The information in this prospectus supplement is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus
supplement is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED ________________, 2000
Prospectus supplement dated __________, _____ (to prospectus dated
__________,____)
$_____________________
RAMP Series 200_-GMACM Trust
Issuer
[GMAC Mortgage Corporation]
Seller and Servicer
Residential Asset Mortgage Products, Inc.
Depositor
Mortgage Asset-Backed Pass-Through Certificates,
Series 200_-GMACM_
The Trust
The trust will hold a pool of [one- to four-family residential first mortgage
loans and junior] [multifamily] mortgage loans.
Offered Certificates
The trust will issue these classes of certificates that are offered under this
prospectus supplement:
o [3] classes of Class A Certificates
Credit Enhancement
Credit enhancement for all of these certificates will be provided by
subordinated certificates, overcollateralization represented by the excess of
the balance of the mortgage loans over the balance of the Class A Certificates,
[and a financial guaranty insurance policy issued by _______________].
You should consider carefully the risk factors beginning on page S-___ inthis
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.
The Attorney General of the State of New York has not passed on or endorsed the
merits of this offering. Any representation to the contrary is unlawful.
______________- will offer the Class A Certificates to the public at varying
prices to be determined at the time of sale. The proceeds to the depositor from
the sale of the underwritten certificates will be approximately ____% of the
principal balance of the underwritten certificates plus accrued interest, before
deducting expenses.
[Name of Underwriter]
Underwriter
<PAGE>
Important notice about information presented in this prospectus supplement and
the prospectus
We provide information to you about the offered certificates in two separate
documents that provide progressively more detail:
o the prospectus, which provides general information, some of which may not
apply to your series of certificates; and
o this prospectus supplement, which describes the specific terms of your
series of certificates.
If the description of your certificates in this prospectus supplement differs
from the related description in the prospectus, you should rely on the
information in this prospectus supplement.
The depositor's principal offices are located at 8400 Normandale Lake Boulevard,
Suite 600, Minneapolis, Minnesota 55437 and its telephone number is (952)
832-7000.
Table of Contents
SUMMARY...................................3
RISK FACTORS.............................10
Risk of Loss...........................10
Loss Mitigation Practices..............13
Limited Obligations....................13
Liquidity Risks........................13
Special Yield and Prepayment
Considerations 14
INTRODUCTION.............................22
DESCRIPTION OF THE MORTGAGE POOL.........22
General................................22
[Related Borrowers, Cross-Collateralized
Mortgage Loans and Mortgage Loans
Collateralized by Multiple
Properties.......................23
Mortgage Pool Characteristics..........23
Underwriting Standards.................35
[Primary Mortgage Insurance and
Primary Hazard Insurance ......37
Additional Information.................38
THE SELLER AND SERVICER..................38
General................................38
Delinquency and Loss Experience of the
Servicer's Portfolio ............39
DESCRIPTION OF THE CERTIFICATES..........40
General................................40
Book-Entry Registration of Certain of
the Offered Certificates ........41
Glossary of Terms......................42
Distributions..........................46
Interest Distributions.................46
Determination of LIBOR.................48
Principal Distributions on the Class A
Certificates ....................49
Overcollateralization Provisions.......50
Financial Guaranty Insurance Policy....51
Allocation of Losses; Subordination....53
Advances...............................56
THE FINANCIAL GUARANTY INSURER...........57
CERTAIN YIELD AND PREPAYMENT
CONSIDERATIONS...................57
General................................57
POOLING AND SERVICING AGREEMENT..........63
General................................63
Servicing and Other Compensation and
Payment of Expenses .............64
[Refinancing of Senior Lien............64
Collection and Liquidation Practices;
Loss Mitigation .................64
Voting Rights..........................65
Termination............................65
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.66
METHOD OF DISTRIBUTION...................67
LEGAL OPINIONS...........................69
EXPERTS..................................69
RATINGS..................................69
LEGAL INVESTMENT.........................70
ERISA CONSIDERATIONS.....................70
<PAGE>
SUMMARY
The following summary is a very general overview of the offered
certificates and does not contain all of the information that you should
consider in making your investment decision. To understand all of the terms of
the offered certificates, you should read carefully this entire document and the
prospectus.
<TABLE>
<S> <C>
Issuer RAMP Series 200_- GMACM_ Trust
Title of securities RAMP Mortgage Asset-Backed Pass-Through Certificates, Series
200_-GMACM_.
Depositor Residential Asset Mortgage Products, Inc., an affiliate of Residential Funding
Corporation.
Servicer and Seller [GMAC Mortgage Corporation, a Pennsylvania corporation]
Trustee _______________________________________ .
Financial Guaranty insurer _______________________________________ .
Mortgage pool ____ adjustable rate mortgage loans with an
aggregate principal balance of approximately
$_________ as of the cut-off date, secured by [first
liens and junior liens] on [one- to
four-family residential] [multifamily]
properties.
Cut-off date ________________1,__________.
Closing date On or about ___________,_____________ .
Distribution dates Beginning on ___________ 25,___ and thereafter on the 25th
of each month or, if the 25th is not a business day, on the next business
day.
Scheduled final distribution date Class A-1 Certificates:________ 25, ____.
Class A-2 Certificates:________ 25, ____.
Class A-3 Certificates:________ 25, ____.
The actual final distribution date could be
substantially earlier.
Form of certificates Book-entry.
S3
<PAGE>
See "Description of the
Certificates--Book-Entry Registration of
Certain of the Offered Certificates" in this
prospectus supplement.
Minimum denominations $25,000.
Legal investment When issued, the Class A
Certificates will not be "mortgage related
securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984.
See "Legal Investment" in this prospectus
supplement and "Legal Investment Matters" in
the prospectus.
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
Offered Certificates
-------------------------------------------------------------------------------------------------
Initial Initial Rating
Pass-Through Certificate
Class Rate Principal Balance (____/____) Designations
-------------------------------------------------------------------------------------------------
Class A Certificates:
-------------------------------------------------------------------------------------------------
-------------------- ---------------- ------------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
[A-1 Adjustable Rate $ AAA/AAA Senior/Adjustable
-----------
Rate]
-------------------- ---------------- ------------------- ---------------- ----------------------
[A-2 % $ AAA/AAA Senior/Fixed Rate]
-------- -----------
-------------------- ---------------- ------------------- ---------------- ----------------------
[A-3 % $ AAA/AAA Senior Lockout/Fixed
-------- -----------
Rate]
-------------------------------------------------------------------------------------------------
Total Class A Certificates: $
-------------------------------------------------------------------------------------------------
Non-Offered Certificates
-------------------------------------------------------------------------------------------------
Class SB and Class R Certificates:
-------------------------------------------------------------------------------------------------
SB NA $ NA Subordinate
-----------
--------------------- --------------- ------------------- ---------------- ----------------------
R NA $ 0 NA Subordinate
--------------------- --------------- ------------------- ---------------- ----------------------
Total Class SB and Class R Certificates: $
-------------------------------------------------------------------------------------------------
Total offered and non-offered certificates: $
-------------------------------------------------------------------------------------------------
Other Information:
Class A-1:
Adjustable Rate: Initial Formula Maximum
Class A-1: ______________% One-Month LIBOR + weighted average net
__________% mortgage rate on the
mortgage loans
</TABLE>
S-5
<PAGE>
The Trust
The depositor will establish a trust with respect to the Series 200_-GMACM_
Certificates under a pooling and servicing agreement. On the closing date, the
depositor will deposit the pool of mortgage loans described in this prospectus
supplement into the trust. Each certificate will represent a partial ownership
interest in the trust.
The trust will also include credit enhancement for the Class A Certificates in
the form of a financial guaranty insurance policy provided by _____________.
The Mortgage Pool
The mortgage loans to be deposited into the trust have the following
characteristics as of the cut-off date:
[insert table]
[The interest rate on the mortgage loans will adjust on each adjustment date to
equal the sum of Six-Month LIBOR and the note margin on the mortgage, subject to
a maximum and minimum interest rate.
The mortgage loans were originated using less restrictive underwriting standards
than the underwriting standards applied by some other first and junior mortgage
loan purchase programs, including the programs of Fannie Mac, Freddie Mac or the
depositor's affiliate, Residential Funding Mortgage Securities I, Inc.]
For additional information regarding the mortgage pool see "Description of the
Mortgage Pool" in this prospectus supplement.
Distributions on the Offered Certificates
Amount available for monthly distribution. On each monthly distribution date,
the trustee will make distributions to investors. The amount available for
distribution will include:
o collections of monthly payments on the mortgage loans, including
prepayments and other unscheduled collections plus
o advances for delinquent payments minus
o the fees and expenses of the subservicers and the servicer, including
reimbursement for advances [minus]
o [the premium paid to the financial guaranty insurer].
See "Description of the Certificates--Glossary of Terms--Available Distribution
Amount" in this prospectus supplement.
Priority of distributions. Distributions on the offered certificates will be
made from available amounts as follows:
o Distribution of interest to the Class A Certificates
o Distributions of principal to the Class A Certificates
o Payment to servicer for certain unreimbursed advances
o [Reimbursement to the financial guaranty insurer for payments made by the
financial guaranty insurer to the Class A Certificates]
o Payments of excess interest payments on the mortgage loans to make principal
payments on the Class A Certificates, until the amount of
overcollateralization reaches the required amount
o Distributions of interest in respect of prepayment interest shortfalls on
the Class A Certificates
o Distribution of remaining funds to the Class SB and Class R Certificates
Interest distributions. The amount of interest owed to each class of Class A
Certificates on each distribution date will equal:
S-6
<PAGE>
o the pass-through rate for that class of certificates multiplied by
o the principal balance of that class of certificates as of the day
immediately prior to the related distribution date multiplied by
o 1/12, in the case of the fixed-rate certificates or the actual number of
days in the interest accrual period divided by 360, in the case of the
adjustable rate certificates minus
o the share of some types of interest shortfalls allocated to that class.
See "Description of the Certificates--Interest Distributions" in this prospectus
supplement.
Allocations of principal. Principal distributions on the certificates will be
allocated among the various classes of offered certificates as described in this
prospectus supplement. Until the required amount of overcollateralization is
reached, all principal payments on the mortgage loans will be distributed among
the Class A Certificates, unless the Class A Certificates are no longer
outstanding. Not all outstanding Class A Certificates will receive principal on
each distribution date.
In addition, the Class A Certificates will receive a distribution in respect of
principal, to the extent of any excess interest payments on the mortgage loans
available to cover losses and then to increase the amount of
overcollateralization until the required amount of overcollateralization is
reached. In addition, the Class A Certificates will receive a distribution of
principal from the financial guaranty insurance policy to cover losses on the
mortgage loans allocated to the Class A Certificates.
See "Description of the Certificates--Principal Distributions on the Class A
Certificates" in this prospectus supplement.
Credit Enhancement
The credit enhancement for the benefit of the certificates consists of:
Excess Interest. Because more interest is paid by the mortgagors than is
necessary to pay the interest on the certificates each month, there will be
excess interest. Some of this excess interest may be used to protect the
certificates against some losses, by making an additional payment of principal
up to the amount of the losses.
Overcollateralization. Any excess interest not used to cover interest shortfalls
or current period losses will be paid as principal on the Class A Certificates
to reduce the principal balance of the Class A Certificates below the aggregate
principal balance of the mortgage loans. The excess amount of the balance of the
mortgage loans represents overcollateralization, which may absorb some losses on
the mortgage loans, if not covered by excess interest. If the level of
overcollateralization falls below what is required, the excess interest
described above will also be paid to the certificates as principal. This will
reduce the principal balance of the certificates faster than the principal
balance of the mortgage loans so that the required level of
overcollateralization is reached.
See "Description of the Certificates--Allocation of Losses; Subordination" in
this prospectus supplement.
[The Financial Guaranty Insurance Policy
_____________ will issue a financial guaranty insurance policy as a means of
providing additional credit enhancement for the Class A Certificates. Under the
policy, the financial guaranty insurer will pay an amount that will cover any
shortfalls in amounts available to pay the interest distribution amount for the
Class A Certificates on any distribution date, the principal portion of any
losses on the mortgage loans allocated to the Class A Certificates and any
unpaid certificate principal balance of the Class A Certificates on the final
distribution date. The financial guaranty insurance policy will not provide
coverage for prepayment interest shortfalls.]
[See "Description of the Certificates--Financial Guaranty Insurance Policy" and
"The Financial Guaranty Insurer" in this prospectus supplement.]
S-7
<PAGE>
Advances
For any month, if the servicer does not receive the full scheduled payment on a
mortgage loan, the servicer will advance funds to cover the amount of the
scheduled payment that was not made. However, the servicer will advance funds
only if it determines that the advance will be recoverable from future payments
or collections on that mortgage loan.
See "Description of the Certificates--Advances" in this prospectus supplement.
Optional Termination
On any distribution date on which the principal balances of the mortgage loans
is less than 10% of their principal balances as of the cut-off date, the
servicer or the depositor will have the option to:
o purchase from the trust all remaining mortgage loans, causing an early
retirement of the certificates; or
o purchase all the certificates.
Under either type of optional purchase, holders of the outstanding certificates
will receive the outstanding principal balance of the certificates in full with
accrued interest. However, no purchase of the mortgage loans or certificates
will be permitted if it would result in a draw under the policy unless the
financial guaranty insurer consents to the termination. In either case, there
will be no reimbursement of principal reductions or related interest that
resulted from losses allocated to the certificates.
See "Pooling and Servicing Agreement--Termination" in this prospectus supplement
and "The Agreements--Termination; Retirement of Securities" in the prospectus.
