributions
of principal while other holders of
[AUCTION] notes receive distributions. ]
S-12
<PAGE>
The Contract Pool
Each contract was purchased or originated by GreenPoint Credit on an
individual basis in the ordinary course of its business. A description of the
general practices of GreenPoint Credit with respect to the origination or
purchase of manufactured housing contracts similar to the contracts contained in
the contract pool is set forth in the prospectus under "The Seller and Servicer
- Loan Originations" and "The Seller and Servicer - Underwriting Policies."
On the date of initial issuance of the notes, the seller will convey
to [the trust/GreenPoint Asset LLC] the contracts owned by it immediately prior
to the conveyance that are pledged to secure the notes. GreenPoint Credit, as
servicer, will obtain and maintain possession of all contract documents.
[The indenture provides that the additional contracts will be
purchased by [the trust/GreenPoint Asset LLC] on the closing date and that the
subsequent contracts will be purchased by [the trust/GreenPoint Asset LLC] no
later than [ ]. Although the additional contracts and subsequent contracts sold
to [the trust/GreenPoint Asset LLC] will have characteristics that differ
somewhat from the initial contracts described in this prospectus supplement,
GreenPoint Credit does not expect that the characteristics of the additional
contracts and subsequent contracts will vary materially from the initial
contracts since the additional contracts and subsequent contracts will conform
to the representations and warranties set forth in the applicable indenture as
they relate to additional contracts and subsequent contracts. See "Description
of the Notes - Conveyance of subsequent contracts and pre-funding account" in
this prospectus supplement.]
No manufactured housing installment sales contract or installment loan
agreement will be in excess of 100% of the value of the manufactured home. See
"The Contract Pool" in the prospectus.
The contracts are all [fixed rate, actuarial contracts]. [Some of the
contracts in the contract pool are secured by a lien on real estate.] [None of
the contracts:
. were purchased in bulk from an unrelated third party;
. are insured in whole or in part or guaranteed in whole or in
part, as applicable, by the Veterans Administration, the Federal
Housing Administration or by any other governmental entity or
instrumentality;
. are amortized using the "simple interest" amortization method; or
. have a variable contract rate or a contract rate which steps up
on particular dates.]
Management of GreenPoint Credit estimates that in excess of [ ]% of
the manufactured homes are used as primary residences by the obligors under the
contracts secured by those manufactured homes.
As of the Cut-off Date, the contract rates on the contracts ranged
from[ ]% to [ ]%. The weighted average contract rate of the contracts as of the
Cut-off Date was
S-13
<PAGE>
approximately [ ]%. As of the Cut-off Date, the contracts had remaining
scheduled maturities of at least [ ] months but not more than [ ]months, and
original scheduled maturities of at least [ ] months but not more than [ ]
months. As of the Cut-off Date, the contracts had a weighted average remaining
term to maturity of approximately [ ] months, and a weighted average original
term to scheduled maturity of approximately [ ] months. The average outstanding
principal balance of the contracts as of the Cut-off Date was approximately $[ ]
and the outstanding principal balances of the contracts as of the Cut-off Date
ranged from approximately $[ ] to $[ ]. The weighted average loan-to-value ratio
for the contracts at origination was approximately [ ]% and the loan-to-value
ratio of the contracts at origination ranged from [ ]% to [ ]%. The underwriting
practices of GreenPoint Credit regarding loan-to-value ratios of contracts it
originates or purchases are set forth in the prospectus under "The Seller and
Servicer - Loan Originations" and "The Seller and Servicer- Underwriting
Policies." Manufactured homes, unlike site-built homes, generally depreciate in
value, and GreenPoint Credit 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.
In addition, the percentage recovery of principal on liquidation of manufactured
housing contracts historically has been adversely affected by 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.
The contracts are secured by manufactured homes located in [ ] states
and the District of Columbia; approximately [ ]% of the contracts by outstanding
principal balance as of the Cut-off Date were secured by manufactured homes
located in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [ ], [ ]% in [
]and [ ]% in [ ]. No other state represented more than 5%, by outstanding
principal balance as of the Cut-off Date, of the contracts.
Approximately [ ]% of the contracts by outstanding principal balance
as of the Cut-off Date are secured by manufactured homes which were new at the
time the related contracts were originated, and approximately [ ]% of the
contracts by outstanding principal balance as of the Cut-off Date are secured by
manufactured homes which were used at the time the related contracts were
originated.
Approximately [ ]%, by principal balance, of the contracts are Land
Home contracts or Land-in-Lieu contracts. The Land Home contracts or Land-in-
Lieu contracts will be secured by either first mortgages or deeds of trust on
the real estate on which the 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 or Land-in-Lieu
contracts" in the prospectus.
The charge-off policy with respect to any particular manufactured
housing installment sales contract or installment loan agreement is determined
by GreenPoint Credit on a case by case basis.
Set forth below are tables containing certain additional
characteristics of the contracts. Entries in the tables may not add to 100% due
to rounding.
S-14
<PAGE>
Geographical Distribution of Manufactured Homes as of Origination
<TABLE>
<CAPTION>
Aggregate
Principal
Number of Balance % of contract pool By
contracts Outstanding Outstanding Principal
As of As of Balance As of
State Cut-off Date Cut-off Date Cut-off Date
------------------------- -------------- -------------- -----------------------
<S> <C> <C> <C>
Alabama................
Arizona................
Arkansas...............
California.............
Colorado...............
Connecticut............
Delaware...............
District of Columbia...
Florida................
Georgia................
Idaho..................
Illinois...............
Indiana................
Iowa...................
Kansas.................
Kentucky...............
Louisiana..............
Maine..................
Maryland...............
Massachusetts..........
Michigan...............
Minnesota..............
Mississippi............
Missouri...............
Montana................
Nebraska...............
Nevada.................
New Hampshire..........
New Jersey.............
New Mexico.............
New York...............
North Carolina.........
North Dakota...........
Ohio...................
Oklahoma...............
Oregon.................
Pennsylvania...........
South Carolina.........
South Dakota...........
Tennessee..............
Texas..................
Utah...................
Vermont................
Virginia...............
Washington.............
West Virginia..........
Wisconsin..............
Wyoming................
Total.................
</TABLE>
S-15
<PAGE>
Years of Origination of contracts
<TABLE>
<CAPTION>
Aggregate Principal % of contract pool By
Number of contracts As Balance Outstanding As Outstanding Principal Balance
Year of Origination of Cut-off Date of Cut-off Date As of Cut-off Date
---------------------------------- ----------------------- ------------------------ -------------------------------
<S> <C> <C> <C>
2000.............................
Total...........................
</TABLE>
Distribution of Original Principal Balances of contracts
<TABLE>
<CAPTION>
Aggregate Principal % of contract pool By
Number of contracts As of Balance Outstanding As of Outstanding Principal
Original contract Amount Cut-off Date Cut-off Date Balance As of Cut-off Date
------------------------------ -------------------------- -------------------------- ----------------------------
<C> <S> <C> <C>
$0 - 5,000..................
$ 5,001 - 7,500............
$ 7,501 - 10,000............
$10,001 - 12,500............
$12,501 - 15,000............
$15,001 - 17,500............
$17,501 - 20,000............
$20,001 - 22,500............
$22,501 - 25,000............
$25,001 - 27,500............
$27,501 - 30,000............
$30,001 - 32,500............
$32,501 - 35,000............
$35,001 - 40,000............
$40,001 - 45,000............
$45,001 - 50,000............
$50,001 - 55,000............
$55,001 - 60,000............
$60,001 - 65,000............
$65,001 - 70,000............
$70,001 - 75,000............
$75,001 - 80,000............
Total.......................
</TABLE>
. The greatest original contract principal balance is $[ ], which represents
[ ]% of the outstanding principal balance of the contracts as of the Cut-
off Date.
S-16
<PAGE>
Distribution of Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
Aggregate Principal % of contract pool By
Number of contracts As of Balance Outstanding As of Outstanding Principal
Loan-to-Value Ratio Cut-off Date Cut-off Date Balance As of Cut-off Date
----------------------------- --------------------------- -------------------------- ----------------------------
<C> <S> <C> <C>
Less than or equal to 50%
51-60%..................
61-70%..................
71-80%..................
81-85%..................
86-90%..................
91-95%..................
Total...................
</TABLE>
Distribution of contract rates
<TABLE>
<CAPTION>
Aggregate Principal % of contract pool By
Ranges of contracts by Number of contracts Balance Outstanding Outstanding Principal
contract rate As of Cut-off Date As of Cut-off Date Balance As of Cut-off Date
------------------------- ---------------------- ----------------------- -------------------------------
<C> <S> <C> <C>
10.25-10.49%...........
10.50-10.74%...........
10.75-10.99%...........
11.00-11.24%...........
11.25-11.49%...........
11.50-11.74%...........
11.75-11.99%...........
12.00-12.24%...........
12.25-12.49%...........
Total..................
</TABLE>
S-17
<PAGE>
Remaining Months to Maturity
<TABLE>
<CAPTION>
% of contract
Aggregate pool By
Principal Outstanding
Number of Balance Principal
contracts As of Outstanding As Balance As of
Months Remaining as of Cut-off Date Cut-off Date of Cut-off Date Cut-off Date
--------------------------------------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C>
Greater than 15 and less than or equal to
30.........................................
Greater than 31 and less than or equal to
60.........................................
Greater than 61 and less than or equal to
90.........................................
Greater than 91 and less than or equal to
120........................................
Greater than 121 and less than or equal to
150.......................................
Greater than 151 and less than or equal to
180.......................................
Greater than 181 and less than or equal to
210.......................................
Greater than 211 and less than or equal to
240.......................................
Greater than 241 and less than or equal to
300.......................................
Greater than 301 and less than or equal to
360.......................................
Total.....................................
</TABLE>
S-18
<PAGE>
The Seller and Servicer
The following information supplements the information in the
prospectus under the heading "The Seller and Servicer and Servicer."
The volume of manufactured housing contracts originated by GreenPoint
Credit, or purchased from dealers on an individual basis by GreenPoint Credit,
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)
[ ] ended
[ ], 200[ ]
-----------
Principal Balance of Contracts Purchased.................... $ [.]
Number of Contracts Purchased............................... [.]
Average Contract Size....................................... $ [.]
Weighted Average Contract Rate.............................. [.]%
Number of Regional Offices.................................. [.]
[The above table includes only contracts originated by GreenPoint
Credit or purchased from dealers and does not include any portfolios acquired in
bulk from third parties. 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 Credit, through the manufactured housing regional office system, as
of the dates indicated:
Size of Serviced Portfolio
(Dollars in Thousands)
[ ] ended
[ ], 200[ ]
-----------
Unpaid Principal Balance of Contracts Being Serviced........ $ ______
Average Contract Unpaid Principal Balance................... $ ______
Number of Contracts Being Serviced ______
S-19
<PAGE>
[Under certain limited circumstances, as set forth in the pooling and
servicing agreement, the servicer may make a one-time modification to the
contract rate with respect to any contract by an amount equal to the lesser of
(i) 5% of contract rate of the related contract and (ii) 0.50%.]
GreenPoint Credit Management's Discussion and Analysis of Delinquency,
Repossession and Loan Loss Experience
[Management of GreenPoint Credit has not observed any material
economic development in the general business environment of the county or in
local areas where GreenPoint Credit originates its manufactured housing
contracts which has unfavorably affected portfolio performance in relation to
delinquencies, repossessions and loan losses during this period. 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 Issuer]
[delaware business trust description]/[update to GreenPoint Asset
information in prospectus]
Prepayment And Yield Considerations
The general prepayment and yield considerations discussed in the
prospectus under "Prepayment and Yield Considerations" should be read carefully
in connection with a decision to invest in any of the notes. The following
discussion supplements, and does not replace or supersede the discussion under
"Prepayment and Yield Considerations" in the prospectus, unless the context
expressly so provides.
The contracts had maturities at origination ranging from [ ] months to
[ ] months, but 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 notes.
GreenPoint Credit does not maintain statistics with respect to the rate of
prepayment of manufactured housing contracts in its servicing portfolio [,
except for contracts in certain pools of securitized manufactured housing
contracts that its is servicing for others for which at least [ ] months of
prepayment information is available, as described in this prospectus
supplement]. Any pool of contracts, including the 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 in this
prospectus supplement. As a result, the prepayment experience of the contracts
contained in any contract pool, including the contract pool, might be faster or
slower than the prepayment experience of the contracts reflected in the
historical data. In addition, although
S-20
<PAGE>
management of GreenPoint Credit is aware of limited publicly available
information relating to historical rates of prepayment on manufactured housing
contracts, management of GreenPoint Credit believes that the limited publicly
available information is not necessarily indicative of the rate of prepayment
that may be expected to be exhibited by the contracts. Nevertheless, management
of GreenPoint Credit anticipates that a number of contracts will be prepaid in
full in each year during which the notes are outstanding. See "Prepayment and
Yield Considerations - Prepayment Considerations," "Description of the
Securities - Optional and Mandatory Repurchase of Securities; Optional
Termination and Termination Auction" and "Certain Legal Aspects of the
Contracts - The Contracts (other than the Land Home Contracts and Land-in-Lieu
Contracts) -Transfers of Manufactured Homes; Enforceability of Restrictions on
Transfer" in the prospectus [and "Description of the Notes - Optional
Termination and Termination Auction" in this prospectus supplement] for a
discussion of certain factors that may influence prepayments, including
homeowner mobility, general and regional economic conditions, prevailing
interest rates, provisions in the contracts prohibiting the owner from selling
the manufactured home without the prior consent of the holder of the related
contract, the early termination of the trust pursuant to a successful
Termination Auction and the option of the servicer, whether or not GreenPoint
Credit remains the servicer, to purchase the contracts and any other property
constituting the trust or to direct the indenture trustee to solicit bids for an
auction at which to sell the contracts and any other property constituting the
trust. In addition, repurchases of contracts on account of certain breaches of
representations and warranties as described below under "Description of the
Notes - Conveyance of Contracts" will have the effect of prepaying the contracts
and therefore will affect the average life of the notes.
[The notes will be prepaid in part on the first distribution date
after the pre-funding period, in no event later than [ ], in the event that any
pre-funded amount remains in the pre-funding account on the related distribution
date. Any amounts remaining which have not been used to purchase subsequent
contracts will be paid to the noteholders. GreenPoint Credit believes that
substantially all of the pre-funded amount will be used to acquire the
subsequent contracts. It is unlikely, however, that the aggregate principal
amount of subsequent contracts purchased by the trust will be identical to the
pre-funded amount, and that consequently, noteholders will receive some
prepayment of principal.]
If a purchaser of notes purchases them at a discount and calculates
its anticipated yield to maturity based on an assumed rate of distributions of
principal on the notes 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. See "Description of the Notes - Distributions" in this
prospectus supplement and "Prepayment and Yield Considerations" in the
prospectus.
There can be no assurance that as to what the delinquency or
repossession experience of GreenPoint Credit on a going forward basis will be.
See "Prepayment and Yield Considerations" in the prospectus for a discussion of
the effect delinquencies and repossessions on the contracts would have on the
average life of the notes.
The expected final scheduled payment date on the contract with the
latest maturity is in [ ].
S-21
<PAGE>
The last scheduled distribution dates for the series 200[ ]-[ ] notes
are set forth on the cover of this prospectus supplement. However, the actual
last distribution date for the notes could occur significantly earlier than the
scheduled distribution dates. In particular, when the Pool Scheduled Principal
Balance falls below 10% of the Cut-off Date Pool Principal Balance and certain
other conditions are met, the trust could be terminated pursuant to the
[servicer/other party]'s exercise of an option call or pursuant to a successful
Termination Auction. See "Description of the Notes - Optional Termination and
Termination Auction" in this prospectus supplement. Either of these events, if
they occur, would result in the early retirement of the then outstanding notes.
As described in this prospectus supplement under "Description of the
Notes - Subordination" and "Description of the Notes - Losses on liquidated
contracts," to the extent that, on any distribution date, the Available
Distribution Amount is not sufficient to permit a full distribution of the Total
Regular Principal Amount to the holders of notes the effect will be to cause the
notes to be amortized more slowly than they otherwise would have been amortized,
and losses on liquidated contracts and delinquencies on the contracts, if not
covered by monthly advances, will be borne by the holders of notes for which
there is a shortfall in the manner described thereunder and as described below.
In the event there is a sufficiently large number of delinquencies on
the contracts in any Collection Period that were not covered by monthly advances
as described in this prospectus supplement, the amounts distributed to the
holders of the notes could be less than the amount of principal and/or interest
that otherwise would be payable on the notes on the related distribution date.
Even if delinquent payments on the contracts were eventually recovered upon
liquidation, if the amounts received do not include interest on delinquent
interest payments, the effective yield on the contracts would be reduced.
Further, under certain circumstances it is possible that sufficient Available
Distribution Amounts might not be available to provide for aggregate
distributions equal to the sum of their initial outstanding note balances plus
accrued interest thereon thereby reducing the effective yield on the notes.
obligors are not required to pay interest on the contracts after the
date of full prepayment of principal or the date of a partial prepayment of
principal, to the extent of the applicable partial prepayment. As a result,
partial or full prepayments in advance of the related due dates for the related
contracts in any Collection Period will reduce the amount of interest received
from the related obligors during such Collection Period to less than one month's
interest. However, when a partial prepayment is made on a contract or a
contract is prepaid in full during any Collection Period, but after the due date
for such contract in the related 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 amount of
partial prepayments are made or a sufficient number of contracts are prepaid in
full in a given Collection Period in advance of their respective due dates,
interest received on all of the contracts during that Collection Period, after
netting out the Monthly Servicing Fee [if GreenPoint Credit is not acting as
servicer], and other expenses of the trust, may be less than the interest
payable on the senior and/or subordinate notes on the related distribution date.
As a result, the Available Distribution Amount for the related distribution date
may not be sufficient to distribute the interest on the notes in the full amount
set forth in this prospectus supplement under "Description of the Notes -
Distributions" and to make a full distribution of the Total
S-22
<PAGE>
Regular Principal Amount to the senior and/or subordinate noteholders. Although
no assurance can be given in this matter, GreenPoint Credit does not anticipate
that the net shortfall of interest caused by partial prepayments or prepayments
in full in any Collection Period would be great enough, in the absence of
delinquencies or liquidation losses, to reduce the Available Distribution Amount
for a distribution date below the amount that would have been required to be
distributed to the holders of the notes on that distribution date in the absence
of any prepayment interest shortfalls.
Because the contracts are [actuarial] contracts, the outstanding
principal balances thereof will reduce, for purposes of accrual of interest
thereon, by a precomputed amortization amount on each due date whether or not
the scheduled payment for the related due date is received in advance of or
subsequent to the related due date, except as described above with respect to
prepayments. See "The Contract Pools" in the prospectus. Thus, the effect of
delinquent scheduled payments, even if they are ultimately paid by the obligor,
will be to reduce the yields on the related contracts below their respective
contract rates (because interest will not have accrued on the principal portion
of any scheduled payment while it is delinquent). If the servicer does not make
an advance with respect to the delinquent contracts as described in this
prospectus supplement, the result will be to reduce the effective yield to the
trust derived from the delinquent contracts to a yield below their contract
rates. Under certain circumstances, the yield reductions described in the
previous sentence could cause the aggregate yield to the trust derived from the
contract pool to be insufficient to support the distribution of interest on the
notes, after netting out other expenses of the trust.
[The table relates to [ ] sold pools for which prepayment information
is available covering a period of at least [ ] months and which had an aggregate
principal balance as of the first day of the month of sale of at least $[ ].
In evaluating whether the data contained in the table contains useful
information with respect to the expected prepayment behavior of any particular
contract pool, prospective noteholders should consider that GreenPoint Credit
has not performed statistical analysis to determine whether the contracts to
which the table relates constitutes a statistically significant sample of
manufactured housing contracts for purposes of determining expected prepayment
behavior. Furthermore, no assurance can be given that the contracts in the
contract pool will have characteristics similar to the contracts in any sold
pool to which the following table relates. For these reasons, and because of
the unpredictable nature of the factors described under "Weighted Average Life
of the Notes" in this prospectus supplement, which may influence the amount of
prepayments of manufactured housing contracts, no assurance can be given that
the prepayment experience for the contract pool with an average age as of the
Cut-off Date similar to the average ages (as of the first day of the month of
sale) of the pools to which the table relates will exhibit prepayment behavior
similar to the behavior summarized in the table for the periods covered by the
table.
In addition to the foregoing, prospective noteholders should consider
that the table set forth below is limited in the periods which are covered
thereby and thus cannot reflect the effects, if any, of aging on the prepayment
behavior of manufactured housing contracts beyond the periods covered thereby.
The table below sets forth with respect to certain pools of contracts:
S-23
<PAGE>
. the initial aggregate principal balance of the contracts in the
pool (calculated as of the first day of the month of the sale),
. the WAC of the contracts in the pool as of the first day of the
month of the sale of the pool,
. the WAM of the contracts in the pool as of the first day of the
month of the sale of the pool,
. the estimated average age of the pool as of the first day of the
month of the sale of the pool,
. the aggregate principal balance of the pool as of [ ],
. the WAC of the contracts in the pool as of [ ] and
. the percentage of the prepayment model (as described in "--
Weighted Average Life of the Notes" below) for the life of each
pool through [ ].
The prepayment performance of the contract pools described in the
following table is not indicative of the prepayment performance of the contracts
in the trust, and no assurance can be given that the prepayment performance of
the contracts in the trust will correspond with the prepayment performance of
any of the pools described below.
<TABLE>
Month Aggregate Estimated % of the
and Original Original Average Aggregate WAC as prepayment
Year of Principal Original WAM Age at Sale Principal of [ ], model as of
Sale Balance WAC (months) (months) Balance 200[] [ ], 200[]
------- ----------- --------- ---------- ------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Weighted Average Life of the Offered Notes
The following information is given solely to illustrate the effect of
prepayments of the contracts on the weighted average life of the notes 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 the related
security is repaid to the investor. The weighted average life of an note is
determined by:
(1) multiplying the amount of each cash distribution in reduction of
the note balance of the note by the number of years from the date
of issuance of the note to the stated distribution date,
S-24
<PAGE>
(2) adding the results, and
(3) dividing the sum by the initial note balance of the note.
The weighted average life of the notes 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, other than from scheduled amortization, and
liquidations due to default or other dispositions of contracts. Prepayments on
contracts may be measured by a prepayment standard or model. 100% of the
prepayment model assumes prepayment rates of [ ]% per annum of the then unpaid
principal balance of the contracts in the first month of the life of the
contracts and an additional [ ]% per annum in each month thereafter ,for
example, [ ]% per annum in the third month, until the [ ]th month. Beginning in
the [ ]th month and in each month thereafter during the life of the contracts,
100% of the prepayment model assumes a constant prepayment rate of [ ]% per
annum.