Ratings
When issued, the offered certificates will receive ratings which are not lower
than those listed in the table on page S- of this prospectus supplement. The
ratings on the offered certificates address the likelihood that holders of the
offered certificates will receive all distributions on the underlying mortgage
loans to which they are entitled. A security rating is not a recommendation to
buy, sell or hold a security and may be changed or withdrawn at any time by the
assigning rating agency. The ratings also do not address the rate of principal
prepayments on the mortgage loans. For example, the rate of prepayments, if
different than originally anticipated, could adversely affect the yield realized
by holders of the offered certificates.
See "Ratings" in this prospectus supplement.
Legal Investment
When issued, the Class A Certificates will not be "mortgage related securities"
for purposes of SMMEA. You should consult your legal advisors in determining
whether and to what extent the offered certificates constitute legal investments
for you.
See "Legal Investment" in this prospectus supplement for important information
concerning possible restrictions on ownership of the offered certificates by
regulated institutions.
ERISA Considerations
The Class A Certificates may be considered eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts.
ERISA plans should consult with their counsel before purchasing the notes.
See "ERISA Considerations" in this prospectus supplement and in the prospectus.
S-8
<PAGE>
Tax Status
For federal income tax purposes, the depositor will elect to treat the trust as
two real estate mortgage investment conduits. The certificates, other than the
Class R Certificates, will represent ownership of regular interests in the trust
and will be treated as representing ownership of debt for federal income tax
purposes. You will be required to include in income all interest and original
issue discount, if any, on such certificates in accordance with the accrual
method of accounting regardless of your usual methods of accounting. For federal
income tax purposes, each of the Class R Certificates will be the sole residual
interest in one of the two real estate mortgage investment conduits.
For further information regarding the federal income tax consequences of
investing in the offered certificates, including important information regarding
the tax treatment of the Class R Certificates, see "Material Federal Income Tax
Consequences" in this prospectus supplement and in the prospectus.
S-9
<PAGE>
RISK FACTORS
The offered certificates are not suitable investments for all investors.
In particular, you should not purchase any class of offered certificates unless
you understand the prepayment, credit, liquidity and market risks associated
with that class.
The offered certificates are complex securities. You should possess,
either alone or together with an investment advisor, the expertise necessary to
evaluate the information contained in this prospectus supplement and the
prospectus in the context of your financial situation and tolerance for risk.
You should carefully consider, among other things, the following factors
in connection with the purchase of the offered certificates:
<TABLE>
<CAPTION>
Risk of Loss
<S> <C>
The return on your Losses on the mortgage loans may occur due to a wide variety of
certificates may be causes, including a decline in real estate values, and adverse
affected by losses on the changes in the borrower's financial condition. A decline in real
mortgage loans, which could estate values or economic conditions nationally or in the regions
occur due to a variety of where the mortgaged properties are located may increase the risk
causes, and are more likely of losses on the mortgage loans. [Special risks for specific
because a significant loan types, such as negative amortization or escalating payments,
number of mortgage loans will be disclosed if material to an individual offering.]
are secured by junior liens
on the mortgaged property. [______% of the mortgage loans included in the mortgage loan pool
are secured by second mortgages or deeds of trust.
Proceeds from liquidation of the property will be
available to satisfy the mortgage loans only if
the claims of any senior mortgages have been
satisfied in full. When it is uneconomical to
foreclose on the mortgaged property or engage in
other loss mitigation procedures, the servicer may
write off the entire outstanding balance of the
mortgage loan as a bad debt. The foregoing risks
are particularly applicable to mortgage loans
secured by second liens that have high combined
loan-to-value ratios or low junior ratios because
it is comparatively more likely that the servicer
would determine foreclosure to be uneconomical. As
of the cut-off date, the weighted average combined
loan-to-value ratio of the mortgage loans is
______%, and approximately ______% of the mortgage
loans will have combined loan-to-value ratios in
excess of ______%.]
[The underwriting standards [The underwriting standards under which the junior mortgage loans
for the junior mortgage were underwritten are analogous to credit lending, rather than
loans are more sensitive to mortgage lending, since underwriting decisions were based
risks related to borrower primarily on the borrower's credit history and capacity to repay
credit-worthiness and less rather than on the value of the collateral upon foreclosure. The
sensitive to risks relating underwriting standards allow loans to be approved with combined
to collateral value loan-to-value ratios of up to 125%. See "Description of the
compared to first lien Mortgage Pool--Underwriting Standards" in this prospectus
loans.] supplement. Because of the relatively high combined
</TABLE>
S-10
<PAGE>
loan-to-value ratios of the mortgage loans and the fact that a
significant number of the mortgage loans are secured by junior
liens, losses on the mortgage loans will likely be higher than on
traditional first lien mortgage loans.]
Some of the mortgage loans included in the trust are either currently delinquent
or have been delinquent in the past, which may increase the risk of loss on the
mortgage loans.
As of the cut-off date, ___% of the mortgage loans are 30 to 59
days delinquent in payment of principal and interest. Other
mortgage loans may have been delinquent in the past. Mortgage
loans with a history of delinquencies are more likely to
experience delinquencies in the future, even if the mortgage
loans are current as of the cut-off date.
See "Description of the Mortgage Pool--Mortgage Pool
Characteristics" and "--Underwriting Standards" in this
prospectus supplement. For a description of the methodology used
to categorize mortgage loans as delinquent, see "The Seller and
Servicer--Delinquency and Loss Experience of the Servicer's
Portfolio" in this prospectus supplement.
<TABLE>
<S> <C>
[Origination disclosure [[ ]% of the mortgage loans included in the mortgage pool
practices for the mortgage are subject to special rules, disclosure requirements and other
loans could create regulatory provisions because they are high cost loans.
liabilities that may affect Purchasers or assignees of these high cost loans, could be
the return on your exposed to all claims and defenses that the mortgagors could
certificates.] assert against the originators of the mortgage loans. Remedies
available to the mortgagor include monetary
penalties, as well as recission rights if the
appropriate disclosures were not given as
required. See "Certain Legal Aspects of the
Loans--The Mortgage Loans--Anti-Deficiency
Legislation and Other Limitations on Lenders" in
the prospectus].
The return on your The concentration of the related properties in one or more
certificates may be geographic regions may increase the risk of loss to the
particularly sensitive to Certificates. Approximately _________% of the cut-off date
changes in real estate principal balance of the mortgage loans are located in
markets in specific [California]. If the regional economy or housing market weakens
regions. in [California], or in any other region having a significant
concentration of properties underlying the
mortgage loans, the mortgage loans in that region
may experience increased rates of delinquency,
which may result in losses on the mortgage loans.
A region's economic condition and housing market
may be adversely affected by a variety of events,
including natural disasters such as earthquakes,
hurricanes, floods and eruptions, and civil
disturbances, including riots. [Concentrations
material to an individual offering will be
disclosed.]
s-11
<PAGE>
Some of the mortgage loans Approximately ___% of the mortgage loans (based on principal
provide for large payments balances) are not fully amortizing over their terms to maturity
at maturity. and, thus, will require substantial principal payments (i.e., a
balloon amount) at their stated maturity. Mortgage
loans which require payment of a balloon amount
involve a greater degree of risk because the
ability of a mortgagor to pay a balloon amount
typically will depend upon the mortgagor's ability
either to timely refinance the loan or to sell the
related mortgaged property.
See "Description of the Mortgage Pool" in this prospectus
supplement.
The return on your The only credit enhancement for the Class A Certificates will be:
certificates will be o the excess interest payments on the mortgage loans;
reduced if losses exceed o overcollateralization represented by the excess of the balance
the credit enhancement of the mortgage loans over the balance of the Class A
available to your Certificates; and
certificates. [o a financial guaranty insurance policy issued by
______________.]
</TABLE>
The return on your certificates may be reduced in an economic downturn.
Mortgage loans similar to those included in the mortgage loan
pool have been originated for a limited period of time. During
this time, economic conditions nationally and in most regions of
the country have been generally favorable. However, a
deterioration in economic conditions could adversely affect the
ability and willingness of mortgagors to repay their loans. No
prediction can be made as to the effect of an economic downturn
on the rate of delinquencies and losses on the mortgage loans.
[The reloading of debt could increase your risk.]
[With respect to mortgage loans which were used for debt
consolidation, there can be no assurance that the borrower will
not incur further debt. This reloading of debt could impair the
ability of borrowers to service their debts, which in turn could
result in higher rates of delinquency and loss on the mortgage
loans.]
The value of your certificates may be reduced if losses are higher than
expected.
If the performance of the mortgage loans is substantially worse
than assumed by the rating agencies, the ratings of any class of
the certificates may be lowered in the future. This would
probably reduce the value of those certificates. Neither the
depositor, the servicer nor any other entity will have any
obligation to supplement any credit enhancement, or to take any
other action to maintain any rating of the certificates.
See "Summary--Credit Enhancement" and "Description of the
Certificates--Allocation of Losses; Subordination" in this
prospectus supplement.
s-12
<PAGE>
Loss Mitigation Practices The release of a lien may increase your risk.
[The servicer may use a wide variety of practices to limit losses
on the mortgage loans. The pooling and servicing agreement
permits the servicer to release the lien on a limited number of
mortgaged properties securing the mortgage loans, if the mortgage
loan is current in payment. See "Pooling and Servicing
Agreement--Refinancing of Senior Lien" and "--Collection and
Liquidation Practices; Loss Mitigation" in this prospectus
supplement.]
Limited Obligations
<TABLE>
<S> <C>
Payments on the mortgage The certificates represent interests only in the RAMP Series
loans, together with the 200_-__ GMACM_ Trust. Credit enhancement includes subordinated
financial guaranty certificates, overcollateralization, [and a financial guaranty
insurance policy, are the insurance policy]. The certificates do not represent an interest
primary source of payments in or obligation of the depositor, the servicer or any of their
on your certificates. affiliates. None of the depositor, the servicer or any of their
affiliates will have any obligation to replace or
supplement the credit enhancement, or to take any
other action to maintain any rating of the
certificates. If proceeds from the assets of the
RAMP Series 200_-GMACM_ Trust are not sufficient
to make all payments provided for under the
pooling and servicing agreement, investors will
have no recourse to the depositor, the servicer or
any of its affiliates.
Liquidity Risks
You may have to hold your A secondary market for your certificates may not develop. Even
certificates to maturity if if a secondary market does develop, it may not continue or it may
their marketability is be illiquid. Neither the underwriter nor any other person will
limited. have any obligation to make a secondary market in your
certificates. Illiquidity means you may not be
able to find a buyer to buy your securities
readily or at prices that will enable you to
realize a desired yield. Illiquidity can have a
severe adverse effect on the market value of your
certificates.
Any class of offered certificates may experience
illiquidity, although typically illiquidity is
more likely for classes that are especially
sensitive to prepayment, credit or interest rate
risk, or that have been structured to meet the
investment requirements of limited categories of
investors.
</TABLE>
s-13
<PAGE>
<TABLE>
<CAPTION>
Special Yield and
Prepayment Considerations
<S> <C>
The yield to maturity on The yield to maturity on each class of offered certificates will
your certificates will vary depend on a variety of factors, including:
depending on the rate of
prepayments. o the rate and timing of principal payments on the mortgage
loans, including prepayments, defaults and liquidations, and
repurchases due to breaches of representations or warranties;
o the pass-through rate for that class;
o interest shortfalls due to mortgagor prepayments; and
o the purchase price of that class.
The rate of prepayments is one of the most
important and least predictable of these factors.
In general, if you purchase a certificate at a
price higher than its outstanding principal
balance and principal distributions on your
certificate occur faster than you assumed at the
time of purchase, your yield will be lower than
you anticipated. Conversely, if you purchase a
certificate at a price lower than its outstanding
principal balance and principal distributions on
that class occur more slowly than you assumed at
the time of purchase, your yield will be lower
than you anticipated.
</TABLE>
The rate of prepayments on the mortgage loans will vary depending on future
market conditions, and other factors.
Because mortgagors can typically prepay their mortgage loans
at any time, the rate and timing of principal distributions
on the offered certificates are highly uncertain. Typically,
when market interest rates increase, borrowers are less
likely to prepay their mortgage loans. This could result in
a slower return of principal to you at a time when you might
have been able to reinvest your funds at a higher rate of
interest than the pass-through rate on your class of
certificates. On the other hand, when market interest rates
decrease, borrowers are typically more likely to prepay
their mortgage loans. This could result in a faster return
of principal to you at a time when you might not be able to
reinvest your funds at an interest rate as high as the
pass-through rate on your class of certificates.
S-14
[Approximately ___% of the mortgage loans permit the
mortgagor to convert the adjustable rate on the mortgage
loan to a fixed rate. Upon the conversion, the subservicer
or the servicer will repurchase the mortgage loan, which
will have the same effect as a prepayment in full.
Mortgagors may be more likely to exercise their conversion
options when interest rates are rising. As a result, the
certificates may receive greater prepayments at a time when
prepayments would not normally be expected.]
Refinancing programs, which may involve soliciting all or
some of the mortgagors to refinance their mortgage loans,
may increase the rate of prepayments on the mortgage loans .
These refinancing programs may be offered by the servicer or
its affiliates, and may include streamlined documentation
programs as well as programs under which a mortgage loan is
modified to reduce the interest rate.
See "Maturity and Prepayment Considerations" in the
prospectus.
[______% of the mortgage loans provide for payment of a
prepayment charge. Prepayment charges may reduce the rate of
prepayment on the mortgage loans until the end of the period
during which such prepayment charges apply. See "Description
of the Mortgage Pool--Mortgage Pool Characteristics" in this
prospectus supplement and "Maturity and Prepayment
Considerations" in the prospectus.]
The yield on your certificates will affected by the specific characteristics
that apply to that class, discussed below.
The offered certificates of each class have different yield
considerations and different sensitivities to the rate and
timing of principal distributions. The following is a
general discussion of yield considerations and prepayment
sensitivities to that class.
See "Certain Yield and Prepayment Considerations" in this
prospectus supplement.