As used in the following table, "0% of the prepayment model" assumes
no prepayments on the contracts; "100% of the prepayment model" assumes the
contracts will prepay at rates equal to 100% of the prepayment model assumed
prepayment rates; "150% of the prepayment model" assumes the contracts will
prepay at rates equal to 150% of the prepayment model assumed prepayment rates;
"170% of the prepayment model" assumes the contracts will prepay at rates equal
to 170% 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 "300% of the prepayment model" assumes the
contracts will prepay at rates equal to 300% 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. In the case of mortgage loans secured by site-built homes, in general,
if prevailing interest rates fall significantly below the interest rates on the
mortgage loans, the mortgage loans are likely to be subject to higher prepayment
rates than if prevailing interest rates remained at or above the rates borne by
the related mortgage loans. Conversely, if prevailing interest rates rise above
the interest rates on the related mortgage loans, the rate of prepayment would
be expected to decrease. In the case of manufactured housing contracts,
however, because the outstanding principal balances are, in general, smaller
than mortgage loan balances and the original term to maturity of each related
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 smaller. Consequently,
changes in prevailing interest rates may not have a
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<PAGE>
similar effect, or may have a similar effect, but to a smaller degree, on the
prepayment rates on manufactured housing contracts.
The percentages and weighted average lives in the following tables
were determined using the following assumptions (the "structuring assumptions"):
(1) scheduled interest and principal payments on the contracts are
received in a timely manner and prepayments are made at the
indicated percentages of the prepayment model set forth in the
tables,
(2) the servicer does not exercise its right of optional termination
described above but the trust is terminated pursuant to a
Termination Auction as described in "Description of the Notes -
Optional Termination and Termination Auction" in this prospectus
supplement,
(3) the contracts, as of the Cut-off Date, will be grouped into
[four] groups having the additional characteristics set forth in
the table entitled "Assumed Contract characteristics" below,
(4) no interest shortfalls will arise in connection with prepayment
in full of the contracts,
(5) there will be no repurchases of any contracts due to a breach in
a representation or warranty with respect thereto, and
(6) a servicing fee of [ ]% per annum will be paid to the servicer.
The tables assume that there are no losses or delinquencies on the
contracts. No representation is made that losses or delinquencies on the
contracts will be experienced at the rate assumed in the preceding sentence or
at any other rate.
Assumed Contract characteristics
<TABLE>
<CAPTION>
Remaining
Current Original Term Term to
Principal to Maturity Maturity
Pool Balance contract rate (Months) (Months)
--------------------------------------- ------------ --------------- ---------------- -------------
<S> <C> <C> <C> <C>
1...................................
2...................................
3...................................
4...................................
Total or weighted average...........
</TABLE>
Since the tables were prepared on the basis of the structuring
assumptions in the preceding paragraph, there are discrepancies between the
characteristics of the actual contracts and the characteristics of the contracts
assumed in preparing the tables. Any discrepancy may have an effect upon the
percentages of the initial note balance of the notes outstanding and weighted
average lives of the notes set forth in the tables. In addition, since the
actual contracts
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<PAGE>
and the trust have characteristics which differ from those assumed in preparing
the tables set forth below, the distributions of principal on the notes may be
made earlier or later than as indicated in the tables.
It is not likely that contracts will prepay at any constant percentage
of the prepayment model to maturity or that all contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the
contracts, which include recently originated contracts, could produce slower
distributions of principal than indicated in the tables at the various
percentages of the prepayment model specified even if the weighted average
remaining term to maturity of the contracts is [ ] months.
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 structuring assumptions, the following tables indicate
the resulting weighted average lives of the notes and sets forth the percentage
of the initial note balance that would be outstanding after each of the dates
shown at the indicated percentages of the prepayment model.
Percent of the initial note balance at the
Respective Percentages of the prepayment model
<TABLE>
<CAPTION>
Prepayments (% of prepayment model)
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Date 0% 100% 150% 170% 200% 250% 300%
---- -- ---- ---- ---- --- --- ---
initial Percentage...............................
[ ], 20[ ] (first distribution date).............
[ ], 20[ ] (anniversary of first distribution
date)............................................
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
[ ], 20[ ]
Weighted Average Life (years)....................
</TABLE>
S-27
<PAGE>
Description of the Notes
The notes will be issued pursuant to the indenture. An execution copy
of the indenture will be filed with the Securities and Exchange Commission after
the initial issuance of the notes as exhibits to a Current Report on Form 8-K.
Reference is made to the prospectus for additional information regarding the
terms and conditions of the indenture. The following discussion supplements,
and does not replace or supersede the discussion under "Description of the
Securities" in the prospectus, unless the context otherwise provides.
Set forth below are summaries of the specific terms and provisions
pursuant to which the notes will be issued. The following summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, the provisions of the indenture. When particular provisions or
terms used in the indenture are referred to, the actual provisions, including
definitions of terms, are incorporated by reference.
General
[All the notes initially will be issuable in one or more Global
Securities registered in the name of Cede as the nominee of DTC. Ownership in
notes represented by Global Securities will only be available in the form of
book-entries on the records of DTC and participating members thereof. All
references to "holders" or "noteholders," and to authorized denominations, when
used with respect to the notes issued as Global Securities, shall reflect the
rights of beneficial owners of the notes, and limitations thereof, as they may
be indirectly exercised through DTC and its participating members, except as
otherwise specified in this prospectus supplement. See "Description of the
Securities - Global Securities" in the prospectus. See the prospectus under
"Description of the Securities - Global Securities" for a description of the
circumstances in which definitive notes in the future may be issued. Any notes
issued as definitive notes will be transferable and exchangeable at the
corporate trust office of the indenture trustee at its Corporate trust
Department in [ ] or, if it so elects, at the office of an agent in [New York,
New York]. No service charge will be made for any registration of exchange or
transfer, but the indenture trustee may require payment of a sum sufficient to
cover any tax or other governmental charge. ]
The notes will be issued in fully registered form only, in
denominations equal to [$1,000] or any integral multiple of [one dollar] in
excess thereof.
The notes will be secured by the trust, which will be pledged by the
issuer to the indenture trustee pursuant to the indenture. The trust will
consist of, without limitation:
(1) the contract pool, including certain rights to receive payments
on the contracts on and after the Cut-off Date,
(2) the amounts held from time to time in the "Payment Account," as
described below under " - Payments on Contracts; Payment
Account," maintained by the indenture trustee pursuant to the
indenture,
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<PAGE>
(3) any property which initially secured a contract and which is
acquired in the process of realizing thereon,
(4) the obligations of the seller, under certain conditions, to
repurchase contracts sold by it with respect to which certain
representations and warranties have been breached and not cured,
and
(5) the proceeds of all insurance policies described in this
prospectus supplement.
The seller will convey the contracts to the indenture trustee. See
"The Contract Pool" in this prospectus supplement and "--Conveyance of
Contracts" below. The servicer will service the contracts pursuant to the
pooling and servicing agreement. The contract documents will be held for the
benefit of the indenture trustee by the servicer.
Distributions of principal, interest or both to the holders of the
notes will be made on each distribution date beginning in [ ], 200[ ], to the
persons in whose names the notes are registered on the record date.
Note Rates
[The Note Rate for the notes on any distribution date will be adjusted
so as not to exceed the weighted average of the net contract rates of the
contracts in the contract pool at the beginning of the month preceding the month
of the related distribution date. The weighted average net contract rate of the
contract pool as of the Cut-off Date was approximately [ ]%.]
[The Note Rate on each distribution date will be [ ]% per annum,
subject to a maximum rate equal to the weighted average of the net contract
rates on the contracts in the contract pool, computed on the basis of a 360-day
year of twelve 30-day months. In all but the most unusual prepayment scenarios,
it is anticipated that the Note Rate will remain at the initial rate of [ ]%.
However, disproportionate prepayments of contracts with higher net contract
rates will lower the weighted average net contract rate on the outstanding
contracts remaining in the contract pool. If a larger principal amount of
contracts having contract rates equal to or higher than [ ]% were to prepay
while a proportionate principal amount of the contracts having contract rates
lower than [ ]% did not prepay, to the extent that the weighted average net
contract rate fell below the initial Note Rate of [ ]%, then the Note Rate would
automatically be reduced to a level equal to the weighted average of the net
contract rates on the contracts remaining in the contract pool. Of the initial
contracts, [ ]% by aggregate principal balance as of the Cut-off Date had
contract rates equal to or higher than [ ]%.]
Conveyance of Contracts
On the date of initial issuance of the notes, the seller will convey
to the indenture 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 the contracts to
the indenture 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
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<PAGE>
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 indenture trustee, the operations
department of the GreenPoint Credit will be required to complete a review of all
of the originals of the contracts, the notes of title to, or other evidence of a
perfected security interest in, the manufactured homes, any related mortgages
and any assignments or modifications of the foregoing confirming the accuracy of
the contract schedule delivered to the indenture trustee. Any contract
discovered not to agree with the contract schedule in a manner that is
materially adverse to the interests of the noteholders will be repurchased by
the seller, or replaced with another contract. However, if the discrepancy
relates to the principal balance of a contract, determined as described above,
the seller may, under certain conditions, deposit cash in the Payment Account in
an amount sufficient to offset the discrepancy. The indenture trustee will not
review the files relating to the contracts in the contract pool.
The servicer will hold, as custodian and agent on behalf of the
indenture 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. See
"Risk Factors - Security Interests of the Seller in the Manufactured Homes;
Transfer of contracts and Security Interests" and "Certain Legal Aspects of the
Contracts - The Contracts (other than the Land Home Contracts and Land-in-Lieu
Contracts) - Security Interests of the Seller in the Manufactured Homes" and
"Land Home Contracts 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 the related contracts, if any. In order to give
notice of the indenture trustee's right, title and interest in and to the
contracts, a UCC-1 financing statement identifying the indenture 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 indenture 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 assignment,
the indenture 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
indenture trustee with respect to each contract sold by it, as of the closing
date, unless expressly stated otherwise, including the following:
(1) as of the Cut-off Date, no contract is more than 59 days
delinquent;
(2) 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;
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<PAGE>
(3) 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;
(4) the contract is not subject to any right of rescission, set-off,
counterclaim or defense;
(5) the contract is covered by hazard insurance described under
"Description of the Securities - Servicing Compensation and
Payment of Expenses; Certain Matters Regarding the servicer -
Hazard Insurance Policies" in the prospectus;
(6) the contract was either:
(a) 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, [or]
(b) originated by the seller in the ordinary course of its
business [or]
(c) purchased by the seller as part of bulk purchases of
manufactured housing contracts from other private lenders or
finance companies, or from governmental agencies or
instrumentalities or from other entities];
(7) 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 indenture trustee pursuant
to the indenture or pursuant to the notes unlawful;
(8) the contract complies with all requirements of law;
(9) 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;
(10) the contract creates a valid and enforceable first-priority
security interest in favor of GreenPoint Credit in the
manufactured home and real property securing the contract, if
any;
(11) the security interest has been assigned to the indenture trustee,
and, after such assignment, the indenture trustee has a valid and
perfected first-priority security interest in the manufactured
home and real property securing the related contract, if any;
(12) the contract has not been sold, assigned or pledged to any other
person, and prior to the transfer of the contracts to the
indenture trustee, the seller owned the contracts sold by it,
free and clear of any encumbrance, equity,
S-31
<PAGE>
loan, pledge, charge, claim or security interest, and it was the
sole owner thereof and had full right to transfer the contract to
the indenture trustee;
(13) 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 (1) above, the seller has not waived any of the
foregoing;
(14) 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 related contract, which are or may be liens prior to
or equal with or subordinate to the lien of the contract;
(15) the contract is a fully-amortizing loan with a [fixed] contract
rate and provides for level payments over the term of the
contract;
(16) the contract contains customary and enforceable provisions that
render the rights and remedies of the holder thereof adequate for
realization against the collateral of the benefits of the
security;
(17) the information contained in the contract schedule with respect
to the contract is true and correct;
(18) there is only one original of the contract;
(19) the contract did not have a loan-to-value ratio at origination
greater than 100%;
(20) the related manufactured home 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
related manufactured home is, to the knowledge of the seller free
of damage and in good repair;
(21) the contract is a "qualified mortgage" under Section 860G(a)(3)
of the Code;
(22) the related manufactured home is a "manufactured home" within the
meaning of Section 5402(6) of Title 42 of the United States Code
and, as to each contract sold by the seller to the trust, the
seller is an approved mortgagee as of the time of the contract's
origination as required under Section 3(a)(41)(A)(ii) of the
Exchange Act;
(23) the contract is secured by a "single family residence" within the
meaning of Section 25(e)(10) of the Code;
S-32
<PAGE>
(24) the contract has been stamped to indicate its assignment to the
indenture trustee within 60 days of the closing date; and
(25) the contract with the lowest contract rate has a contract rate of
[ ]% and the contract with the highest contract rate has a
contract rate of [ ]%.
Under the terms of the indenture, and subject to the relevant seller's
option to effect a substitution with respect to contracts sold by it as
described in the last paragraph under this subheading, the seller will be
obligated to repurchase, at the price described below, any contract sold by it
within 90 days after the seller becomes aware, or after the seller's receipt of
written notice from the indenture trustee or the servicer, of a breach of any
representation or warranty of the seller in the indenture that materially and
adversely affects the trust's interest in any contract it sold thereto unless
the 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 related contract, if any, located in any
jurisdiction on account of a breach of the representation and warranty described
in clause (11) 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 manufactured home
or to execute any transfer instrument relating to any manufactured home or real
property, if any, other than a notation or transfer instrument necessary to show
the seller as lienholder or legal title holder, unless:
(1) a court of competent jurisdiction has adjudged that, because of
the failure by the seller to cause a notation to be made on the
related document of title, the indenture trustee does not have a
perfected first-priority security interest in the related
manufactured home or
(2) (A) 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 the 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 that jurisdiction and which is subject to the same
laws regarding the perfection of security interests therein
applicable to the manufactured homes located in that jurisdiction
and
(B) the servicer shall not have completed all appropriate
remedial action with respect to the related manufactured home
within 180 days after receipt of the written advice.
Any advice 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 (2)
above. However, the servicer is required to seek advice with respect to the
matters described in clause (2) above whenever information comes to the
attention of its
S-33
<PAGE>
counsel which causes such counsel to determine that a holding of the type
described in clause (2)(A) might exist. If any counsel selected by the servicer
informs the servicer that no holding of the type described in clause (2)(A)
exists, the advice will be conclusive and binding on the parties to the
indenture pursuant to which a indenture 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 receiver or conservator
of the seller, it is likely that the receiver or conservator of the seller 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 indenture trustee and the noteholders for a breach of a
representation or warranty under the indenture 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 Payment 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 it sold being substituted as of the beginning of the month.
[Conveyance of [subsequent contracts and] [pre-funding account]
[The pre-funding account will be used to purchase subsequent contracts
during the pre-funding period.]
[The pre-funded amount will be reduced during the pre-funding period
by the amount used to purchase subsequent contracts in accordance with the
indenture. [The pre-funding account will be part of the trust but not part of
the REMIC.] Any reimbursement income earned on amount on deposit in the pre-
funding account will be taxable to GreenPoint Credit.]
[Under the indenture, following the initial issuance of the notes, the
trust will be obligated to purchase subsequent contracts from GreenPoint Credit
during the pre-funding period, subject to the availability thereof. Each
subsequent contract will have been underwritten in accordance with GreenPoint
Credit's standard underwriting criteria. subsequent contracts will be
transferred to the trust pursuant to subsequent transfer instruments between
GreenPoint Credit and the trust. In connection with the purchase of subsequent
contracts on the related dates of transfer, the "subsequent transfer dates," the
trust will be required to pay to GreenPoint Credit from amounts on deposit in
the pre-funding account a cash purchase price of 100% of the principal balance
thereof. GreenPoint Credit will designate the subsequent transfer date as the
Cut-off Date with respect to the related subsequent transfer date will not
include accrued interest on the related subsequent contracts in the trust will
increase by an amount equal to the aggregate
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<PAGE>
principal balance of the contracts so purchased and the amount in the pre-
funding account will decrease accordingly. Any pre-funded amount remaining after
the purchase of subsequent contracts will be applied on the first distribution
date on or after the last day of the pre-funding period to prepay principal on
the [notes].
[Any conveyance of subsequent contracts on a subsequent transfer date
is subject to certain conditions including, but not limited to:
(1) each subsequent contract must satisfy the representations and
warranties specified in the related subsequent transfer
instrument and the indenture;
(2) GreenPoint Credit will not select subsequent contracts in a
manner that it believes is adverse to the interests of the
noteholders;
(3) [as of its respective Cut-off Date, each subsequent contract must
satisfy the following criteria:
(a) no subsequent contract may be more than [ ] days
contractually delinquent;
(b) the remaining stated term to maturity of each subsequent
contract may not exceed [ ] months;
(c) each subsequent contract must be underwritten in accordance
with GreenPoint Credit's standard underwriting criteria; and
(d) no subsequent contract may have a loan-to-value ratio
greater than 100%;
(4) the contract pool following the addition of the subsequent
contracts must satisfy the following criteria:
(a) the weighted average contract rate must not be less than
[ ]%;
(b) the weighted average loan-to-value ratio must not be greater
than [ ]%;
(c) not less than [ ]% of the Cut-off Date Pool Principal
Balance must be attributable to loans to purchase new
manufactured homes; and
(d) at least [ ]% of the Cut-off Date Pool Principal Balance
must consist of Land Home Contracts;
(5) as a result of the purchase of the subsequent contracts, the
notes will not receive from [Rating Agencies] a lower credit
rating than the rating assigned at the initial issuance of the
notes; and
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<PAGE>
(6) an independent accountant will provide a letter stating whether or
not the characteristics of the subsequent contracts conform to
the characteristics described in this prospectus supplement].]
Payments on the Contracts; Payment Account
The indenture trustee will initially establish and maintain the
Payment Account at an Eligible Institution. The funds in the Payment Account are
required to be invested by the indenture trustee in common trusts, collective
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, as defined below, are required to be paid into the Payment
Account not later than the second business day following receipt thereof. [For
as long as GreenPoint Credit remains the servicer under the pooling and
servicing agreement and GreenPoint Credit maintains a short-term rating of at
least [ ] from [the rating agency], which is currently the case, the servicer
need not deposit collections into the Payment Account within two business days
of receipt but may use for its own benefit all collections until the related
distribution date without an obligation to pay interest or any other investment
return thereon. It is understood that any benefit to the servicer from this
arrangement shall be additional servicing compensation. While the rating is
maintained, on or prior to each distribution date, the servicer will deposit in
the Payment Account amounts which are to be included in the funds available for
the related distribution date. [Amounts deposited in the Payment Account may be
invested in Permitted Investments, as described in the indenture, maturing no
later than the related distribution date.]]
[At any time that the short-term rating of the servicer does not
satisfy the rating requirements specified above, the servicer may continue to
hold collections prior to distribution as described above so long as it causes
to be maintained an irrevocable letter of credit or surety bond or other credit
enhancement instrument in form and substance satisfactory to the rating agency.
Further, any credit enhancement described in the previous sentence, must be
issued by a issuery institution or insurance company having a rating on its
short-term obligations of at least [ ] and long-term obligations of at least [ ]
by [the rating agency] or other ratings if approved by [the rating agency]. The
credit enhancement must also provide that the indenture trustee may draw thereon
in the event that the servicer, fails to make any deposit or payment required
under the indenture.]
Amounts received as late payment fees, fees in connection with checks
returned for insufficient funds, 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 indenture, and amounts
required to be deposited upon substitution of an eligible substitute contract
because of a breach of a representation or warranty as described under "--
Conveyance of Contracts" above,
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<PAGE>
are required to be paid into the Payment Account. The amounts described in the
preceding sentence will be treated as partial principal prepayments.
On the Determination Date, the servicer will determine the Available
Distribution Amount and the amounts to be distributed on the notes on the
related distribution date. The "Available Distribution Amount" for any
distribution date is the sum of:
(1) the monthly advance for the related distribution date, as defined
below under "- Advances;" and
(2) the amount in the Payment Account on the close of business on the
last day of the immediately preceding Collection Period, less the
sum of:
(a) any repossession profits, of which there are expected to be a
deminimis amount, on defaulted contracts,
(b) payments on contracts 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,
(c) excess contract payments and any other payments not required
to be distributed to noteholders on the related distribution
date,
(d) reimbursements to the servicer in the amount of expenses
incurred in connection with the liquidation of a contract,
the "liquidation expenses," and certain taxes and insurance
premiums advanced by the servicer in respect of manufactured
homes (as described below under "--Advances"),
(e) reimbursements to the servicer for nonrecoverable advances in
respect of contracts and monthly advances to the extent
permitted by the pooling and servicing agreement (as
described below under "--Advances"), and
(f) [if GreenPoint Credit is not acting as servicer,] the Monthly
Servicing Fee.
An "Excess Contract Payment" is 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 indenture trustee in the Payment Account and may be applied as
described under "- Advances" below.
The indenture trustee or its paying agent will withdraw funds from the
Payment Account on each distribution date, but only to the extent of the related
Available Distribution Amount, to make payments to noteholders as specified
under "- Distributions" below. From time to time, as provided in the pooling
and servicing agreement, the servicer will also withdraw funds from the Payment
Account to make payments to it the seller as permitted by the pooling
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<PAGE>
and servicing agreement and described in subclauses (a), (b), (d), (e) and (f)
of clause (2) in the second preceding paragraph.
Distributions
Distributions to the holders of the series 200[ ]-[ ] notes will be
applied first to the holders of the senior notes, second to the holders of the
notes and then to the holders of the notes. The Available Distribution Amount
for each distribution date will be applied in the amounts and the order of
priority set forth below. Distributions of principal and interest to holders of
the notes will be made on each distribution date in an amount equal to their
respective Percentage Interests multiplied by the aggregate amount distributed
to the class of notes on the related distribution date. [Interest on the series
200[ ]-[ ] notes will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.]
Each distribution with respect to book-entry notes 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 beneficial 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 beneficial owners that it
represents. All credits and disbursements with respect to book-entry notes are
to be made by DTC and its participants in accordance with DTC's rules. See
"Description of the Notes - Global Securities" below.
Priorities. On each distribution date, the Available Distribution
Amount will be distributed in the following amounts and in the following order
of priority:
(1) to the noteholders, the Interest Distribution Amount;
(2) to the noteholders, the Formula Principal Distribution Amount
until the note balance is reduced to zero [and on the [ ]
distribution date any amounts remaining in the pre-funding
account]; and.
(3) to the certificateholders, any remaining Available Distribution
Amount.
[Reserve Account]
[On the closing date, the indenture trustee shall establish a reserve
account for the benefit of the noteholders. The reserve account shall have an
initial balance of [$ ] [zero] on the closing date. Commencing on the
distribution date which is the earlier of: (a) the distribution date in [ ]; and
(b) the first distribution date on which the percentage equivalent of a
fraction, the numerator of which is the Pool Scheduled Principal Balance, after
giving effect to distribution with respect to principal, for the related
distribution date and the denominator of which is the Cut-off Date Pool
Principal Balance, is less than or equal to [ ]%, the indenture trustee shall
make a deposit into the reserve account up to the reserve account cap. On each
distribution date, the indenture trustee will withdraw from the reserve account
an amount, referred to as the reserve account draw amount, equal to the lesser
of (a) the amount then on deposit in the reserve account
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and (b) the amount by which the aggregate of amounts due to noteholders in
clauses (1) through (6) under "Distributions" above exceeds the Available
Distribution Amount on the related distribution date and distribute that amount,
together with the Available Distribution Amount.]