Class A Certificates
The Class A Certificates are subject to various priorities
for payment of principal. Distributions of principal on the
Class A Certificates with an earlier priority of payment
will be affected by the rates of prepayment of the mortgage
loans early in the life of the mortgage pool. Those classes
of Class A Certificates with a later priority of payment
will be affected by the rates of prepayment of the mortgage
loans experienced both before and after the commencement of
principal distributions on those classes.
See "Description of the Certificates--Principal
Distributions on the Class A Certificates" in this
prospectus supplement.
S-15
<PAGE>
[Class A-1 Certificates The interest rate on the Class
A-1 certificates will vary with One-Month LIBOR.
Therefore, the yield to investors on the Class A-1
certificates will be sensitive to fluctuations in
the level of LIBOR. Investors should consider
whether this volatility is suitable to their
investment needs.]
The Class A-1 certificates may not always receive
interest at a rate equal to One-Month LIBOR plus
the applicable margin. If the weighted average of
the net mortgage rates on the mortgage loans is
less than One-Month LIBOR plus the applicable
margin, the interest rate on the Class A-1
certificates will be reduced to that weighted
average rate. Thus, the yield to investors in the
Class A-1 certificates will be sensitive to
fluctuations in the level of One-Month LIBOR and
may be adversely affected by the application of
the weighted average net mortgage rate on the
related mortgage loans . The prepayment of the
mortgage loans with higher net mortgage rates may
result in a lower weighted average net mortgage
rate. If on any distribution date the application
of the weighted average net mortgage rate results
in an interest payment lower than One-Month LIBOR
plus the applicable margin on the Class A-1
certificates during the related interest accrual
period, the value of those certificates may be
temporarily or permanently reduced. In a rising
interest rate environment, the Class A-1
certificates may receive interest at the weighted
average net mortgage rate for a protracted period
of time. In addition, in such a situation, there
would be less excess interest payments on the
mortgage loans to cover losses and to create
additional overcollateralization.
[Class A-3 Certificates It is not expected that the Class
A-3 certificates will receive any distributions of
principal until the distribution date in . Until
the distribution date in , the Class A-3
certificates may receive a portion of principal
prepayments that is smaller than its pro rata
share of principal prepayments.]
[Risks Particular to
Multifamily Properties:]
[Reductions in occupancy and rent levels on multifamily properties could
adversely affect their value and cash flow.
__ mortgaged properties, securing mortgage loans that
represent ___% of the initial pool balance, are multifamily
residential multifamily rental properties. A decrease in
occupancy or rent levels could could result in realized
losses on the mortgage loans. Occupancy and rent levels on
multifamily properties may be adversely affected by:
S-16
<PAGE>
o local, regional or national economic conditions, which
may limit the amount of rent that can be charged for
rental units or result in a reduction in timely rent
payments;
o construction of additional housing units in the same
market;
o local military base or industrial or other business
closings;
o developments at local colleges and universities;
o national, regional and local politics, including
current or future rent stabilization and rent control
laws and agreements;
o trends in the senior housing market;
o the level of mortgage interest rates, which may
encourage tenants in multifamily residential rental
properties to purchase housing;
o lack of amenities, unattractive physical attributes or
bad reputation of the mortgaged property;
o state and local regulations; and
o the ability of management to provide adequate
maintenance and insurance.]
[Student housing concentrations may affect cash flow of a multifamily property.
___ of the mortgaged properties, securing mortgage loans
that represent ___% of the initial pool balance, are student
housing or have high concentrations of student tenants. In
addition to other multifamily real estate risks, student
housing risks include:
o increased influence of economic, social, governmental
and demographic factors as they relate to the number of
students attending colleges and universities in need of
student housing;
o reliance upon the well-being of the colleges or
universities to which the facilities relate;
o student housing facilities are subject to competition
from colleges and universities as well as other
providers of student housing and physical layouts may
not be readily convertible to traditional multifamily
use;
o maintenance and insurance costs of student housing can
exceed the typical costs of other multifamily housing;
S-17
<PAGE>
o tenants or sub-tenants are individuals who often have
little or no credit history, may not have parental
guarantees and are not tied to the local community; and
o turnover of tenants or sub-tenants can be significant
and student housing is less utilized or subject to
reduced rents during summer months.]
[Restrictions imposed on multifamily properties by government programs could
also adversely affect their value and cash flow.
Tax credit, and city, state and federal housing subsidies or
similar programs may apply to multifamily properties,
including Section 8 of the United States Housing Act of
1937, as amended. The limitations and restrictions imposed
by these programs could and result in realized losses on the
mortgage loans that may be allocated to your class of
certificates. These programs may include:
o rent limitations that could adversely affect the
ability of borrowers to increase rents to maintain the
condition of their mortgaged properties and satisfy
operating expenses; and
o tenant income restrictions that may reduce the number
of eligible tenants in those mortgaged properties and
result in a reduction in occupancy rates.
The differences in rents between subsidized or supported
properties and other multifamily residential rental
properties in the same area may not be a sufficient economic
incentive for some eligible tenants to reside at a
subsidized or supported property that may have fewer
amenities or be less attractive as a residence.
Additionally, the borrower under these mortgage loans may be
adversely affected if it or the mortgaged property fails to
qualify for inclusion in the program, if subsidies
thereunder are reduced, or if the programs are otherwise
terminated.]
[Risks Associated With Tenants Generally:]
[Losses may be caused by the expiration of or tenant defaults on leases.
The income from and market value of multifamily properties
would decline if leases on the dwelling units expired or
terminated, or tenants defaulted and the borrowers were
unable to renew the leases or relet the units on comparable
terms.
If units are not renewed at all or are not renewed on
favorable terms, the trust may experience realized losses on
the mortgage loans that may be allocated to your class of
certificates.
S-18
<PAGE>
Even if borrowers successfully relet vacated units, the
costs associated with reletting, including tenant
improvements, leasing commissions and free rent, can exceed
the amount of any reserves maintained for that purpose and
reduce cash flow from the mortgaged properties. Although
[some] of the mortgage loans require the borrower to
maintain escrows for leasing expenses, there is no guarantee
that these reserves will be sufficient.]
[Losses may be caused by inadequate property management
Losses may be realized on the mortgage loans that may be
allocated to your class of certificates if property
management is inadequate. The property manager is
responsible for the following activities:
o responding to changes in the local market;
o planning and implementing the rental structure,
including establishing levels of rent payments;
o managing operating expenses; and
o ensuring that maintenance and capital improvements are
carried out in a timely fashion.
Sound property management controls costs, provides
appropriate service to tenants and ensures that improvements
are maintained. Sound property management can also maintain
cash flow, reduce vacancy, leasing and repair costs and
preserve building value. Properties deriving revenues
primarily from short-term sources, such as short-term or
month-to-month leases, are generally more management
intensive than properties leased to creditworthy tenants
under long-term leases. Property management errors can
impair the long-term viability of a property. We make no
representation or warranty as to the skills of any present
or future manager. Additionally, we cannot assure you that
property management will be in a financial condition to
fulfill their management responsibilities throughout the
terms of their respective management agreements.]
[Conflicts of interests between property managers and owners may result in
losses.
Managers of mortgaged properties and the borrowers may
experience conflicts of interest in the management or
ownership of mortgaged properties. These conflicts of
interest could result in realized losses losses on the
mortgage loans that may be allocated to your class of
certificates. These conflicts of interests may exist
because:
o the mortgaged properties may be managed by property
managers affiliated with the borrowers;
o the mortgaged properties may be managed by property
managers who also manage other properties that compete
with the mortgaged properties; and
S-19
<PAGE>
o affiliates of the managers or the borrowers, or the
managers or the borrowers or both, may also own other
properties, including competing properties.]
[Related borrowers may make losses on the mortgage loans more severe
Some borrowers under the mortgage loans are affiliated or
under common control with one another. When borrowers are
related, any adverse circumstances relating to one borrower
or its affiliates, and affecting one mortgage loan or
mortgaged property, also can affect the related borrower's
mortgage loans or mortgaged properties, which could make
losses more likely or more severe or both than would be the
case if there were no related borrowers.
For example, a borrower that owns or controls several
mortgaged properties and experiences financial difficulty at
one mortgaged property might defer maintenance at one or
more other mortgaged properties to satisfy current expenses
of the mortgaged property experiencing financial difficulty.
Alternatively, the borrower could attempt to avert
foreclosure by filing a bankruptcy petition. The bankruptcy
or insolvency of one borrower or its affiliate could have an
adverse effect on the operation of all of the mortgaged
properties of that borrower and its affiliates and on the
ability of those mortgaged properties to produce sufficient
cash flow to make required payments on the mortgage loans.
The insufficiency of cash flows could result in realized
losses on the mortgage loans that may be allocated to your
class of certificates. See "Certain Legal Aspects of the
Loans --The Mortgage Loans--Anti-Deficiency Legislation and
Other Limitations on Lenders" in the prospectus.]
[Larger-than-average balance loans may make losses more severe.
Several mortgage loans, either individually or together with
other mortgage which they are cross-collateralized, have
outstanding balances that are substantially higher than the
average outstanding balance. If a mortgage pool includes
mortgage loans with larger-than-average balances, any
realized losses on the mortgage loans with
larger-than-average balances could be more severe, relative
to the size of the pool, than would be the case if the
aggregate balance of the pool were distributed among a
larger number of mortgage loans.]
[Losses could result from limitation on enforceability of
cross-collateralization
__ mortgage loans, representing __% of the initial pool
balance, are cross-collateralized with one or more other
mortgage loans. Cross-collateralization arrangements
involving more than one borrower could be challenged as a
fraudulent conveyance by creditors of a borrower or by the
representative or the bankruptcy estate of a borrower, if
that borrower were to become a debtor in a bankruptcy case.
S-20
<PAGE>
The additional security provided by cross-collateralization
would not be available if a court determines that the grant
was a fraudulent conveyance. If a creditor were to
successfully assert a fraudulent conveyance claim it could
result in realized losses on the mortgage loans that may be
allocated to your class of certificates. See "Certain Legal
Aspects of the Loans--The Mortgage Loans--Anti-Deficiency
Legislation and Other Limitations on Lenders" in the
prospectus and "Description of the Mortgage
Pool--General--Related Borrowers, Cross-Collateralized
Mortgage Loans and Mortgage Loans Collateralized by Multiple
Properties" in this prospectus supplement.]
S-21
<PAGE>
INTRODUCTION
The Depositor will establish a trust with respect to Series 200_-__ on
the closing date, under a pooling and servicing agreement among the depositor,
the servicer and the trustee, dated as of the cut-off date. On the closing date,
the depositor will deposit into the trust a pool of mortgage loans that, in the
aggregate, will constitute a mortgage pool, and that will be secured by first or
junior liens on one-to four-family residential properties.
Some capitalized terms used in this prospectus supplement have the
meanings given below under "Description of the Certificates--Glossary of Terms"
or in the prospectus under "Glossary."
DESCRIPTION OF THE MORTGAGE POOL
General
The mortgage pool will consist of ________ mortgage loans with an aggregate
principal balance outstanding as of the cut-off date, after deducting payments
of principal due on or before the cut-off date, of $_________ . The mortgage
loans are secured by [first] [and junior liens] on fee simple or leasehold
interests in [one- to four-family residential] [multifamily] real properties
[and, in the case of ____ mortgage loans, an interest in shares issued by a
cooperative apartment corporation and the related proprietary lease]. [___% of
the mortgage loans have a due date other than the first day of each month]. In
each case, the property securing the mortgage loan is referred to as the
mortgaged property. [The mortgage pool will consist of adjustable-rate mortgage
loans with terms to maturity of not more than 30 years from the date of
origination or modification, or, in the case of approximately __% of the
mortgage loans, not more than 15 years.] With respect to mortgage loans which
have been modified, references in this prospectus supplement to the date of
origination shall be deemed to be the date of the most recent modification.
[Approximately __% of the mortgage loans are secured by second liens on the
mortgaged properties, and __% of the mortgage loans are secured by third or more
junior liens on the mortgaged properties. __% of the mortgage loans are Balloon
Loans.] With respect to mortgage loans which have been modified, references in
this prospectus supplement to the date of origination shall be deemed to be the
date of the most recent modification. All percentages of the mortgage loans
described in this prospectus supplement are approximate percentages by aggregate
principal balance as of the cut-off date unless otherwise indicated.
All of the mortgage loans were purchased by the depositor from, and will
be serviced by, [GMAC Mortgage Corporation]. See "The Seller and Servicer"
below.
Under the terms of the pooling and servicing agreement, the Seller will
make representations and warranties with respect to the mortgage loans to the
trustee for the benefit of the certificateholders.
To the extent that the Seller does not repurchase a mortgage loan in the
event of a breach of its representations and warranties with respect to that
mortgage loan, neither the Depositor nor any other person will be required to
repurchase the mortgage loan.
S-22
<PAGE>
[Related Borrowers, Cross-Collateralized Mortgage Loans and Mortgage Loans
Collateralized by Multiple Properties
__ mortgage loans, which represent __% of the initial pool balance, are
cross-collateralized mortgage loans among groups of related borrowers. ___
mortgage loans, other than the cross-collateralized mortgage loans, which
represent ___% of the initial pool balance, are secured by one or more mortgages
encumbering multiple mortgaged properties. Each of these mortgage loans is
evidenced by a single mortgage note, and is not treated as a set of
cross-collateralized mortgage loans. Because of this, the total number of
mortgage loans in the mortgage pool is ___, while the total number of mortgaged
properties in the mortgage pool is ___. In most cases, we treat a mortgage loan
that is secured by mortgaged properties that are located in more than one state
as an individual mortgage loan, except that when we describe the geographic
concentration and property type distribution of the mortgage pool, we treat
these mortgage loans as multiple mortgage loans that are allocated a cut-off
date balance based on the allocated loan amount. Losses could result from
limitations on the enforceability of cross-collateralization. For a discussion
of risks related to cross-collateralized loans, see "Risk Factors" in this
prospectus supplement.
[insert additional disclosure regarding isolating individual properties
and risks, rights and obligations of the parties in respect of the
cross-collateralized groups, as appropriate]
In addition to the cross-collateralized loans and the mortgage loans
secured by multiple mortgaged properties, some sets of mortgage loans were made
to borrowers who are affiliated or under common control with one another. None
of these sets of mortgage loans represents more than ____% of the initial pool
balance.]
Mortgage Pool Characteristics
None of the mortgage loans will have been originated prior to
__________,____ or will have a maturity date later than __________ 1, 20__ . No
mortgage loan will have a remaining term to maturity as of the cut-off date of
less than months. The weighted average remaining term to maturity of the
mortgage loans as of the cut-off date will be approximately months. The weighted
average original term to maturity of the mortgage loans as of the cut-off date
will be approximately months. __% of the mortgage loans are fully amortizing and
have original terms to maturity of approximately fifteen years, with a weighted
average remaining term to stated maturity of these mortgage loans of __ months.
__% of the mortgage loans are fully amortizing and have original terms to
maturity of approximately thirty years, with a weighted average remaining term
to stated maturity of these mortgage loans of __ months. As used in this
prospectus supplement the remaining term to maturity means, as of any date of
determination and with respect to any mortgage loan, the number of months
equaling the number of scheduled monthly payments necessary to reduce the
then-current Stated Principal Balance of that mortgage loan to zero, assuming
the related mortgagor will make all scheduled monthly payments but no
prepayments, on the mortgage loan thereafter.
As of the cut-off date, ____% of the mortgage loans are 30 to 59 days
delinquent in payment of principal and interest. As of the cut-off date, none of
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<PAGE>
the mortgage loans will be 60 or more days delinquent in payment of principal
and interest. For a description of the methodology used to categorize mortgage
loans as delinquent, see "The Seller and the Servicer--Delinquency and Loss
Experience of the Servicer's Portfolio" in this prospectus supplement.
[Approximately ____% of the mortgage loans will be Buy-Down Loans.]
None of the mortgage loans provide for deferred interest or negative
amortization.
[As of the cut-off date, approximately % of the mortgage loans will be
High Cost Loans. Purchasers or assignees of any High Cost Loan, including the
trust, could be liable for all claims and subject to all defenses that the
borrower could assert against the originator of the High Cost Loan. Remedies
available to the borrower include monetary penalties, as well as recission
rights if appropriate disclosures were not given as required. See "Risk Factors"
in this prospectus supplement and "Certain Legal Aspects of the Loans--The
Mortgage Loans--Anti-Deficiency Legislation and Other Limitations on Lenders" in
the prospectus.]
[___% of the mortgage loans are secured by second liens.]
[Approximately ____% of the mortgage loans are Balloon Loans, which
require monthly payments of principal based on 30 year amortization schedules
and have scheduled maturity dates of approximately 15 years from the due date of
the first monthly payment, leaving a substantial portion of the original
principal amount, the Balloon Amount, due and payable on the respective
scheduled maturity date. The existence of a Balloon Amount typically will
require the related mortgagor to refinance the mortgage loan or to sell the
mortgaged property on or prior to the scheduled maturity date. The ability of a
mortgagor to accomplish either of these goals will be affected by a number of
factors, including the level of available mortgage rates at the time of sale or
refinancing, the mortgagor's equity in the related mortgaged property, the
financial condition of the mortgagor, tax laws and prevailing general economic
conditions. None of the depositor, the servicer or the trustee is obligated to
refinance any Balloon Loan. Subject to the terms thereof, the financial guaranty
insurance policy will provide coverage for any losses incurred upon liquidation
of a Balloon Loan arising out of or in connection with the failure of a
mortgagor to pay its Balloon Amount. See "Description of the
Certificates--Financial Guaranty Insurance Policy" in this prospectus
supplement.]
[Approximately ___% of the mortgage loans are Convertible Mortgage
Loans, which provide that, at the option of the related mortgagor, the
adjustable interest rate on a mortgage loan may be converted to a fixed interest
rate. Upon conversion, the mortgage rate will be converted to a fixed interest
rate determined in accordance with the formula set forth in the related mortgage
note which formula is intended to result in a mortgage rate which is not less
than the then current market interest rates, subject to applicable usury laws.
After the conversion, the monthly payments of principal and interest will be
adjusted to provide for full amortization over the remaining term to scheduled
maturity.]
[The servicer will be obligated to repurchase any Convertible Mortgage Loan
following the conversion thereof at a price equal to the unpaid principal
balance thereof plus accrued interest to the first day of the month in which the
S-24
<PAGE>
purchase price is to be distributed to the Class A Certificates. If the servicer
fails to repurchase a Convertible Mortgage Loan following the conversion
thereof, it will not constitute an Event of Default under the Pooling and
Servicing Agreement and the mortgage loan will remain in the trust fund as a
fixed-rate loan.]
Approximately ___% of the mortgage loans will have mortgage rates
calculated on the basis of the simple interest method. See "The
Trusts--Characteristics of Loans--Simple Interest Loans" in the prospectus.
[Mortgage Rate Adjustment: The mortgage rate on the mortgage loans will adjust
semi-annually commencing approximately six months after origination, on the
adjustment date specified in the related mortgage note, to a rate equal to the
sum, rounded as specified in the related mortgage notes, of Six-Month LIBOR and
the note margin set forth in the related mortgage note, subject to the
limitations described in this prospectus supplement.]
[The amount of the monthly payment on each mortgage loan will be
adjusted semi-annually on the due date of the month following the month in which
the adjustment date occurs to equal the amount necessary to pay interest at the
then-applicable mortgage rate and to fully amortize the outstanding principal
balance of each mortgage loan over its remaining term to stated maturity. As of
the cut-off date, ___% of the mortgage loans will have reached their first
adjustment date. The mortgage loans will have various adjustment dates, note
margins and limitations on the mortgage rate adjustments, as described below.]
[The mortgage rate on each loan may not increase or decrease on any
adjustment date by more than a specified percentage per annum. This periodic
rate cap is not more than ___%, except that the mortgage rate on some of the
mortgage loans may adjust up to ___% on the initial adjustment date.]
[The mortgage rate on a mortgage loan may not exceed the maximum
mortgage rate or be less than the minimum mortgage rate specified for such
mortgage loan in the related mortgage note. The minimum mortgage rate for each
mortgage loan will be equal to the note margin, except in the case of ____% of
the mortgage loans, which have a minimum mortgage rate greater than the note
margin. The minimum mortgage rates on the mortgage loans will range from ____%
to ____%, with a weighted average minimum mortgage rate as of the cut-off date
of _____%. The maximum mortgage rates on the mortgage loans will range from
____% to ______%, with a weighted average maximum mortgage rate as of the
cut-off date of ____%. No mortgage loan provides for payment caps on any
adjustment date that would result in deferred interest or negative
amortization.]
[Six-Month LIBOR. The reference date with respect to each mortgage loan
is the date as of which Six-Month LIBOR, as published by The Wall Street
Journal, is determined. The reference date with respect to each mortgage loan
is:
o the first business day of the month immediately preceding the month in
which the adjustment date occurs,
o the date forty-five days prior to the adjustment date,
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<PAGE>
o the date fifteen days prior to the adjustment date, or
o the 20th day of the month preceding the month in which the adjustment date
occurs;
except that the reference date with respect to ___ mortgage loans, representing
approximately ___% of the aggregate principal balance of the mortgage loans,
will adjust with respect to Six-Month LIBOR as published by Fannie Mae and as
most recently available as of the date forty-five days prior to the adjustment
date.]
[Listed below are levels of Six-Month LIBOR as published by The Wall
Street Journal that are or would have been applicable to mortgage loans with a
reference date of the first business day of the preceding month, and having the
following adjustment dates for the indicated years. There can be no assurance
that levels of Six-Month LIBOR published by Fannie Mae, or published in The Wall
Street Journal on a different reference date would have been at the same levels
as those set forth below. The following does not purport to be representative of
future levels of Six-Month LIBOR, as published by Fannie Mae or The Wall Street
Journal. No assurance can be given as to the level of Six-Month LIBOR on any
adjustment date or during the life of any mortgage loan based on Six-Month
LIBOR.]
[Adjustment Date 1997 1998 1999 2000
January 1......... % % % %
February 1........
March 1...........
April 1...........
May 1.............
June 1............
July 1............
August 1..........
September 1.......
October 1.........
November 1........
December 1........
The initial mortgage rate in effect on a mortgage loan typically will be
lower, and may be significantly lower, than the mortgage rate that would have
been in effect based on Six-Month LIBOR and the related note margin. Therefore,
unless Six-Month LIBOR declines after origination of a mortgage loan, the
related mortgage rate will typically increase on the first adjustment date
following origination of such mortgage loan, subject to the periodic rate cap.
The repayment of the mortgage loans will be dependent on the ability of the
mortgagors to make larger monthly payments following adjustments of the mortgage
rate. Mortgage loans that have the same initial mortgage rate may not always
bear interest at the same mortgage rate because such mortgage loans may have
different adjustment dates (and the mortgage rates therefore may reflect
different related Index values), note margins, maximum mortgage rates and
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<PAGE>
minimum mortgage rates. The net mortgage rate with respect to each mortgage loan
as of the cut-off date will be set forth in the mortgage loan schedule attached
to the Pooling and Servicing Agreement. The net mortgage rate on each mortgage
loan will be adjusted on each adjustment date to equal the servicing fee rate,
which the mortgage rate on the mortgage loan minus the sum of (i) the rate per
annum at which the servicing fee accrues on the mortgage loan and (ii) the
policy premium rate, which is the amount of the premium payable to the financial
guaranty insurer with respect to the financial guaranty insurance policy,
subject to any periodic rate cap, but may not exceed the maximum net mortgage
rate, or be less than the minimum net mortgage rate for such mortgage loan. See
"Description of the Mortgage Pool--Mortgage Pool Characteristics" in this
prospectus supplement.]
Mortgage Loan Characteristics. The mortgage loans will have the following
characteristics as of the cut-off date:
Number of mortgage loans
Weighted Average of Net Mortgage Rates........................ %
Range of Net Mortgage Rates................................... %
Mortgage Rates:
Weighted Average.......................................... %
Range..................................................... %
Note Margins:
Weighted Average.......................................... %
Range..................................................... %
Minimum Mortgage Rates:
Weighted Average.......................................... %
Range..................................................... %
Minimum Net Mortgage Rates:
Weighted Average.......................................... %
Range..................................................... %
Maximum Mortgage Rates:
Weighted Average.......................................... %
Range..................................................... %
Maximum Net Mortgage Rates:
Weighted Average.......................................... %
Range..................................................... %
Weighted Average Months to next Adjustment Date after __________,____
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<PAGE>
The mortgage loans are assumable pursuant to the terms of the related
mortgage note. See "Maturity and Prepayment Considerations" in the prospectus.
[Included below is a table showing the Credit Scores for some
mortgagors. Credit Scores are obtained by many mortgage lenders in connection
with mortgage loan applications to help assess a borrower's credit-worthiness.
Credit Scores are obtained from credit reports provided by various credit
reporting organizations, each of which may employ differing computer models and
methodologies. The Credit Score is designed to assess a borrower's credit
history at a single point in time, using objective information currently on file
for the borrower at a particular credit reporting organization. Information
utilized to create a Credit Score may include, among other things, payment
history, delinquencies on accounts, levels of outstanding indebtedness, length
of credit history, types of credit, and bankruptcy experience. Credit Scores
range from approximately 350 to approximately 840, with higher scores indicating
an individual with a more favorable credit history compared to an individual
with a lower score. However, a Credit Score purports only to be a measurement of
the relative degree of risk a borrower represents to a lender, i.e., a borrower
with a higher score is statistically expected to be less likely to default in
payment than a borrower with a lower score. In addition, investors should be
aware that Credit Scores were developed to indicate a level of default
probability over a two-year period, which does not correspond to the life of a
mortgage loan. Furthermore, Credit Scores were not developed specifically for
use in connection with mortgage loans, but for consumer loans in general, and
assess only the borrower's past credit history. Therefore, a Credit Score does
not take into consideration the differences between mortgage loans and consumer
loans generally, or the specific characteristics of the related mortgage loan,
for example, the loan-to-value ratio, LTV ratio, the collateral for the mortgage
loan, or the debt to income ratio. There can be no assurance that the Credit
Scores of the mortgagors will be an accurate predictor of the likelihood of
repayment of the related mortgage loans or that any mortgagor's Credit Score
would not be lower if obtained as of the date of this prospectus supplement.]
[The following tables describe information as to the Credit Scores of
the related mortgagors as used in the origination of the mortgage loans.
<TABLE>
<CAPTION>
Credit Score Distribution
Number of Mortgage Cut-off Date Percent of Mortgage
Credit Score Range Loans Principal Balance Pool
<S> <C>
$ %
Not Available (1)
Subtotal with Credit
Score
Total Pool
</TABLE>
_____________________
(1) Mortgage loans indicated as having a Credit Score that is not available
include some mortgage loans where the Credit Score was not provided by
the related seller and mortgage loans where no credit history can be
obtained from the related mortgagor.]
S-28
Set forth below is a description of some additional characteristics of
the mortgage loans as of the cut-off date unless otherwise indicated. All
percentages of the mortgage loans are approximate percentages by aggregate
principal balance as of the cut-off date unless otherwise indicated. Unless
otherwise specified, all principal balances of the mortgage loans are as of the
cut-off date and are rounded to the nearest dollar.