[Funds in the reserve account will be invested in eligible investments
as directed by the indenture trustee, and the net investment earnings, if any,
will be paid to the certificateholders.]
On any distribution date, any funds on deposit in the reserve account
in excess of the reserve account cap, after giving effect to any reserve account
draw amount paid to the noteholders on that distribution date, will be withdrawn
from the reserve account and paid to the certificateholders.]
[The reserve account is intended to enhance the likelihood of regular
receipt by the holders of the Series 200[ ]-[ ] notes of the full amount of the
distributions due them and to afford noteholders protection against losses on
liquidated contracts, but no assurance can be given that the reserve account
will be sufficient for this purpose.]
[The reserve account cap shall be as to any distribution date, after
giving effect to distributions due thereon, after the closing date and until
none of the notes remain outstanding, $[ ] (which is [ ]% of the Cut-off Date
Pool Principal Balance).]
Losses on liquidated contracts
As described above, the Total Regular Principal Amount distributable
to the holders of the series 200[ ]-[ ] notes on each distribution date includes
the Scheduled Principal Balance of each contract that became a liquidated
contract during the immediately preceding Collection Period. The liquidation
proceeds, net of:
(1) certain expenses incurred to liquidate the liquidated contract;
(2) all accrued and unpaid interest thereon; and
(3) all monthly advances required to be made in respect of the
liquidated contract, the "Net liquidation proceeds," may be less
than the Scheduled Principal Balance of the liquidated contract.
Under the circumstances described in the preceding sentence, the loss
on the liquidated contract during a Collection Period, in the amount of the
deficiency between the Net liquidation proceeds and the Scheduled Principal
Balance of the liquidated contract, may be covered to the extent of the amount,
the "Excess Interest," if any, by which the interest collected on nondefaulted
contracts during the same Collection Period exceeds interest distributions due
to holders of the series 200[ ]-[ ] notes and the Monthly Servicing Fee.
The effect of any losses on liquidated contracts during a Collection
Period in excess of the aggregate of Excess Interest generally will be to cause
shortfalls, losses or both
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with respect to the notes, which shortfalls or losses will be borne by the
noteholders, the noteholders and the noteholders, in that order.
Example of Distributions
The following chart sets forth an example of the flow of funds on the
notes for the distribution date occurring in [August 2000]:
[June 30].................................. (A) Cut-off Date.]
[July 1-31]................................ (B) servicer receives scheduled
payments on the contracts and
any principal prepayments made
by obligors and applicable
interest thereon.]
[August 13]................................ (C) record date.]
[August 12]................................ (D) Determination Date.]
[August 15]................................ (E) (distribution date is the 15th
day of each month or, if the
15th day is not a business
day, the next business day.)]
[Succeeding months follow the pattern of (B)
through (E)................................]
(A) The Cut-off Date Pool Principal Balance on [June 30, 2000] will be computed
as described under " -- Conveyance of Contracts" above.
(B) scheduled payments, principal prepayments and liquidation proceeds (net of
liquidation expenses) and amounts for the repurchase of contracts may be
received at any time during this period and will be distributed to
noteholders on [August 15, 2000]. When a partial prepayment is made or a
contract is prepaid in full, interest on the amount prepaid is collected
from the obligor only to the date of payment. The Available Distribution
Amount for the distribution on [August 15, 2000] are described under "
-- Payments on Contracts; Payment Account" above.
(C) Distributions on [August 15, 2000] will be made to noteholders of record at
the close of business on [August 13, 2000].
(D) On [August 12, 2000] (three business days prior to the distribution date),
the servicer will determine the amounts of principal and interest which
will be passed through on [August 15, 2000] to noteholders.
(E) On [August 15, 2000], the amounts determined on [August 12, 2000] will be
distributed to noteholders.
Advances
For each distribution date, the servicer will be obligated to make an
advance, a "monthly advance," equal to the lesser of (a) delinquent scheduled
payments of principal and interest on the contracts that were due in the
preceding Collection Period and (b) the amount, if any, by which scheduled
distributions of principal and interest due on the series 200[ ]-[ ] notes
exceeds the amount specified in clause (b) of the definition of Available
Distribution Amount (as set forth above under " -- Payments on Contracts;
Payment Account"), except to the extent, in the
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servicer's judgment, the advance would not be recoverable from related late
payments, liquidation proceeds or otherwise, a "nonrecoverable advance."
The aggregate amount of any additional advances made by the servicer
that have not been reimbursed to the servicer as described below is referred to
in this prospectus supplement as the "outstanding amount advanced." The servicer
may apply any excess contract payments in the Payment Account, rather than its
own funds, to make all or a portion of a monthly advance, but must replace the
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, but only to the extent of the outstanding amount advanced, out
of funds in the Payment Account for the delinquent scheduled payments on the
contract or out of any other funds in the Payment Account.
In making monthly advances, the servicer will be attempting to
maintain a regular flow of scheduled interest and principal to the series 200[
]-[ ] regular noteholders 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 or otherwise, in respect of certain
taxes and insurance premiums not paid by an obligor on a timely basis. Funds so
advanced are reimbursable to the servicer as provided in the pooling and
servicing agreement.
[The Letter of Credit]
[The letter of credit will be an asset of the trust and the indenture
trustee will maintain possession of and make claims for payment pursuant to the
letter of credit for the benefit of the trust.]
[The obligations of [LETTER OF CREDIT PROVIDER] under the letter of
credit will be irrevocable, primary, absolute and unconditional, except as
expressly provided therein, and neither the failure of the indenture trustee,
the servicer, or any other person to perform any covenants or obligations in
favor of [LETTER OF CREDIT PROVIDER], 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 indenture
trustee, the servicer, or any other person shall in any way affect or limit
[LETTER OF CREDIT PROVIDER]'s obligations under the letter of credit. If an
action or proceeding to enforce the letter of credit is brought, the indenture
trustee will be entitled to recover from [LETTER OF CREDIT PROVIDER] costs and
expenses reasonably incurred, including without limitation reasonable fees and
expenses of counsel.]
[The Note Guaranty Insurance Policy]
[The notes will be entitled to the benefit of the note guaranty
insurance policy. As of any determination date, the aggregate amount available
under the note guaranty insurance policy will be equal to the aggregate note
balance of the notes plus interest thereon. With respect
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to any distribution date, an enhancement payment will be payable under the note
guaranty insurance policy equal to the amount by which the aggregate amount
distributable to the notes described in "--Priority of Distributions" above
exceeds the sum of the Available Distribution Amount for the notes plus the
letter of credit draw amount, if any, and any amounts received from the Payment
Account pursuant to "--Priority of Distributions" above.]
[The note guaranty insurance policy will be issued pursuant to the
insurance agreement entered into by and between the seller, the servicer, the
indenture trustee and [INSURER].
Reports to Noteholders
The indenture trustee will include with each distribution to a
noteholder a statement as of the related distribution date setting forth, among
other things:
. the aggregate amount distributed on the notes on the related
distribution date;
. the amount of the distribution on the notes which constitutes
principal;
. the amount of the distribution on the notes which constitutes
interest;
. the remaining note balance;
. the Monthly Servicing Fee payable on the related distribution date
and the amount of any other fees payable out of the trust;
. 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;
. (1) the number of contracts that were repurchased or replaced by a
seller in accordance with the indenture during the prior Collection
Period, identifying the contracts, (2) the repurchase price of the
contracts and (3) the amount, if any, paid by the seller due to the
differences, if any, between the remaining principal balances of
the replaced contracts and the eligible substitute contracts;
. the aggregate principal balances of all contracts that are not
liquidated contracts and in respect of which the related
manufactured homes have been repossessed or foreclosed upon;
. the aggregate liquidation losses, less costs of liquidation,
realized by the trust through the Collection Period immediately
preceding the related distribution date, expressed in dollars;
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. the aggregate liquidation losses, less costs of liquidation,
realized by the trust through the Collection Period immediately
preceding the related distribution date, expressed as a percentage
of the Cut-off Date Pool Principal Balance;
. the amount of any monthly advance for the related distribution date
and the aggregate amount of monthly advances that remain
outstanding as of the distribution date;
. the weighted average contract rate for the contract pool for the
Collection Period immediately preceding the month of the related
distribution date; and
. the number of manufactured homes currently held by the servicer due
to repossessions and the aggregate principal balance of the related
defaulted contracts.
In addition, within a reasonable period of time after the end of each
calendar year, the indenture trustee will furnish a report to each holder of a
series 200[ ]-[ ] regular note of record at any time during the calendar year as
to the aggregate of amounts reported pursuant to clauses (a) and (b) above for
the calendar year.
[Optional Termination and Termination Auction]
[The indenture provides that 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/other party] will have
the option to purchase, upon giving notice mailed no later than the 15th day of
the month next preceding the month of the exercise of the option to purchase,
all outstanding contracts at a price equal to the greater of (a) the sum of (x)
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 (y)
below, as of the final distribution date, and (y) the fair market value of the
acquired property, 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,
plus, in the case of both clause (a) and (b), an amount sufficient to reimburse
noteholders for any shortfall in interest due thereto in respect of prior
distribution dates. The [servicer/other party]'s option shall not be
exercisable if there will not be distributed to the noteholders an amount equal
to the note balance together with any shortfall in interest due to the
noteholders in respect of prior distribution dates and one month's interest on
the note balance at the Note Rate. The amount referred to in this paragraph 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/other party] may also direct the indenture
trustee to conduct a Termination Auction for the sale of all contracts then
outstanding in the trust, and in any case the servicer shall be obligated to
direct the indenture trustee to conduct a Termination Auction within 90 days of
the distribution date on
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which the Pool Scheduled Principal Balance is less than 10% of the Cut-off Date
Pool Principal Balance, unless the servicer has exercised the purchase option
described above. The servicer shall give notice mailed no later than [ ] days
preceding the date on which the Termination Auction is to occur. The indenture
trustee will solicit each noteholder, the seller and one or more active
participants in the asset-backed securities or manufactured housing contract
market that are not affiliated with GreenPoint Credit to make a bid to purchase
the contracts at the Termination Auction. The indenture trustee will sell all
the contracts to the highest bidder, subject, among other things, to (1) the
requirement that the highest bid equal or exceed the Minimum Termination Amount,
and (2) 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 Credit. If the foregoing
requirements are satisfied, the successful bidder or bidders shall deposit the
aggregate purchase price for the contracts in the Payment Account. If the
foregoing requirements are not satisfied, the purchase shall not occur and
distributions will continue to be made on the notes.]
Termination of the Indenture
The indenture will terminate upon the last action required to be taken
by the indenture trustee on the final distribution date following the earlier of
(1) the purchase by the servicer of all contracts and all property acquired in
respect of any contract remaining in the trust as described above under "
-- Optional Termination and Termination Auction"[,/or] (2) the final payment or
other liquidation, or any advance with respect thereto, of the last contract
remaining in the trust or the disposition of all property acquired upon
repossession of any manufactured home [or (3) the sale in a Termination Auction
of all contracts and all other property acquired in respect of any contract
remaining in the trust as described above under " -- Optional Termination and
Termination Auction"].