<TABLE>
<CAPTION>
Mortgage Rates
Number of Mortgage Cut-off Date Percent of Mortgage
Mortgage Rates (%) Loans Principal Balance Pool
<S> <C>
$ %
Total $ %
As of the cut-off date, the weighted average mortgage rate of the
mortgage loans will be approximately % per annum.
Original Mortgage Loan Principal Balances
Original Mortgage Number of Cut-off Date Percentage of
Loan Balance Mortgage Loans Principal Balance Mortgage Pool
$ $ %
Total $ %
As of the cut-off date, the average unpaid principal balance of the mortgage loans will be approximately
$ ________________.
S-29
Net Mortgage Rates of the Mortgage Loans
Number of Cut-off Date Percent of
Mortgage Loans Principal Mortgage Loans
Net Mortgage Rates (%) Balance
6.000-6.499.......................... $ %
6.500-6.999..........................
7.000-7.499..........................
7.500-7.999..........................
8.000-8.499..........................
8.500-8.999..........................
9.000-9.499..........................
9.500-9.999..........................
10.000-10.499.........................
11.000-11.499.........................
11.500-11.999.........................
12.000-12.499.........................
12.500-12.999.........................
13.000-13.499.........................
Total........................... $ %
====================================================================================================================
As of the cut-off date, the weighted average net mortgage rate of the
mortgage loans will be approximately _______% per annum.
[Combined Loan-to-Value Ratios
Combined Loan Number of Cut-off date Percentage of
to Value Ratio (%) Mortgage Loans Principal Balance Mortgage Pool
$ %
Total $ %
The weighted average combined LTV ratio at origination of the mortgage loans will be approximately
_____%.]
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<PAGE>
[The method for calculating the combined LTV ratio is described below
under the caption "Underwriting Standards."]
[Junior Ratios of the Mortgage Loans
Number of
Mortgage Cut-off Date Percent of
Junior Ratio(%) Loans Principal Balance Mortgage Loans
- $ %
-
-
-
-
-
-
-
-
-
Total $ %
=======
------------------
Excludes mortgage loans secured by first liens on the related
mortgaged property. With respect to each mortgage loan secured by
a second lien on the related mortgaged property, the Junior Ratio
is the ratio of the original principal balance of the mortgage
loan to the sum of (i) the original principal balance of that
mortgage loan, and (ii) the unpaid principal balance of any
senior lien at the time of the origination of that mortgage loan.
The weighted average Junior Ratio as of the cut-off date was approximately __%.]
Geographic Distributions of Mortgaged Properties
Number of Cut-off Date Percentage of
State Mortgage Loans Principal Balance Mortgage Pool
[California $ %
Connecticut
Illinois
New Jersey
New York]
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<PAGE>
Other (1)
Total $ %
(1) Other includes states and the District of Columbia with under 3%
concentrations individually.
No more than ___% of the mortgage loans will be secured by mortgaged
properties located in any one zip code area in California and no more than ___% of
the mortgage loans will be secured by mortgaged properties located in any one
zip code area outside California.
Mortgage Loan Purpose
Number of Cut-off Date Percentage of
Loan Purpose Mortgage Loans Principal Balance Mortgage Pool
Purchase $ %
Rate/Term Refinance
Equity Refinance
Total $ %
The weighted average combined LTV ratio at origination of rate and term
refinance mortgage loans will
be____%. The weighted average combined LTV ratio at origination of equity refinance mortgage loans will be
_____%.
Mortgage Loan Documentation Types
Number of Cut-off Date Percentage of
Documentation Type Mortgage Loans Principal Balance Mortgage Pool
Full $ %
Reduced
Total $ %
o For purposes of the above table, Reduced Documentation Type includes mortgage loans which were underwritten
under a no stated income program.
[The weighted average LTV ratio at origination of the mortgage loans
which were underwritten under a reduced loan documentation program will be ___%. No
more than ___% of the reduced loan documentation mortgage loans will be secured by
mortgaged properties located in California.]
S-32
<PAGE>
Occupancy Types
Number of Cut-off Date Percentage of
Occupancy Mortgage Loans Principal Balance Mortgage Pool
Primary Residence $ %
Second/Vacation
Non Owner-occupied
Total $ %
Mortgaged Property Types
Number of Cut-off Date Percentage of
Property Type Mortgage Loans Principal Balance Mortgage Pool
Single-family detached $ %
Planned Unit
Developments (detached)
Two- to four-family
units
Condo Low-Rise (less
than 5 stories)
Condo Mid-Rise (5 to 8
stories)
Condo High-Rise (9
stories or more)
Townhouse
Planned Unit
Developments (attached)
Cooperative Units
Multifamily
Leasehold
Total $ %
--------------------------------------------------------------------------------------------------------------------
S-33
<PAGE>
[Lien Priority of the Mortgage Loans
Number of Cut-off Date Percent of
Lien Property Mortgage Loans Principal Balance Mortgage Loans
Second Lien $ %
--- ---
Total $ %]
=== ===
Remaining Term of Scheduled Maturity of the Mortgage Loans
Number of Cut-off Date Percent of
Months Remaining to Scheduled Maturity Mortgage Loans Principal Balance Mortgage Loans
$ %
Total $ %
</TABLE>
The weighted average remaining term to maturity of the mortgage loans as of
the cut-off date was approximately ___ months.
[insert "Debt Service Coverage Ratio" table relating to multifamily property]
[In connection with each mortgage loan that is secured by a leasehold
interest, the related seller shall have represented to the depositor that, among
other things:
o the use of leasehold estates for residential properties is an accepted
practice in the area where the related mortgaged property is located;
o residential property in the area consisting of leasehold estates is readily
marketable;
S-34
<PAGE>
o the lease is recorded and no party is in any way in breach of any provision
of the lease;
o the leasehold is in full force and effect and is not subject to any prior
lien or encumbrance by which the leasehold could be terminated or subject
to any charge or penalty; and
o the remaining term of the lease does not terminate less than ten years
after the maturity date of each such mortgage loan.
Some of the aspects of the Cooperative Loans included in the mortgage
pool differ from those of other types of mortgage loans. See "Certain Legal
Aspects of the Loans--The Mortgage Loans --Cooperative Loans" in the
prospectus.]
[A portion of the mortgage loans provide for payment of a prepayment
charge. In most cases, the prepayment provisions provide for payment of a
prepayment charge for partial prepayments and full prepayments, other than a
prepayment:
o occurring upon the sale of property securing a mortgage loan,
o made within five years following the origination of the mortgage loan, and
o In an amount equal to six months' advance interest on the amount of the
prepayment that, when added to all other amounts prepaid during the
twelve-month period immediately preceding the date of prepayment, exceeds
twenty percent (20%) of the original principal amount of the mortgage loan.
Prepayment charges received on the mortgage loans will not be available for
distribution on the certificates. See "Certain Legal Aspects of the
Loans--Default Interest and Limitations on Prepayments" in the prospectus.]
Underwriting Standards
GMACM's underwriting standards with respect to the mortgage loans
generally will conform to those published in GMACM's underwriting guidelines.
The underwriting standards as set forth in GMACM's underwriting guidelines are
continually revised based on prevailing conditions in the [residential]
[multifamily] mortgage market and the market for mortgage securities.
The underwriting standards set forth in GMACM's underwriting guidelines
with respect to mortgage loans originated or acquired under the GMAC Mortgage 30
Year Non-Conforming Fixed Rate Loan Program provide for varying levels of
documentation. For the "Standard" documentation loan program, a prospective
borrower is required to complete a detailed application providing pertinent
credit information. The application contains a description of borrower's assets
and liabilities and a statement of income and expenses, as well as an
authorization to apply for a credit report which summarizes the borrower's
credit history with merchants and lenders and any record of bankruptcy. In
addition, employment verification is obtained which reports the borrower's
current salary and may contain the length of employment and an indication as to
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<PAGE>
whether it is expected that the borrower will continue such employment in the
future. If a prospective borrower is self-employed or if income is received from
dividends and interest, rental properties or other income which can be verified
from tax returns, the borrower may also be required to submit copies of signed
tax returns. In addition, the borrower may be required to authorize verification
of deposits at financial institutions where the borrower has accounts.
In determining the adequacy of the mortgaged property as collateral, an
appraisal may be required of each property considered for financing. Such
appraisals may be performed by appraisers independent from or affiliated with
GMACM or its affiliates. Such appraisals, however, will not establish that the
mortgaged properties provide assurance of repayment of the mortgage loans. The
appraiser is required to verify that property is in good condition and that
construction, if new, has been completed. The appraisal is based on various
factors, including the market value of comparable homes and the cost of
replacing the improvements. For existing properties, if the appraisal is more
than 120 days old but less than 180 days old, the original appraiser must
certify that the value has not declined. If the appraisal is more than 180 days
old, a new appraisal is required. For new construction or
construction-to-permanent loans, if the appraisal is more than 120 days old but
less than 360 days old, the original appraiser must certify that the value has
not declined. The re-certification must be dated within 120 days of the
settlement or closing. If the appraisal is more than 360 days old, a new
appraisal is required. To the extent that the appraised value of a mortgaged
property declines over time, the actual loan-to-value ratio with respect to such
mortgage loan will be higher than the loan-to-value ratio derived at the time of
origination of such mortgage loan.
Once all applicable employment, credit and property information is
received, a determination is made as to whether the prospective borrower has
sufficient monthly income available to meet the borrower's monthly obligations
on the proposed mortgage loan and other expenses related to the home (such as
property taxes and hazard insurance) and other financial obligations and monthly
living expenses.
Under GMACM's underwriting guidelines, loans may also be originated
under the "Relocation" or "Relocation-VIP" documentation programs. Under these
programs, certain items described above are verified using alternative sources.
In the case of "Relocation" documentation, a signed employer relocation
verification form is acceptable in lieu of a paystub. The "Relocation-VIP"
program does not require income verification, however, eligible borrowers must
have a minimum annual base salary of $75,000.
Loans may also be originated under GMACM's underwriting guidelines under
the "Stated Income," a no income verification for self-employed borrowers. For
these loans, a credit check, an appraisal, and verification of sufficient assets
is required. These loans generally will not exceed a 75% loan-to-value ratio on
primary residences and a 70% loan-to-value ratio on second homes.
GMACM's underwriting guidelines also provide for loans under its
"Select" program to employees and retirees of General Motors Corporation, or GM.
Such loans are made to executives of GM or affiliates of GM, dealer principals
and general managers with a minimum annual base salary of $75,000 or to GM or GM
affiliate retirees with a minimum base retirement annual income of $60,000. In
addition, "Super Select" processed loans are made to executives of GM or
S-36
<PAGE>
affiliates of GM, dealer principals and general managers with a minimum annual
base salary of $200,000. For both "Select" and "Super Select" loan programs, no
income, no asset and, at times, no appraisal is required. Underwriting for both
"Select" and "Super Select" is subject to a maximum loan-to-value ratio of 80%
for primary residences. For the "Select" program, a maximum loan-to-value ratio
of 70% is permitted for second homes and for the "Super Select" program the
maximum loan-to-value ratio allowed is 80% for second homes. The loan-to-value
ratio for the "Super Select" program is based on the borrower's stated value and
generally no appraisal is required for loan-to-value ratios of 80% or less. On
the "Select" program, the borrower must supply evidence of value only in some
instances. For example, if the combined loan amount exceeds $650,000 or if the
loan is an equity refinance loan, an appraisal of the property is required. In
addition to the loan-to-value and salary requirements described above,
generally, borrower eligibility under the "Select" or "Super Select"
documentation program may be determined by use of a credit scoring model.
The underwriting standards set forth in GMACM's underwriting guidelines
with respect to mortgage loans originated under the GMACM 30 Year Non-Conforming
Fixed Rate Loan Program may be varied in appropriate cases. There can be no
assurance that every mortgage loan was originated in conformity with the
applicable underwriting standards in all material respects, or that the quality
or performance of the mortgage loans will be equivalent under all circumstances.
GMACM's underwriting standards include a set of specific criteria
pursuant to which the underwriting evaluation is made. However, the application
of GMACM's underwriting standards does not imply that each specific criterion
was satisfied individually. Rather, a mortgage loan will be considered to be
originated in accordance with a given set of underwriting standards if, based on
an overall qualitative evaluation, the loan is in substantial compliance with
those underwriting standards. For example, a mortgage loan may be considered to
comply with a set of underwriting standards, even if one or more specific
criteria included in those underwriting standards were not satisfied, if other
factors compensated for the criteria that were not satisfied or if the mortgage
loan is considered to be in substantial compliance with the underwriting
standards.
[Insert underwriting standards for multifamily and mixed-use mortgage loans]
[Primary Mortgage Insurance and Primary Hazard Insurance
Each mortgage loan is required to be covered by a standard hazard insurance
policy, which is referred to as a primary hazard insurance policy. In addition,
to the best of the depositor's knowledge, each mortgage loan with an LTV ratio
at origination in excess of _____% will be insured by a primary mortgage
guaranty insurance policy, which is referred to as a primary insurance policy,
covering at least % of the principal balance of the mortgage loan at origination
if the LTV ratio is between % and %, and at least ____% of the principal balance
of the mortgage loan at origination if the LTV ratio is between _____% and
______%. An additional ___% of the mortgage loans are mortgage loans with a LTV
ratio, or combined LTV ratio in the case of the junior loans, at origination in
excess of 80% that are not insured by a primary insurance policy.
S-37
<PAGE>
Substantially all of the primary insurance policies were issued by
General Electric Mortgage Insurance Corporation, Mortgage Guaranty Insurance
Corporation, United Guaranty Residential Insurance Company, PMI Mortgage
Insurance Company, Commonwealth Mortgage Assurance Company, Republic Mortgage
Insurance Company or Amerin Guaranty Corporation, which collectively are the
primary insurers. Each primary insurer has a claims paying ability currently
acceptable to the rating agencies that have been requested to rate the
certificates; however, there is no assurance as to the actual ability of any
primary insurer to pay claims. See "Insurance Policies on Loans" in the
prospectus.]
Additional Information
The description in this prospectus supplement of the mortgage pool and
the mortgaged properties is based upon the mortgage pool as constituted at the
close of business on the cut-off date, as adjusted for the scheduled principal
payments due on or before the cut-off date. Prior to the issuance of the offered
certificates, mortgage loans may be removed from the mortgage pool as a result
of incomplete documentation or otherwise, if the depositor deems that removal
necessary or appropriate. A limited number of other mortgage loans may be added
to the mortgage pool prior to the issuance of the offered certificates. The
depositor believes that the information in this prospectus supplement will be
substantially representative of the characteristics of the mortgage pool as it
will be constituted at the time the offered certificates are issued although the
range of mortgage rates and maturities and some other characteristics of the
mortgage loans in the mortgage pool may vary.
A current report on Form 8-K will be available to purchasers of the
offered certificates and will be filed, together with the pooling and servicing
agreement, with the commission within fifteen days after the initial issuance of
the offered certificates. In the event mortgage loans are removed from or added
to the mortgage pool as described in the preceding paragraph, that removal or
addition will be noted in the current report.
THE SELLER AND SERVICER
General
[GMAC Mortgage Corporation] is the Seller and Servicer for all of the
mortgage loans in the mortgage pool. The Seller is an indirect wholly-owned
subsidiary of [General Motors Acceptance Corporation]. The Seller is engaged in
the mortgage banking business, including the origination, purchase, sale and
servicing of residential mortgage loans.
The certificates do not represent an interest in or an obligation of the
Seller or the Servicer. The Seller's only obligations with respect to the
certificates will be pursuant to certain limited representations and warranties
made by the Seller or as otherwise provided herein.
The Seller maintains its executive and principal offices at 100 Witmer
Road, Horsham, Pennsylvania 19044. Its telephone number is (215) 682-1000.
The Servicer will be responsible for servicing the Mortgage Loans in
accordance with the its program guide and the terms of the Servicing Agreement.
The Custodian will be [________].
S-38
<PAGE>
Delinquency and Loss Experience of the Servicer's Portfolio
The following tables summarize the delinquency and loss experience [for
all closed-end home equity loans] originated by the Servicer. The data presented
in the following tables are for illustrative purposes only, and there is no
assurance that the delinquency and loss experience of the mortgage loans in the
mortgage pool will be similar to that described below.
As used in this prospectus supplement, a loan is considered to be "30 to
59 days" or "30 or more days" delinquent when a payment due on any due date
remains unpaid as of the close of business on the next following monthly due
date. However, since the determination as to whether a loan falls into this
category is made as of the close of business on the last business day of each
month, a loan with a payment due on July 1 that remained unpaid as of the close
of business on July 31 would still be considered current as of July 31. If that
payment remained unpaid as of the close of business on August 31, the loan would
then be considered to be 30 to 59 days delinquent. Delinquency information
presented in this prospectus supplement as of the cut-off date is determined and
prepared as of the close of business on the last business day immediately prior
to the cut-off date.
There can be no assurance that the delinquency experience described
below will be representative of the results that may be experienced with respect
to the mortgage loans in the mortgage pool.
S-39
<PAGE>
<TABLE>
<CAPTION>
Delinquency and Loss Experience
Mortgage Loan Portfolio Delinquency Experience (1)
=========================================================================================================
At _____, 2000 At December 31, At December 31, At December 31,
1999 1998 1997
$ Loans % by $ $ Loans % by $ $ Loans % by $ $ Loans % by $
------- ------ ------- ------ ------- ------ ------- ------
<S> <C> <C> <C>
Number of Loans
Total Portfolio
Period of
Delinquency
30-59 Days
60-89 Days
90+ Days
Total Loans
Foreclosure
Foreclosed
Total Loans in
Foreclosure
Total Delinquent
Loans
=========== ======== =========== ======== =========== ======== =========== ========
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Mortgage Loan Portfolio Loss and Foreclosure Experience (1)
=========================================================================================================
At _______, 2000 At December 31, At December 31, At December 31,
1999 1998 1997
$ Loans % by $ $ Loans % by $ $ Loans % by $ $ Loans % by $
------- ------ ------- ------ ------- ------ ------- ------
Number of Loans
Total Portfolio
Total Loans in
Foreclosure
Net Chargeoffs for
Period
=========== ======== =========== ======== =========== ======== =========== ========
</TABLE>
(1) Performing loans in bankruptcy are not included in delinquency statistics.
DESCRIPTION OF THE CERTIFICATES
General
The Series 200_ - __ Mortgage Asset-Backed Pass-Through Certificates
will include the following three classes of Class A Certificates: o Class A-1
Certificates, or the Adjustable Rate Certificates o Class A-2 Certificates; and
o Class A-3 Certificates, or the Lockout Certificates; and together with the
Class
A-2 Certificates, the Fixed Rate Certificates
In addition to the Class A Certificates, the Series -__ Mortgage
Asset-Backed Pass-Through Certificates will also include two classes of
certificates which are designated as the Class SB Certificates and Class R
Certificates. Only the Class A Certificates are offered by this prospectus
supplement. See "Glossary" in the prospectus for the meanings of capitalized
terms and acronyms not otherwise defined in this prospectus supplement.
The certificates will evidence the entire beneficial ownership interest
in the trust fund. The trust fund will consist of:
S-40
<PAGE>
o the mortgage loans
o the assets as from time to time that are identified as deposited in respect
of the mortgage loans in the Custodial Account and in the Payment Account
and belonging to the trust fund
o property acquired by foreclosure of the mortgage loans or deed in lieu of
foreclosure
o any applicable primary insurance policies and primary hazard insurance
policies
o the financial guaranty insurance policy; and o all proceeds of any of the
foregoing.
The Class A Certificates will be available only in book-entry form
through facilities of The Depository Trust Company. The Class A Certificates
will be issued, maintained and transferred on the book-entry records of DTC and
its participants. The Class A Certificates will be issued in minimum
denominations of $25,000 and integral multiples of $1 in excess thereof.
The Class A Certificates will be represented by one or more certificates
registered in the name of the nominee of DTC. The depositor has been informed by
DTC that DTC's nominee will be Cede & Co. No beneficial owner will be entitled
to receive a certificate of any class in fully registered form, a definitive
certificate, except as described in this prospectus supplement under
"--Book-Entry Registration of Certain of the Offered Certificates--Definitive
Certificates." Unless and until definitive certificates are issued for the Class
A Certificates under the limited circumstances described in this prospectus
supplement:
o all references to actions by certificateholders with respect to
the Class A Certificates shall refer to actions taken by DTC upon
instructions from its participants, and
o all references in this prospectus supplement to distributions,
notices, reports and statements to certificateholders with
respect to the Class A Certificates shall refer to distributions,
notices, reports and statements to DTC or Cede, as the registered
holder of the Class A Certificates, for distribution to
beneficial owners by DTC in accordance with DTC procedures.
Book-Entry Registration of Certain of the Offered Certificates
General. Beneficial owners that are not participants or indirect
participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, the Class A Certificates may do so only through participants
and indirect participants. In addition, beneficial owners will receive all
distributions of principal of and interest on the Class A Certificates from the
paying agent through DTC and participants. Accordingly, beneficial owners may
experience delays in their receipt of payments. Unless and until definitive
certificates are issued for the Class A Certificates, it is anticipated that the
only registered certificateholder of the Class A Certificates will be Cede, as
nominee of DTC. Beneficial owners will not be recognized by the trustee or the
servicer as certificateholders, as the term is used in the pooling and servicing
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<PAGE>
agreement, and beneficial owners will be permitted to receive information
furnished to certificateholders and to exercise the rights of certificateholders
only indirectly through DTC, its participants and indirect participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers of the Class A
Certificates among participants and to receive and transmit distributions of
principal of, and interest on, the Class A Certificates. Participants and
indirect participants with which beneficial owners have accounts with respect to
the Class A Certificates similarly are 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 physical
certificates evidencing their interests in the Class A Certificates, DTC's rules
provide a mechanism by which beneficial owners, through their participants and
indirect participants, will receive distributions and will be able to transfer
their interests in the Class A Certificates.
None of the depositor, the servicer or the trustee will have any
liability for any actions taken by DTC or its nominee, including, without
limitation, actions for any aspect of the records relating to or payments made
on account of beneficial ownership interests in the Class A Certificates held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Definitive Certificates. Definitive certificates will be issued to
beneficial owners or their nominees, respectively, rather than to DTC or its
nominee, only under the limited conditions described in the prospectus under
"Description of the Securities--Form of Securities."
Upon the occurrence of an event described in the prospectus in the third
paragraph under "Description of the Securities--Form of Securities," the trustee
is required to notify, through DTC, participants who have ownership of Class A
Certificates as indicated on the records of DTC of the availability of
definitive certificates for their Class A Certificates. Upon surrender by DTC of
the definitive certificates representing the Class A Certificates and upon
receipt of instructions from DTC for re-registration, the trustee will reissue
the Class A Certificates as definitive certificates issued in the respective
principal amounts owned by individual beneficial owners, and thereafter the
trustee and the servicer will recognize the holders of the definitive
certificates as certificateholders under the pooling and servicing agreement.
For additional information regarding DTC and the DTC registered
certificates, see "Description of the Securities--Form of Securities" in the
prospectus.
Glossary of Terms
The following terms are given the meanings shown below to help describe
the cash flows on the certificates:
Accrued Certificate Interest - For any distribution date and class of
Class A Certificates, an amount equal to interest accrued during the related
Interest Accrual Period on the Certificate Principal Balance of the certificates
of that class immediately prior to that distribution date at the related
pass-through rate less interest shortfalls, if any, allocated thereto for that
S-42
<PAGE>
distribution date, to the extent not covered with respect to the Class A
Certificates by the subordination provided by the Class SB Certificates
including:
(i) any Prepayment Interest Shortfall to the extent not covered
by the servicer as described in this prospectus supplement under
"Description of the Certificates--Interest Distributions";
(ii) the interest portions of Realized Losses, including Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses,
and Extraordinary Losses not allocated through subordination;
(iii) the interest portion of any Advances that were made with
respect to delinquencies that were ultimately determined to be Excess
Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or
Extraordinary Losses; and
(iv) any other interest shortfalls not covered by subordination,
including interest shortfalls relating to the Soldiers' and Sailors'
Civil Relief Act of 1940, or Relief Act, or similar legislation or
regulations, all allocated as described below.
Any reductions will be allocated among the holders of all classes of
certificates in proportion to the respective amounts of Accrued Certificate
Interest that would have been payable on that distribution date absent these
reductions. In the event that any shortfall described in the immediately
preceding four clauses above is allocated to the offered certificates, or the
Available Distribution Amount on any distribution date is less than the Interest
Distribution Amount due on any distribution date, the amount of any shortfall
will be drawn under the financial guaranty insurance policy and distributed to
the holders of the Class A Certificates. Notwithstanding the foregoing, if
payments are not made as required under the financial guaranty insurance policy,
any interest shortfalls may be allocated to the Class A Certificates as
described above. See "--Financial Guaranty Insurance Policy" below. Accrued
Certificate Interest on each class of Class A Certificates will be distributed
on a pro rata basis. Accrued Certificate Interest on the Class A-2 and Class A-3
Certificates is calculated on the basis of a 360-day year consisting of twelve
30-day months. Accrued Certificate Interest on the Class A-1 Certificates will
be calculated on the basis of the actual number of days in the Interest Accrual
Period and a 360-day year.
Available Distribution Amount - For any distribution date, an amount
equal to:
o the aggregate amount of scheduled payments on the mortgage loans
due on the related due date and received on or prior to the
related determination date, after deduction of the related
servicing fees and any subservicing fees, which are collectively
referred to as the servicing fees, and the premium payable on the
financial guaranty insurance policy;
o all unscheduled payments, including mortgagor prepayments on the
mortgage loans, Insurance Proceeds, Liquidation Proceeds and
proceeds from repurchases of and substitutions for the mortgage
loans occurring during the preceding calendar month; and
S-43
<PAGE>
o all Advances made for that distribution date, in each case net of
amounts reimbursable therefrom to the servicer and any
subservicer.
In addition to the foregoing amounts, with respect to unscheduled
collections, not including mortgagor prepayments, the servicer may elect to
treat such amounts as included in the Available Distribution Amount for the
distribution date in the month of receipt, but is not obligated to do so. As
described in this prospectus supplement under "--Principal Distributions on the
Class A Certificates," any amount with respect to which such election is so made
shall be treated as having been received on the last day of the preceding
calendar month for the purposes of calculating the amount of principal and
interest distributions to any class of certificates. With respect to any
distribution date, the due date is the first day of the month in which that
distribution date occurs and the determination date is the 20th day of the month
in which that distribution date occurs or, if that day is not a business day,
the immediately succeeding business day.
On any distribution date, the policy premium rate is equal to
one-twelfth of the product of the percentage specified in the Insurance and
Indemnity Agreement, dated as of ______, ____ among the financial guaranty
insurer, the depositor, the trustee, the seller and the servicer, and the
aggregate Certificate Principal Balance of the Class A Certificates immediately
prior to such distribution date.
Certificate Principal Balance - For any Class A Certificate as of any
date of determination, an amount equal to the initial Certificate Principal
Balance of that certificate, reduced by the aggregate of (a) all amounts
allocable to principal previously distributed with respect to that certificate,
including amounts paid pursuant to the financial guaranty insurance policy, and
(b) any reductions in the Certificate Principal Balance of that certificate
deemed to have occurred in connection with allocations of Realized Losses in the
manner described in this prospectus supplement, other than any amounts that have
been paid pursuant to the financial guaranty insurance policy.