Upon presentation and surrender of the series 200[ ]-[ ] notes, the
indenture trustee shall cause to be distributed, to the extent of funds
available, to noteholders on the final distribution date in proportion to their
respective Percentage Interests an amount equal to the respective unpaid note
balances of the series 200[ ]-[ ] notes, together with any unpaid interest on
the notes due on prior distribution dates and one month's interest at the
applicable note rates on the unpaid note balances; provided that funds will be
distributed in the applicable order of priority specified under " --
Distributions" above. If the indenture is then being terminated, any amount
which remains on deposit in the Payment Account, other than amounts retained to
meet claims, after distribution to the holders of the series 200[ ]-[ ] notes
will be distributed to the 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.
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
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promptly after the servicer determines that the 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 [ ]%
and 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; Payment Account"
above. [For so long as the servicer is entitled to delay deposits to the
Payment Account until on or prior to the distribution date, any earnings on the
amounts retained by the servicer will constitute additional servicing
compensation.]
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 in connection
with checks returned for insufficient funds, 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 the contracts, if any.
The Indenture Trustee
[TRUSTEE] has its corporate trust offices at [ ]. The indenture
trustee may resign at any time, in which event the seller[s] will be obligated
to appoint a successor indenture trustee. The seller[s] may also remove the
indenture trustee if the indenture trustee ceases to be eligible to continue as
indenture trustee under the indenture or if the indenture trustee becomes
insolvent. In the circumstances described in the preceding sentence, the
seller[s] will also be obligated to appoint a successor indenture trustee. Any
resignation or removal of the indenture trustee and appointment of a successor
indenture trustee will not become effective until acceptance of the appointment
by the successor indenture trustee.
The indenture requires the indenture trustee to maintain, at its own
expense, an office or agency in New York City or [ ] where notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the indenture trustee and the note registrar in respect of
the notes pursuant to the indenture may be served.
The indenture trustee, or any of its affiliates, in its individual or
any other capacity, may become the owner or pledgee of notes with the same
rights as it would have if it were not indenture trustee.
The indenture trustee will also act as paying agent, note registrar
and authenticating agent under the indenture.
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[Registration of the Offered Notes
The notes will be book-entry notes. Persons acquiring beneficial
ownership interests in the notes will hold their notes through DTC in the United
States, or Cedel Bank, societe anonyme or Euroclear System in Europe if they are
participants of those systems, or indirectly through organizations which are
participants in those systems. The book-entry notes will be issued in one or
more notes which equal the aggregate principal balance of the notes and will
initially be registered in the name of Cede & Co., the nominee of DTC. Cedel
and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries which in turn will hold positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Citibank will act as depositary for Cedel and The Chase Manhattan Bank will act
as depositary for Euroclear, in such capacities, individually the "relevant
depositary" and collectively the "European depositaries" Except as described
below, no beneficial owner of a book-entry note will be entitled to receive a
physical note, a "definitive note." Unless and until definitive notes are
issued, it is anticipated that the only "noteholder" of the notes will be Cede &
Co., as nominee of DTC. Beneficial owners of notes will not be noteholders as
that term is used in the indenture. Beneficial owners are only permitted to
exercise their rights indirectly through Participants and DTC.
The beneficial owner's ownership of a book-entry note 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. In turn, the Financial Intermediary's ownership of
the book-entry note 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 DTC participant and on the records of
Cedel or Euroclear, as appropriate.
Beneficial owners will receive all distributions of principal of and
interest on the notes from the indenture trustee through DTC and DTC
participants. While the notes are outstanding, except under the circumstances
described below, under the rules, regulations and procedures creating and
affecting DTC and its operations, or the DTC rules, DTC is required to make
book-entry transfers among Participants on whose behalf it acts with respect to
the notes and is required to receive and transmit distributions of principal of,
and interest on, the notes. Participants and indirect participants with whom
beneficial owners have accounts with respect to notes are similarly required to
make book-entry transfers and receive and transmit distributions on behalf of
their respective beneficial owners. Accordingly, although beneficial owners
will not possess notes representing their respective interests in the notes, the
DTC rules provide a mechanism by which beneficial owners will receive
distributions and will be able to transfer their interest.
Noteholders will not receive or be entitled to receive notes
representing their respective interests in the notes, except under the limited
circumstances described below. Unless and until definitive notes are issued,
noteholders who are not Participants may transfer ownership of notes only
through Participants and indirect participants by instructing Participants and
indirect participants to transfer notes, by book-entry transfer, through DTC for
the account of the purchasers of the notes, which account is maintained with
their respective Participants. Under
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the DTC rules and in accordance with DTC's normal procedures, transfers of
ownership of notes 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 noteholders.
Because of time zone differences, credits of securities received in
Cedel 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. The credits or any transactions in the
securities settled during the processing will be reported to the relevant
Euroclear or Cedel Participants on the same business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear participant to a DTC Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
Transfers between Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants 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 Cedel
Participants or Euroclear participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the relevant depositary; however, cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by a counterparty in the 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. Cedel Participants
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 DTC participant in the book-entry
notes, whether held for its own account or as a nominee for another person. In
general, beneficial ownership of book-entry notes will be subject to the DTC
rules, as in effect from time to time.
Cedel Bank, societe anonyme, 67 Bd Grande-Duchesse Charlotte, L-1331
Luxembourg, was incorporated in 1970 as a limited company under Luxembourg law.
Cedel is owned by banks, securities dealers and financial institutions, and
currently has about 100 shareholders, including U.S. financial institutions or
their subsidiaries. No single entity may own more than five percent of Cedel's
stock.
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Cedel is registered as a bank in Luxembourg, and as such is subject to
regulation by the Institute Monetaire Luxembourgeois, the Luxembourg Monetary
Authority, which supervises Luxembourg banks.
Cedel holds securities for its customers or "Cedel Participants" and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
also deals with domestic securities markets in several countries through
established issuery and custodial relationships. Cedel has established an
electronic bridge with Morgan Guaranty trust as the Euroclear operator in
Brussels to facilitate settlement of trades between systems. Cedel currently
accepts over 70,000 securities issues on its books.
Cedel's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's United States customers are limited to
securities brokers and dealers and banks. Currently, Cedel has approximately
3,000 customers located in over 60 countries, including all major European
countries, Canada, and the United States. Indirect access to Cedel is available
to other institutions which clear through or maintain a custodial relationship
with an account holder of Cedel.
Euroclear was created in 1968 to hold securities for its participants,
or 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 notes 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. 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
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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 notes 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 notes will be made on each
distribution date by the indenture trustee to DTC. DTC will be responsible for
crediting the amount of any payments to the accounts of the applicable DTC
participants in accordance with DTC's normal procedures. Each DTC participant
will be responsible for disbursing payments to the beneficial owners of the
book-entry notes that it represents and to each Financial Intermediary for which
it acts as agent. Each Financial Intermediary will be responsible for
distributing funds to the beneficial owners of the book-entry notes that it
represents.
Under a book-entry format, beneficial owners of the book-entry notes
may experience some delay in their receipt of payments, since the payments will
be forwarded by the indenture trustee to DTC, Cedel or Euroclear. Distributions
with respect to notes held through Cedel or Euroclear will be credited to the
cash accounts of Cedel Participants 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. Because DTC
can only act on behalf of Financial Intermediaries, the ability of a beneficial
owner to pledge book-entry notes to persons or entities that do not participate
in the Depository system, or otherwise take actions in respect of the book-entry
notes, may be limited due to the lack of physical notes for the book-entry
notes. In addition, issuance of the book-entry notes in the book-entry form may
reduce the liquidity of the notes in the secondary market since certain
potential investors may be unwilling to purchase notes for which they cannot
obtain physical notes.
Monthly and annual reports on the trust 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 the Depository, and to the Financial Intermediaries to whose DTC
accounts the book-entry notes of the beneficial owners are credited.
DTC has advised the indenture trustee that, unless and until
definitive notes are issued, DTC will take any action permitted to be taken by
the holders of the book-entry notes under the indenture only at the direction of
one or more Financial Intermediaries to whose DTC accounts the book-entry notes
are credited, to the extent that actions are taken on behalf of Financial
Intermediaries whose holdings include book-entry notes. Cedel or the Euroclear
operator, as the case may be, will take any other action permitted to be taken
by a noteholder under the indenture on behalf of a Cedel Participant 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 notes which conflict with actions taken with
respect to other notes.
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definitive notes, or their nominees, rather than to DTC, only if (a)
DTC or GreenPoint Credit advises the indenture trustee in writing that DTC is no
longer willing, qualified or able to discharge properly its responsibilities as
nominee and issuery with respect to the book-entry notes and GreenPoint Credit
or the indenture trustee is unable to locate a qualified successor, (b)
GreenPoint Credit, at its sole option, with the consent of the indenture
trustee, elects to terminate a book-entry system through DTC or (c) after the
occurrence of an event of default under the indenture, beneficial owners having
Percentage Interests aggregating not less than 51% of the book-entry notes
advise the indenture trustee and DTC through the Financial Intermediaries and
the DTC 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 indenture trustee will be required to notify all
beneficial owners of the occurrence of the event and the availability through
DTC of definitive notes. Upon surrender by DTC of the global note or notes
representing the book-entry notes and instructions for re-registration, the
indenture trustee will issue definitive notes, and thereafter the indenture
trustee will recognize the holders of definitive notes as noteholders under the
indenture.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfer of notes among participants of DTC,
Cedel 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 indenture 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 notes held by Cede &
Co., as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
Federal Income Tax Consequences
The following is a general discussion of anticipated material federal
income tax consequences of the purchase, ownership and disposition of the notes
offered under this prospectus supplement and the accompanying prospectus. This
discussion has been prepared with the advice of Orrick, Herrington & Sutcliffe
LLP as counsel to the issuer. This discussion is directed solely to noteholders
that hold the notes as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended, and does not purport to discuss all
federal income tax consequences that may be applicable to particular categories
of investors, some of which may be subject to special rules, including banks,
insurance companies, foreign investors, tax-exempt organizations, dealers in
securities or currencies, mutual funds, real estate investment trusts, natural
persons, cash method taxpayers, S corporations, estates and trusts, investors
that hold the notes as part of a hedge, straddle or, an integrated or conversion
transaction, or holders whose "functional currency" is not the United States
dollar. Also, it does not address alternative minimum tax consequences or the
indirect effects on the holders of equity interests in a noteholder. 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
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retroactively. Taxpayers and preparers of tax returns 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:
(i) is given as to events that have occurred at the time the
advice is rendered and is not given as to the consequences
of contemplated actions; and
(ii) 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
supplement and/or the accompanying prospectus.
In addition to the federal income tax consequences described in this
prospectus supplement and the accompanying prospectus, potential investors
should consider the state and local tax consequences, if any, of the purchase,
ownership and disposition of the notes. See "State and Other Tax Consequences"
in this prospectus supplement. Noteholders are advised to consult their tax
advisors concerning the federal, state, local or other tax consequences to them
of the purchase, ownership and disposition of the notes offered under this
prospectus.
In the opinion of Orrick, Herrington & Sutcliffe LLP, special tax counsel
to the issuer, for federal income tax purposes, the notes will be characterized
as indebtedness, and neither the issuer nor any portion of the issuer will be
characterized as an association, or a publicly traded partnership, taxable as a
corporation or as a taxable mortgage pool within the meaning of Section 7701(i)
of the Internal Revenue Code of 1986, as amended.
The following discussion is based in part upon the rules governing original
issue discount that are described in Sections 1271-1273 and 1275 of the Internal
Revenue Code of 1986, as amended, and in the Treasury regulations issued under
these sections, referred to as the "OID Regulations." The OID Regulations do
not adequately address various issues relevant to, and in some instances provide
that they are not applicable to, securities such as the notes. For purposes of
this tax discussion, references to a "noteholder" or a "holder" are to the
beneficial owner of a note.