Cumulative Insurance Payments - The aggregate of any payments made with
respect to the Class A Certificates by the financial guaranty insurer under the
financial guaranty insurance policy.
Excess Bankruptcy Losses - Bankruptcy Losses in excess of the
Bankruptcy Amount.
Excess Cash Flow-On any distribution date, the excess of the Available
Distribution Amount over the sum of (a) the Interest Distribution Amount and (b)
the sum of the amounts described in clauses [ ] of the definition of Principal
Distribution Amount.
Excess Fraud Losses - Fraud Losses in excess of the Fraud Loss Amount.
Excess Special Hazard Losses - Special Hazard Losses in excess of the
Special Hazard Amount.
Excess Subordinated Amount - On any distribution date, the excess, if
any, of (a) the Subordinated Amount on such distribution date over (b) the
Targeted Subordinated Amount.
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Final Disposition - A Final Disposition is deemed to have occurred upon
a determination by the servicer that it has received all Insurance Proceeds,
Liquidation Proceeds and other payments or cash recoveries which the servicer
reasonably and in good faith expects to be finally recoverable with respect to a
defaulted mortgage loan.
Interest Accrual Period - For the Class A-2 and Class A-3 Certificates,
the calendar month preceding the month in which the distribution date occurs.
For the Class A-1 Certificates, (a) for the distribution date in __________,
___, the period commencing on the closing date and ending on the day preceding
the distribution date in ________ ___, and (b) with respect to any distribution
date after the distribution date in _________ ___, the period commencing on the
distribution date in the month immediately preceding the month in which the
distribution date occurs and ending on the day preceding the distribution date.
Interest Distribution Amount - The aggregate amount of Accrued
Certificate Interest to be distributed to the holders of the Class A
Certificates for that distribution date.
Lockout Prepayment Percentage - For any distribution date occurring
prior to the distribution date in , 0%. For any distribution date occurring
after the first five years following the closing date, a percentage determined
as follows:
o for any distribution date during the sixth year after the closing date, 30%;
o for any distribution date during the seventh year after the closing date, 40%;
o for any distribution date during the eighth year after the closing date, 60%;
o for any distribution date during the ninth year after the closing date,
80%; and
o for any distribution date thereafter, 100%.
Lockout Scheduled Percentage - For any distribution date occurring prior
to the distribution date in , 0% and for any distribution date thereafter, 100%.
Principal Distribution Amount -On any distribution date, the lesser of
(a) the balance of the Available Distribution Amount remaining after the
Interest Distribution Amount has been distributed and (b) the sum of:
(1) the principal portion of all scheduled monthly payments on
the mortgage loans received or advanced with respect to the related due
period;
(2) the principal portion of all proceeds of the repurchase of
mortgage loans or, in the case of a substitution, amounts representing a
principal adjustment as required by the pooling and servicing agreement
during the preceding calendar month;
(3) the principal portion of all other unscheduled collections
received on the mortgage loans during the preceding calendar month or
deemed to be received during the preceding calendar month including,
without limitation, full and partial prepayments made by the respective
mortgagors, to the extent not distributed in the preceding month;
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(4) the principal portion of any Realized Losses incurred on the
mortgage loans for the preceding calendar month to the extent payable
from Excess Cash Flow on such distribution date; and
(5) the Subordination Increase Amount for such distribution date.
Subordinated Amount - On any distribution date, the excess, if any, of
(a) the aggregate Stated Principal Balances of the mortgage loans after giving
effect to distributions of principal to be made on such distribution date over
(b) the Certificate Principal Balance of the Class A Certificates as of such
date, after taking into account the payment to the Class A Certificates of the
amounts described in clauses [ ] of the definition of Principal Distribution
Amount on such distribution date.
Subordination Increase Amount - On any distribution date, any amount of
Excess Cash Flow actually applied as an accelerated payment of principal on the
Class A Certificates.
Subordination Reduction Amount - On any distribution date, the lesser of
(a) the Excess Subordinated Amount and (b) the amount available for distribution
specified in clauses [ ] of the definition of Principal Distribution Amount.
Targeted Subordinated Amount - On any distribution date, the required
level of the Subordinated Amount, as set forth in the Pooling and Servicing
Agreement.
Distributions
Distributions on the Class A Certificates will be made by the trustee on the
25th day of each month or, if that day is not a business day, then the next
succeeding business day, commencing in _______ 2000. Distributions on the
certificates will be made to the persons in whose names the certificates are
registered at the close of business on the day prior to each distribution date
or, if the certificates are no longer DTC registered certificates, on the record
date. See "Description of the Securities--Distributions of Principal and
Interest on the Securities" in the prospectus. Distributions will be made by
check or money order mailed, or upon the request of a certificateholder owning
Class A Certificates having denominations, aggregating at least $1,000,000, by
wire transfer or otherwise, to the address of the person entitled to the
distribution, which, in the case of DTC registered certificates, will be DTC or
its nominee, as it appears on the trustee's register in amounts calculated as
described in this prospectus supplement on the determination date. However, the
final distribution relating to the certificates will be made only upon
presentation and surrender thereof at the office or the agency of the trustee
specified in the notice to certificateholders of the final distribution. A
business day is any day other than:
a Saturday or Sunday or
a day on which banking institutions in the State of California, Minnesota, New
York, Pennsylvania, Illinois or Delaware are required or authorized by law to be
closed.
Interest Distributions
Holders of each class of Class A Certificates will be entitled to
receive interest distributions in an amount equal to the Accrued Certificate
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Interest on that class on each distribution date, to the extent of the Available
Distribution Amount for that distribution date, commencing on the first
distribution date in the case of all classes of Class A Certificates entitled to
interest distributions.
Prepayment Interest Shortfalls will result because interest on
prepayments in full is distributed only to the date of prepayment, and because
no interest is distributed on prepayments in part, as these prepayments in part
are applied to reduce the outstanding principal balance of the related mortgage
loans as of the due date in the month of prepayment.
However, on any distribution date, any Prepayment Interest Shortfalls
resulting from prepayments in full during the preceding calendar month will be
offset by the servicer, but only to the extent those Prepayment Interest
Shortfalls do not exceed the amount of the servicing fee due on such
distribution date. Prepayment Interest Shortfalls resulting from partial
prepayments will not be offset by the servicer from servicing compensation or
otherwise. No assurance can be given that the servicing compensation available
to cover Prepayment Interest Shortfalls will be sufficient therefor. See
"Pooling and Servicing Agreement--Servicing and Other Compensation and Payment
of Expenses" in this prospectus supplement.
[If on any distribution date the Available Distribution Amount is less
than Accrued Certificate Interest on the Class A Certificates for that
distribution date, the shortfall will be allocated among the holders of all
classes of Class A Certificates in proportion to the respective amounts of
Accrued Certificate Interest for that distribution date. In addition, the amount
of any such interest shortfalls that are covered by subordination, specifically,
interest shortfalls not described in the definition of Available Distribution
Amount preceding paragraph, will be unpaid Accrued Certificate Interest and will
be distributable to holders of the certificates of those classes entitled to
those amounts on subsequent distribution dates, in each case to the extent of
available funds after interest distributions as required in this prospectus
supplement.
These shortfalls could occur, for example, if delinquencies on the
mortgage loans were exceptionally high and were concentrated in a particular
month and Advances by the servicer did not cover the shortfall. Any amounts so
carried forward will not bear interest. Any interest shortfalls will not be
offset by a reduction in the servicing compensation of the servicer or
otherwise, except to the limited extent described in the preceding paragraph
with respect to Prepayment Interest Shortfalls resulting from prepayments in
full.
The pass-through rates on all classes of Class A Certificates, other
than the Class A-1 Certificates, are fixed and are listed on page S- of this
prospectus supplement.
The pass-through rates on the Class A-1 Certificates are calculated as
follows:
The pass-through rate on the Class A-1 Certificates with respect to the
initial Interest Accrual Period is _____% per annum, and as to any Interest
Accrual Period thereafter, will be a per annum rate equal to ___________% plus
the arithmetic mean of the London interbank offered rate quotations for
one-month Eurodollar deposits, determined monthly as described in this
prospectus supplement, with a maximum rate of % per annum and a minimum rate of
__________% per annum.
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The pass-through rates on the Class A-1 Certificates for the current and
immediately preceding Interest Accrual Period may be obtained by telephoning the
trustee at __________.]
[The pass-through rates on all classes of the Class A Certificates will
increase by __% per annum for each distribution date after the first
distribution date on which the servicer and the depositor are permitted to
exercise their option to purchase the mortgage loans from the trust as described
under "Pooling and Servicing Agreement--Termination," in this prospectus
supplement. Notwithstanding the foregoing, the pass-through rates on the Class A
Certificates will not increase as described above if proceeds for optional
termination are available for payment to the certificateholders on or prior to
any distribution date.]
As described in this prospectus supplement, the Accrued Certificate
Interest allocable to each class of certificates is based on the Certificate
Principal Balance of that class.
Determination of LIBOR
LIBOR for any Interest Accrual Period after the initial Interest Accrual
Period will be determined as described in the three succeeding paragraphs.
On each distribution date, LIBOR shall be established by the trustee and
as to any Interest Accrual Period, LIBOR will equal the rate for United States
dollar deposits for one month which appears on the Dow Jones Telerate Screen
Page 3750 as of 11:00 A.M., London time, on the second LIBOR Business Day prior
to the first day of that Interest Accrual Period--the LIBOR rate adjustment
date. Telerate Screen Page 3750 means the display designated as page 3750 on the
Telerate Service or any other page as may replace page 3750 on that service for
the purpose of displaying London interbank offered rates of major banks. If the
rate does not appear on that page or any other page as may replace that page on
that service, or if the service is no longer offered, any other service for
displaying LIBOR or comparable rates as may be selected by the trustee after
consultation with the servicer, the rate will be the reference bank rate.
The reference bank rate will be determined on the basis of the rates at
which deposits in the U.S. Dollars are offered by the reference banks, which
shall be three major banks that are engaged in transactions in the London
interbank market, selected by the trustee after consultation with the servicer.
The reference bank rate will be determined as of 11:00 A.M., London time, on the
day that is one LIBOR business day prior to the immediately preceding
distribution date to prime banks in the London interbank market for a period of
one month in amounts approximately equal to the aggregate Certificate Principal
Balance of the Class A-1 Certificates then outstanding. The trustee will request
the principal London office of each of the reference banks to provide a
quotation of its rate. If at least two quotations are provided, the rate will be
the arithmetic mean of the quotations. If on that date fewer than two quotations
are provided as requested, the rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by the trustee
after consultation with the servicer, as of 11:00 A.M., New York City time, on
that date for loans in U.S. Dollars to leading European banks for a period of
one month in amounts approximately equal to the aggregate Certificate Principal
Balance of the Class A-1 Certificates then outstanding. If no quotations can be
obtained, the rate will be LIBOR for the prior distribution date, or in the case
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of the first LIBOR rate adjustment date, ___% with respect to the Class A-1
Certificates; provided however, if, under the priorities listed previously in
this paragraph, LIBOR for a distribution date would be based on LIBOR for the
previous distribution date for the third consecutive distribution date, the
trustee shall select an alternative comparable index over which the trustee has
no control, used for determining one-month Eurodollar lending rates that is
calculated and published or otherwise made available by an independent party.
LIBOR business day means any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the city of London, England are required or
authorized by law to be closed.
The establishment of LIBOR by the trustee and the trustee's subsequent
calculation of the pass-through rates applicable to the Class A-1 Certificates
for the relevant Interest Accrual Period, in the absence of manifest error, will
be final and binding.
Principal Distributions on the Class A Certificates
Except as provided below, holders of the Class A Certificates will be
entitled to receive on each distribution date, in the priority described in this
prospectus supplement and to the extent of the portion of the Available
Distribution Amount remaining after the distribution of the Interest
Distribution Amount is distributed, a distribution allocable to principal equal
to the Principal Distribution Amount.
Distributions of principal on the Class A Certificates on each
distribution date will be made, after distribution of the Interest Distribution
Amount, as follows:
(i) the Principal Distribution Amount to the Class A-3
Certificates in reduction of its Certificate Principal Balance, until
its Certificate Principal Balance has been reduced to zero, an amount
equal to the sum of the following:
(A) the Lockout Scheduled Percentage of the Class A-3
Certificates' pro rata share, based on its Certificate Principal
Balance relative to the aggregate Certificate Principal Balance
of all classes of Certificates, of the aggregate of the amounts
described in clauses [ ] of the definition of Principal
Distribution Amount; and
(B) the Lockout Prepayment Percentage of the Class A-3
Certificates' pro rata share, based on its Certificate Principal
Balance relative to the aggregate Certificate Principal Balance
of all classes of Class A Certificates, of the aggregate of the
amounts described in clause [ ] of the definition of Principal
Distribution Amount;
provided that if the aggregate of the amounts set forth in the definition of
Principal Distribution Amount is more than the balance of the Available
Distribution Amount remaining after the Interest Distribution Amount has been
distributed, the amount paid to the Class A-3 Certificates under this clause (i)
shall be reduced by an amount equal to the Class A-3 Certificates' pro rata
share, based on its aggregate Certificate Principal Balance relative to the
aggregate Certificate Principal Balance of the Class A Certificates of that
difference; and
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(ii) the balance of the Principal Distribution Amount remaining
after the distributions, if any, described in clause (i) above shall be
distributed in the following order of priority:
(A) first, concurrently, Class A-1 and Class A-2
Certificates, on a pro rata basis, until their Certificate
Principal Balances have been reduced to zero; and
(B) second, to the Class A-3 Certificates until its
Certificate Principal Balance has been reduced to zero.]