Status as Real Property Loans
Notes held by a domestic building and loan association will not constitute
"loans . . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Internal Revenue Code of 1986, as amended; and
notes held by a real estate investment trust will not constitute "real estate
assets" within the meaning of Section 856(c)(4)(A) of the Internal Revenue Code
of 1986, as amended, and interest on notes will not be considered "interest on
obligations secured by mortgages on real property" within the meaning of Section
856(c)(3)(B) of the Internal Revenue Code of 1986, as amended.
Original Issue Discount
The notes are not expected to be considered issued with original issue
discount since the principal amount of the notes will not exceed their issue
price by more than a de minimis
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amount. The stated interest thereon will be taxable to a noteholder as ordinary
interest income when received or accrued in accordance with the noteholder's
method of tax accounting. Under the OID Regulations, a holder of a note issued
with a de minimis amount of original issue discount must include the discount in
income, on a pro rata basis, as principal payments are made on the note.
The original issue discount, if any, on a note would be the excess of its
stated redemption price at maturity over its issue price. The issue price of a
particular class of notes will be the first cash price at which a substantial
amount of notes of that class is sold, excluding sales to bond houses, brokers
and underwriters, on the closing date. If less than a substantial amount of a
particular class of notes is sold for cash on or prior to the closing date, the
issue price of the class will be treated as the fair market value of that class
on the closing date. Under the OID Regulations, the stated redemption price of
a note is equal to the total of all payments to be made on the note other than
"qualified stated interest." "Qualified stated interest" includes interest that
is unconditionally payable at least annually at a single fixed rate, or in the
case of a variable rate debt instrument, at a "qualified floating rate," an
"objective rate," a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate," or a
combination of "qualified floating rates" that typically does not operate in a
manner that accelerates or defers interest payments on the note.
In the case of notes bearing adjustable note rates, the determination of
the total amount of original issue discount and the timing of the inclusion of
original issue discount will vary according to the characteristics of the notes.
In general terms original issue discount is accrued by treating the note rate of
the notes as fixed and making adjustments to reflect actual note rate payments.
Some classes of the notes may provide for the first interest payment on
these notes to be made more than one month after the date of issuance, a period
which is longer than the subsequent monthly intervals between interest payments.
Assuming the "accrual period," as defined in the fourth paragraph below, for
original issue discount is each monthly period that ends on a distribution date,
in some cases, as a consequence of this "long first accrual period," some or all
interest payments may be required to be included in the stated redemption price
of the note and accounted for as original issue discount.
In addition, if the accrued interest to be paid on the first distribution
date is computed for a period that begins prior to the closing date, a portion
of the purchase price paid for a note will reflect the accrued interest. In
those cases, information returns to the noteholders and the IRS will be based on
the position that the portion of the purchase price paid for the interest
accrued during periods prior to the closing date is treated as part of the
overall purchase price of the note, and not as a separate asset the purchase
price of which is recovered entirely out of interest received on the next
distribution date, and that portion of the interest paid on the first
distribution date in excess of interest accrued for a number of days
corresponding to the number of days from the closing date to the first
distribution date should be included in the stated redemption price of the note.
However, the OID Regulations state that all or some portion of the accrued
interest may be treated as a separate asset the cost of which is recovered
entirely out of interest paid on the first distribution date. It is unclear how
an election to do so would be made under the OID Regulations and whether the
election could be made unilaterally by a noteholder.
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Notwithstanding the general definition of original issue discount, original
issue discount on a note will be considered to be de minimis if it is less than
0.25% of the stated redemption price of the note multiplied by its weighted
average maturity. For this purpose, the weighted average maturity of the note
is computed as the sum of the amounts determined, as to each payment included in
the stated redemption price of the note, by multiplying (1) the number of
complete years, rounding down for partial years, from the issue date until the
payment is expected to be made, possibly taking into account a prepayment
assumption, by (2) a fraction, the numerator of which is the amount of the
payment, and the denominator of which is the stated redemption price at maturity
of the note. Under the OID Regulations, original issue discount of only a de
minimis amount, other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday, will be
included in income as each payment of stated principal is made, based on the
product of the total amount of the de minimis original issue discount and a
fraction, the numerator of which is the amount of the principal payment and the
denominator of which is the outstanding stated principal amount of the note.
The OID Regulations also would permit a noteholder to elect to accrue de minimis
original issue discount into income currently based on a constant yield method.
See "Federal Income Tax Considerations--Market Discount" in this prospectus
supplement for a description of the election under the OID Regulations.
If original issue discount on a note is in excess of a de minimis amount,
the holder of the note must include in ordinary gross income the sum of the
"daily portions" of original issue discount for each day during its taxable year
on which it held the note, including the purchase date but excluding the
disposition date. In the case of an original holder of a note, the daily
portions of original issue discount will be determined as follows.
As to each "accrual period," that is, each period that ends on a date that
corresponds to a distribution date and begins on the first day following the
immediately preceding accrual period, or in the case of the first period, begins
on the closing date, a calculation will be made of the portion of the original
issue discount that accrued during this accrual period. The portion of original
issue discount that accrues in any accrual period will equal the excess, if any,
of (1) the sum of (A) the present value, as of the end of the accrual period, of
all of the distributions remaining to be made on the note, if any, in future
periods and (B) the distributions made on the note during the accrual period of
amounts included in the stated redemption price, over (2) the adjusted issue
price of the note at the beginning of the accrual period. The present value of
the remaining distributions referred to in the preceding sentence will be
calculated using a discount rate equal to the original yield to maturity of the
notes, and possibly assuming that distributions on the note will be received in
future periods based on the trust assets being prepaid at a rate equal to a
prepayment assumption. For these purposes, the original yield to maturity of
the note would be calculated based on its issue price and possibly assuming that
distributions on the note will be made in all accrual periods based on the trust
assets being prepaid at a rate equal to a prepayment assumption. The adjusted
issue price of a note at the beginning of any accrual period will equal the
issue price of the note, increased by the aggregate amount of original issue
discount that accrued on the note in prior accrual periods, and reduced by the
amount of any distributions made on the note in prior accrual periods of amounts
included in its stated redemption price. The original issue discount accruing
during any accrual period, computed as described above, will be allocated
ratably to each day during the accrual period to determine the daily portion of
original issue discount for that day. Although the issuer will calculate
original
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issue discount, if any, based on its determination of the accrual periods, a
noteholder may, subject to some restrictions, elect other accrual periods.
A subsequent purchaser of a note that purchases the note at a price,
excluding any portion of the price attributable to accrued qualified stated
interest, less than its remaining stated redemption price will also be required
to include in gross income the daily portions of any original issue discount
relating to the note. However, each daily portion will be reduced, if the cost
is in excess of its "adjusted issue price," in proportion to the ratio that
excess bears to the aggregate original issue discount remaining to be accrued on
the note. The adjusted issue price of a note on any given day equals:
(a) the adjusted issue price, or, in the case of the first
accrual period, the issue price, of the note at the
beginning of the accrual period which includes that day,
plus
(b) the daily portions of original issue discount for all days
during the accrual period prior to that day, less
(c) any principal payments made during the accrual period
relating to the note.
Market Discount
A noteholder that purchases a note at a market discount, that is, assuming
the note is issued without original issue discount, at a purchase price less
than its remaining stated principal amount, will recognize gain upon receipt of
each distribution representing stated principal. In particular, under Section
1276 of the Internal Revenue Code of 1986, as amended, the noteholder, in most
cases, will be required to allocate the portion of each distribution
representing stated principal first to accrued market discount not previously
included in income, and to recognize ordinary income to that extent.
A noteholder 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, the election will apply to all market discount bonds
acquired by the noteholder on or after the first day of the first taxable year
to which the election applies. In addition, the OID Regulations permit a
noteholder to elect to accrue all interest, discount, including de minimis
market or original issue discount, and premium in income as interest, based on a
constant yield method. If this election were made for a note with market
discount, the noteholder would be deemed to have made an election to include
currently market discount in income for all other debt instruments having market
discount that the noteholder acquires during the taxable year of the election or
after that year, and possibly previously acquired instruments. Similarly, a
noteholder that made this election for a note that is acquired at a premium
would be deemed to have made an election to amortize bond premium for all debt
instruments having amortizable bond premium that the noteholder owns or
acquires. See "Federal Income Tax Consequences--Premium" in this prospectus
supplement. Each of these elections to accrue interest, discount and premium
for a note on a constant yield method would be irrevocable.
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However, market discount for a note will be considered to be de minimis for
purposes of Section 1276 of the Internal Revenue Code of 1986, as amended, if
the market discount is less than 0.25% of the remaining principal amount of the
note multiplied by the number of complete years to maturity remaining after the
date of its purchase. In interpreting a similar rule for 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 for market discount, possibly taking into account a
prepayment assumption. If market discount is treated as de minimis under this
rule, it appears that the actual discount would be treated in a manner similar
to original issue discount of a de minimis amount. See "Federal Income Tax
Consequences--Original Issue Discount" in this prospectus supplement.
Section 1276(b)(3) of the Internal Revenue Code of 1986, as amended,
specifically authorizes the Treasury Department to issue regulations providing
for the method for accruing market discount on debt instruments, the principal
of which is payable in more than one installment. Until regulations are issued
by the Treasury Department, some rules described in the legislative history to
Section 1276 of the Internal Revenue Code of 1986, as amended, or the Committee
Report, apply. The Committee Report indicates that in each accrual period
market discount on notes should accrue, at the noteholder's option: (1) on the
basis of a constant yield method, or (2) in the case of a note issued without
original issue discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid in the accrual period
bears to the total amount of stated interest remaining to be paid on the notes
as of the beginning of the accrual period. Moreover, any prepayment assumption
used in calculating the accrual of original issue discount is also used in
calculating the accrual of market discount. Because the regulations referred to
in this paragraph have not been issued, it is not possible to predict what
effect these regulations might have on the tax treatment of a note purchased at
a discount in the secondary market. Further, it is uncertain whether a
prepayment assumption would be required to be used for the notes if they were
issued with original issue discount.
To the extent that notes provide for monthly or other periodic
distributions throughout their term, the effect of these rules may be to require
market discount to be includible in income at a rate that is not significantly
slower than the rate at which the discount would accrue if it were original
issue discount. Moreover, in any event a holder of a note typically will be
required to treat a portion of any gain on the sale or exchange of the note 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.
Further, under Section 1277 of the Internal Revenue Code of 1986, as
amended, a holder of a note 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 a note purchased with market discount. For these
purposes, the de minimis rule referred to in the third preceding paragraph
applies. Any deferred interest expense would not exceed the market discount
that accrues during that taxable year and is, in most cases, allowed as a
deduction not later than the year in which the market discount is includible in
income. If the holder elects to include market discount in income currently as
it accrues on all market discount instruments acquired by that holder in that
taxable year or after that year, the interest deferral rule described above will
not apply.
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Premium
If a holder purchases a note for an amount greater than its remaining
principal amount, the holder will be considered to have purchased the note with
amortizable bond premium equal in amount to the excess, and may elect to
amortize the premium using a constant yield method over the remaining term of
the note and to offset interest otherwise to be required to be included in
income relating to that note by the premium amortized in that taxable year. If
this election is made, it will apply to all debt instruments having amortizable
bond premium that the holder owns or subsequently acquires. The OID Regulations
also permit noteholders to elect to include all interest, discount and premium
in income based on a constant yield method. See "Federal Income Tax
Consequences--Market Discount" in this prospectus supplement. The Committee
Report states that the same rules that apply to accrual of market discount,
which rules may require use of a prepayment assumption in accruing market
discount for notes without regard to whether the notes have original issue
discount, would also apply in amortizing bond premium under Section 171 of the
Internal Revenue Code of 1986, as amended.
Realized Losses
Under Section 166 of the Internal Revenue Code of 1986, as amended, both
corporate and noncorporate holders of the notes that acquire those notes in
connection with a trade or business should be allowed to deduct, as ordinary
losses, any losses sustained during a taxable year in which their notes become
wholly or partially worthless as the result of one or more realized losses on
the trust assets. However, it appears that a noncorporate holder that does not
acquire a note in connection with a trade or business will not be entitled to
deduct a loss under Section 166 of the Internal Revenue Code of 1986, as
amended, until the holder's note becomes wholly worthless, that is, until its
outstanding principal balance has been reduced to zero, and that the loss will
be characterized as a short-term capital loss.
Each holder of a note will be required to accrue interest and original
issue discount for that note, without giving effect to any reductions in
distributions attributable to defaults or delinquencies on the trust assets
until it can be established that any reduction ultimately will not be
recoverable. As a result, the amount of taxable income reported in any period
by the holder of a note could exceed the amount of economic income actually
realized by the holder in that period. Although the holder of a note eventually
will recognize a loss or reduction in income attributable to previously accrued
and included income that, as the result of a realized loss, ultimately will not
be realized, the law is unclear as to the timing and character of the loss or
reduction in income.
Sales of Notes
If a note is sold, the selling noteholder will recognize gain or loss equal
to the difference between the amount realized on the sale and its adjusted basis
in the note. The adjusted basis of a note, in most cases, will equal the cost
of that note to that noteholder, increased by the amount of any original issue
discount or market discount previously reported by the noteholder for that note
and reduced by any amortized premium and any principal payment received by the
noteholder. Except as provided in the following three paragraphs, any gain or
loss will be capital gain or loss, provided the note is held as a capital asset,
in most cases, property held for
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investment, within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended.
Gain recognized on the sale of a note by a seller who purchased the note at
a market discount will be taxable as ordinary income in an amount not exceeding
the portion of the discount that accrued during the period the note was held by
the holder, reduced by any market discount included in income under the rules
described in this prospectus supplement under "Federal Income Tax
Considerations--Market Discount" and "--Premium."
A portion of any gain from the sale of a note that might otherwise be
capital gain may be treated as ordinary income to the extent that the note is
held as part of a "conversion transaction" within the meaning of Section 1258 of
the Internal Revenue Code of 1986, as amended. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk, if substantially
all of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in the transaction. The amount of gain so realized in a
conversion transaction that is recharacterized as ordinary income generally will
not exceed the amount of interest that would have accrued on the taxpayer's net
investment at 120% of the appropriate "applicable Federal rate," which rate is
computed and published monthly by the IRS, at the time the taxpayer enters into
the conversion transaction, subject to appropriate reduction for prior inclusion
of interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include any net capital
gain in total net investment income for the taxable year, for purposes of the
rule that limits the deduction of interest on indebtedness incurred to purchase
or carry property held for investment to a taxpayer's net investment income.
Backup Withholding
Payments of interest and principal, as well as payments of proceeds from
the sale of notes, may be subject to the "backup withholding tax" under Section
3406 of the Internal Revenue Code of 1986, as amended, at a rate of 31% if
recipients of the payments fail to furnish to the payor information, including
their taxpayer identification numbers, or otherwise fail to establish an
exemption from the tax. Any amounts deducted and withheld from a distribution
to a recipient would be allowed as a credit against the recipient's federal
income tax. Furthermore, penalties may be imposed by the IRS on a recipient of
payments that is required to supply information but that does not do so in the
proper manner.
The issuer will report to the holders and to the IRS for each calendar year
the amount of any "reportable payments" during that year and the amount of tax
withheld, if any, relating to payments on the notes.
Tax Treatment of Foreign Investors
Interest paid on a note to a nonresident alien individual, foreign
partnership or foreign corporation that has no connection with the United States
other than holding notes, known as nonresidents, will normally qualify as
portfolio interest and will be exempt from federal income
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tax, except, in general, where (1) the recipient is a holder, directly or by
attribution, of 10% or more of the capital or profits interest in the issuer, or
(2) the recipient is a controlled foreign corporation to which the issuer is a
related person. Upon receipt of appropriate ownership statements, the issuer
normally will be relieved of obligations to withhold tax from the interest
payments. These provisions supersede the generally applicable provisions of
United States law that would otherwise require the issuer to withhold at a 30%
rate, unless this rate were reduced or eliminated by an applicable tax treaty,
on, among other things, interest and other fixed or determinable, annual or
periodic income paid to nonresidents. For these purposes a noteholder may be
considered to be related to the issuer by holding a certificate or by having
common ownership with any other holder of a certificate or any affiliate of that
holder.
New Withholding Regulations
The Treasury Department has issued new regulations referred to as the "New
Withholding Regulations," which make modifications to the withholding, backup
withholding and information reporting rules described above in the three
preceding paragraphs. The New Withholding Regulations attempt to unify
certification requirements and modify reliance standards. The New Withholding
Regulations will generally be effective for payments made after December 31,
2000, subject to transition rules. Prospective investors are urged to consult
their tax advisors regarding the New Withholding Regulations.
State and Other Tax Consequences
In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state and
local tax consequences of the acquisition, ownership, and disposition of the
notes offered by this prospectus supplement and the accompanying prospectus.
State tax law may differ substantially from the corresponding federal tax law,
and the discussion above does not purport to describe any aspect of the tax laws
of any state or other jurisdiction. Therefore, prospective investors should
consult their tax advisors about the various tax consequences of investments in
the notes offered by this prospectus.
ERISA Considerations
The notes are eligible for purchase by any ERISA plan. Any fiduciary or
other investor of ERISA plan assets that proposes to acquire or hold the notes
on behalf of or with assets of any ERISA plan should consult with its counsel
with respect to the potential applicability of the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and the
Internal Revenue Code of 1986, as amended, to the proposed investment. See
"ERISA Considerations" in the prospectus.
Each purchaser of a note, by its acceptance of the note, shall be deemed to
have represented that the acquisition and holding of the note by the purchaser
does not constitute or give rise to a prohibited transaction under section 406
of ERISA or section 4975 of the Internal Revenue Code of 1986, as amended, for
which no statutory, regulatory or administrative exemption is available. See
"ERISA Considerations" in the prospectus.
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The notes may not be purchased with the assets of a ERISA plan if the
underwriters, the issuer, the servicer, the indenture indenture trustee, the
owner indenture trustee, the Enhancer or any of their affiliates:
(a) has investment or administrative discretion with respect to
the ERISA plan assets;
(b) has authority or responsibility to give, or regularly gives,
investment advice regarding the ERISA plan assets, for a fee
and under an agreement or understanding that the advice will
serve as a primary basis for investment decisions regarding
the ERISA plan assets and will be based on the particular
investment needs for the ERISA plan; or
(c) is an employer maintaining or contributing to the ERISA
plan.
On January 5, 2000, the DOL published final regulations under Section
401(c) of ERISA. The final 401(c) Regulations will take effect on July 5, 2001.
The sale of any of the notes to a ERISA plan is in no respect a representation
by the issuer or the underwriters that the investment meets all relevant legal
requirements with respect to investments by ERISA plans generally or any
particular ERISA plan, or that the investment is appropriate for ERISA plans
generally or any particular ERISA plan.
Ratings
It is a condition to the issuance of the notes that they be rated at
least "[AAA]" by [ ] and at least "[Aaa]" by [ ]. 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 rating of
the notes should be evaluated independently of similar security ratings assigned
to other kinds of securities.
The ratings assigned by [ ] to the notes:
. address the likelihood of the receipt by the noteholders of their
allocable share of principal and/or interest on the underlying
assets; and
. take into consideration:
-- the credit quality of the related underlying assets,
-- any credit support arrangements,
-- structural and legal aspects associated with the notes, and
-- the extent to which the payment stream on such underlying assets
is adequate to make payments required by the notes.
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[ ] ratings on the notes do not constitute a statement:
. regarding frequency of prepayments on the underlying assets, or
. as to whether yield may be adversely affected as a result thereof.
An explanation of the significance of such ratings may be obtained
from [ ], [ ], New York, New York [ ], telephone [( )- ].
The seller has not requested a rating on the notes by any rating
agency other than [ ]. However, there can be no assurance as to whether any
other rating agency will rate any or all of the notes, or if it did, what rating
would be assigned to the notes by any other rating agency. A rating on any or
all of the notes by certain other rating agencies, if assigned at all, may be
lower than the rating assigned to the notes by [ ].
Legal Investment
The notes offered hereby will not constitute "mortgage related
securities" under SMMEA until such time as the balance of the pre-funding
account is reduced to zero. At the time the pre-funding account is reduced to
zero, the notes will constitute legal investments for certain types of investors
to the extent provided in SMMEA. Investors should consult their own legal
advisors in determining whether and to what extent the senior notes constitute
legal investments for them.
Method Of Distribution
Subject to the terms and conditions of the underwriting agreement, the
seller has agreed to sell, and [each of] underwriters of the notes has agreed to
purchase from the seller[s], the respective principal amounts of the notes set
forth below its name in the table below.
[underwriters] [underwriters]
-------------- --------------
Principal Amount of Notes... $ $
In the underwriting agreement, the underwriters of the notes have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the notes offered hereby if any notes are purchased. In the event of default
by an underwriter of the notes, the underwriting agreement provides that, in
certain circumstances, the underwriting agreement may be terminated.
The seller has been advised by the underwriters of the notes that they
propose initially to offer the notes 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 [ %] of the note balance. The underwriters
of the notes may allow dealers, and such dealers may allow, a concession not in
excess of [ %] of the note balance. After the initial public offering of the
notes, the public offering prices and any concessions may be changed.
S-60
<PAGE>
The underwriting agreement provides that the seller will indemnify the
underwriters of the notes against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, or contribute to payments the
underwriters of the notes may be required to make in respect thereof.
The underwriters of the notes will reimburse certain expenses of the
seller.
In connection with the sale of the notes, the underwriters of the
notes and other persons participating in the sale may engage in transactions
that stabilize, maintain or otherwise affect the price of the notes.
Specifically, the underwriters of the notes may over-allot in connection with
the sale, creating a short position in the notes for their own account. To
cover over-allotments or to stabilize the price of the notes, the underwriters
of the notes may bid for, and purchase, notes in the open market. The
underwriters of the notes may also impose a penalty bid whereby they may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
notes, if the underwriters of the notes repurchase previously distributed notes
in transactions to cover their short position, in stabilization transactions or
otherwise. Finally, the underwriters of the notes may bid for, and purchase,
notes in market making transactions. These activities may stabilize or maintain
the market price of the notes above market levels that may otherwise prevail.
The underwriters of the notes are 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 notes 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 notes.]
Legal Matters
Certain legal matters relating to the notes, including legal matters
relating to material federal income tax consequences concerning the notes, will
be passed upon for the seller by Orrick, Herrington & Sutcliffe LLP, Los
Angeles, California and for the underwriters of the notes by [ ].
S-16
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$[ ]
(Approximate)
[GREENPOINT ASSET LLC LOGO]/[TRUST]
Issuer
[GREENPOINTCREDIT, LLC LOGO]
Seller and Servicer
Manufactured Housing Contract-Backed Notes,
Series [ ]-[ ]
PROSPECTUS SUPPLEMENT
[_____], [__]
[UNDERWRITER]
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 notes 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 notes and with respect to their unsold allotments or
subscriptions. In addition, for ninety days from the date of this prospectus
supplement, all dealers selling the notes will deliver a prospectus supplement
and prospectus.