On each distribution date, the financial guaranty insurer shall be
entitled to receive, after payment to the Class A Certificateholders of the
Interest Distribution Amount and the Principal Distribution Amount for such
distribution date, but before application of any Subordination Increase Amount,
from the Excess Cash Flow to the extent available therefor, the aggregate of any
payments made with respect to the Class A Certificates by the financial guaranty
insurer under the financial guaranty insurance policy to the extent not
previously reimbursed, plus interest thereon.
Overcollateralization Provisions
The Pooling and Servicing Agreement requires that, on each distribution
date, Excess Cash Flow, if any, be applied on such distribution date as an
accelerated payment of principal on the Class A Certificates, but only as
follows: The Excess Cash Flow for any distribution date will derive primarily
from the amount of interest accrued on the mortgage loans in excess of the sum
of (a) interest at the related pass-through rates on the Certificate Principal
Balances of the Class A Certificates, (b) the premium payable on the financial
guaranty insurance policy in respect of the mortgage loans and (c) accrued
servicing fees in respect of the mortgage loans, in each case in respect of such
distribution date. Excess Cash Flow will be applied on any distribution date as
follows:
o first, to pay to the holders of the Class A Certificates the principal
portion of Realized Losses incurred on the mortgage loans for the preceding
calendar month;
o second, to pay to the financial guaranty insurer any Cumulative Insurance
Payments;
o third, to pay any Subordination Increase Amount;
o fourth, to pay the holders of the Class A Certificates the amount of any
Prepayment Interest Shortfalls allocated thereto, to the extent not covered
by the Servicing Fee payable on such distribution date;
o fifth, to pay the holders of the Class A Certificates any Prepayment
Interest Shortfalls remaining unpaid from prior distribution dates together
with interest thereon; and
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o sixth, to pay to the holders of the Class SB Certificates and Class R
Certificates any balance remaining, in accordance with the terms of the
Pooling and Servicing Agreement.
The application of Excess Cash Flow to the payment of principal on the Class A
Certificates has the effect of accelerating the amortization of the Class A
Certificates relative to the amortization of the mortgage loans.
The Pooling and Servicing Agreement requires that the Excess Cash Flow,
to the extent available as described above, will be applied as an accelerated
payment of principal on the Class A Certificates to the extent that the Targeted
Subordinated Amount exceeds the Subordinated Amount as of such distribution
date.
Subordination Reduction Amount: In the event that the Targeted
Subordinated Amount is permitted to decrease or "step down" on a distribution
date in the future, a portion of the principal that would otherwise be
distributed to the holders of the Class A Certificates on such distribution date
shall not be distributed to the holders of the Class A Certificates on such
distribution date. This has the effect of decelerating principal distributions
to the Class A Certificates relative to the amortization of the mortgage loans,
and of reducing the Subordinated Amount. If, on any distribution date, the
Excess Subordinated Amount is, or, after taking into account all other
distributions to be made on such distribution date would be, greater than zero
(i.e., the Subordinated Amount is or would be greater than the Targeted
Subordinated Amount), then any amounts relating to principal which would
otherwise be distributed to the holders of the Class A Certificates on such
distribution date shall instead be distributed to the holders of the Class SB
Certificates in an amount equal to the Subordination Reduction Amount for such
distribution date.
Financial Guaranty Insurance Policy
The following summary of the terms of the financial guaranty insurance
policy does not purport to be complete and is qualified in its entirety by
reference to the financial guaranty insurance policy. The following information
regarding the financial guaranty insurance policy has been supplied by the
financial guaranty insurer for inclusion in this prospectus supplement.
Glossary of Terms: As used in this section and in the financial guaranty
insurance policy, the following terms shall have the following meanings:
o Agreement - The Pooling and Servicing Agreement, dated as of
_________, _____, among the depositor, the Seller, the Servicer and
the trustee, without regard to any amendment or supplement thereto
unless such amendment or supplement has been approved in writing by
the financial guaranty insurer.
o Business Day - Any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which
the corporate trust office of the trustee under the Agreement or the
financial guaranty insurer is located are authorized or obligated by
law or executive order to close.
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o Deficiency Amount - For the related Class A Certificates as of any
distribution date, (i) any shortfall in amounts available in the
Payment Account to pay interest accrued during the Interest Accrual
Period on the Certificate Principal Balance of the Class A
Certificates at the applicable Pass-Through Rate, net of any interest
shortfalls relating to the Relief Act and any Prepayment Interest
Shortfalls allocated to the Class A Certificates, (ii) the principal
portion of any Realized Loss allocated to the Class A Certificates
and (iii) the Certificate Principal Balance of the Class A
Certificates to the extent unpaid on the final distribution date or
earlier termination of the trust fund pursuant to the terms of the
Agreement. For purposes of determining the Deficiency Amount, the
final distribution date will be the distribution date in
____________.
o Holder - Any person who is the registered or beneficial owner of any
Class A Certificate and who, on the applicable distribution date, is
entitled under the terms of the Class A Certificates to payment
thereunder.
o Insured Amount - As of any distribution date, any Deficiency Amount.
o Notice - The telephonic or telegraphic notice, promptly confirmed in
writing by telecopy substantially in the form of Exhibit A attached
to the financial guaranty insurance policy, the original of which is
subsequently delivered by registered or certified mail from the
trustee specifying the Insured Amount which shall be due and owing on
the applicable distribution date.
Capitalized terms used in the financial guaranty insurance policy and
not otherwise defined in the financial guaranty insurance policy shall have the
meanings set forth in the Agreement as of the date of execution of the financial
guaranty insurance policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless the amendment or modification has been
approved in writing by the financial guaranty insurer.
The financial guaranty insurer, in consideration of the payment of the
premium and subject to the terms of the related financial guaranty insurance
policy, thereby unconditionally and irrevocably guarantees to any Holder that an
amount equal to each full and complete Insured Amount will be paid to the
trustee or its successor, as trustee for the Holders. The financial guaranty
insurer's obligations under each financial guaranty insurance policy for a
particular Insured Amount shall be discharged to the extent funds equal to the
applicable Insured Amount are received by the trustee, whether or not such funds
are properly applied by the trustee. Insured Amounts shall be paid only at the
time set forth in each financial guaranty insurance policy, and no accelerated
Insured Amounts shall be paid regardless of any acceleration of the Class A
Certificates, unless such acceleration is at the sole option of the financial
guaranty insurer. The financial guaranty insurance policy does not cover any
interest shortfalls relating to the Relief Act or Prepayment Interest
Shortfalls.
Notwithstanding the foregoing paragraph, the financial guaranty
insurance policy does not cover shortfalls, if any, attributable to the
liability of the trust fund, any REMIC or the trustee for withholding taxes, if
any, including interest and penalties in respect of any such liability.
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The financial guaranty insurer will pay any amounts payable under the
financial guaranty insurance policy no later than 12:00 noon, New York City
time, on the later of the distribution date on which the related Deficiency
Amount, as defined below, is due or the Business Day following receipt in New
York, New York on a Business Day of a Notice; provided that if such Notice is
received after 12:00 noon, New York City time, on such Business Day, it will be
deemed to be received on the following Business Day. If any such Notice received
is not in proper form or is otherwise insufficient for the purpose of making a
claim under the financial guaranty insurance policy it shall be deemed not to
have been received for purposes of this paragraph, and the financial guaranty
insurer shall promptly so advise the trustee and the trustee may submit an
amended Notice.
Insured Amounts due under the financial guaranty insurance policy,
unless otherwise stated in the financial guaranty insurance policy, are to be
disbursed by the financial guaranty insurer to the trustee on behalf of the
Holders by wire transfer of immediately available funds in the amount of the
Insured Amount.
The financial guaranty insurance policy is being issued under and
pursuant to and shall be construed under, the laws of the State of New York,
without giving effect to the conflict of laws principles thereof.
The financial guaranty insurance policy is not cancelable for any
reason. The premium on the financial guaranty insurance policy is not refundable
for any reason including payment, or provision being made for payment, prior to
maturity of the related Class A Certificates.
Allocation of Losses; Subordination
Subject to the terms thereof, the financial guaranty insurance policy
will cover all Realized Losses allocated to the Class A Certificates. If
payments are not made as required under the financial guaranty insurance policy,
Realized Losses will be allocable to the Class A Certificates based on the
following priorities.
The subordination provided to the Class A Certificates by the Class SB
Certificates will cover Realized Losses on the mortgage loans that are Defaulted
Mortgage Losses, Fraud Losses, Bankruptcy Losses and Special Hazard Losses. Any
Realized Losses which are not Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses will be allocated as follows:
o first, to the Excess Cash Flow for the related distribution date; and
o second, to the Class SB Certificates
and the remainder of the Realized Losses among all the remaining classes of
Class A Certificates on a pro rata basis.
Any allocation of a Realized Loss, other than a Debt Service Reduction,
to a certificate will be made by reducing:
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o its Certificate Principal Balance, in the case of the principal
portion of the Realized Loss, in each case until the Certificate
Principal Balance of that class has been reduced to zero, and
o the Accrued Certificate Interest thereon, in the case of the
interest portion of the Realized Loss, by the amount so allocated
as of the distribution date occurring in the month following the
calendar month in which the Realized Loss was incurred.
In addition, any allocation of a Realized Loss to a Class A Certificate may also
be made by operation of the payment priority to the Class A Certificates
described under "--Principal Distributions on the Class A Certificates" in this
prospectus supplement.
As used in this prospectus supplement, subordination refers to the
provisions discussed above for the sequential allocation of Realized Losses
among the various classes, as well as all provisions effecting those allocations
including the priorities for distribution of cash flows in the amounts described
in this prospectus supplement.
As described in the prospectus, in some circumstances the servicer may
permit a servicing modification--the modification of a defaulted mortgage loan
to reduce the applicable mortgage rate or to reduce its outstanding principal
amount. Any principal reduction of this type shall constitute a Realized Loss at
the time of the reduction, and the amount by which each monthly payment is
reduced by any mortgage rate reduction shall constitute a Realized Loss in the
month in which each such reduced monthly payment is due.
Servicing modification reductions shall be allocated when incurred, as
provided above, in the same manner as other Realized Losses as described in this
prospectus supplement. Any Advances made on any mortgage loan will be reduced to
reflect any related servicing modifications previously made. The mortgage rate
and Net Loan Rate as to any mortgage loan will be deemed not reduced by any
servicing modification, so that the calculation of Accrued Certificate Interest
payable on the Class A Certificates will not be affected by the servicing
modification.
Any Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses, Extraordinary Losses or other losses of a type not covered by
subordination will be allocated on a pro rata basis among the Class A
Certificates and in an aggregate amount equal to the percentage of that loss
equal to the then aggregate Certificate Principal Balance of the Class A
Certificates divided by the then aggregate Stated Principal Balance of the
mortgage loans, in each case subject to the limitations set forth in the Pooling
and Servicing Agreement, and the remainder of the Realized Losses will be
allocated to the Class SB Certificates.
An allocation of a Realized Loss on a "pro rata basis" among two or more
classes of certificates means an allocation to each of those classes of
certificates on the basis of its then outstanding Certificate Principal Balance
prior to giving effect to distributions to be made on that distribution date in
the case of an allocation of the principal portion of a Realized Loss, or based
on the Accrued Certificate Interest thereon in respect of that distribution date
in the case of an allocation of the interest portion of a Realized Loss.
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In order to maximize the likelihood of distribution in full of the
Interest Distribution Amount and Principal Distribution Amount, on each
distribution date, holders of Class A Certificates have a right to distributions
of the Available Distribution Amount that is prior to the rights of the holders
of the Class SB Certificates and Class R Certificates, to the extent necessary
to satisfy the Interest Distribution Amount and Principal Distribution Amount.
The Special Hazard Amount shall initially be equal to $_____________. As of
any date of determination following the cut-off date, the Special Hazard Amount
shall equal $__________ less the sum of (A) any amounts allocated through
subordination relating to Special Hazard Losses and (B) the Adjustment Amount.
The Adjustment Amount will be equal to an amount calculated under the terms of
the pooling and servicing agreement.
The Fraud Loss Amount shall initially be equal to $_____________. As of any
date of determination after the cut-off date, the Fraud Loss Amount shall equal
(X) prior to the third anniversary of the cut-off date an amount equal to ____%
of the aggregate principal balance of all of the mortgage loans as of the
cut-off date minus the aggregate amounts allocated through Subordination for
Fraud Losses up to that date of determination and (Y) from the third to the
fifth anniversary of the cut-off date, an amount equal to (1) the lesser of (a)
the Fraud Loss Amount as of the most recent anniversary of the cut-off date and
(b) ____% of the aggregate principal balance of all of the mortgage loans as of
the most recent anniversary of the cut-off date minus (2) the aggregate amounts
allocated through subordination for Fraud Losses since the most recent
anniversary of the cut-off date up to that date of determination. On and after
the fifth anniversary of the cut-off date, the Fraud Loss Amount shall be zero
and Fraud Losses shall not be allocated through subordination.
The Bankruptcy Amount will initially be equal to $_______________. As of
any date of determination on or after the first anniversary of the cut-off date,
the Bankruptcy Amount will equal the excess, if any, of (1) the lesser of (a)
the Bankruptcy Amount as of the business day next preceding the most recent
anniversary of the cut-off date and (b) an amount calculated under the terms of
the pooling and servicing agreement, which amount as calculated will provide for
a reduction in the Bankruptcy Amount, over (2) the aggregate amount of
Bankruptcy Losses allocated solely to the Class SB Certificates through
subordination since that anniversary.
Realized Losses allocated to the Class A Certificates will be covered by
the financial guaranty insurance policy. In the event payments are not made as
required under such policy, these losses will be borne by the holders of the
Class A Certificates.
With respect to any defaulted mortgage loan that is finally liquidated,
through foreclosure sale, disposition of the related mortgaged property if
acquired on behalf of the certificateholders by deed in lieu of foreclosure, or
otherwise, the amount of loss realized, if any, will equal the portion of the
Stated Principal Balance remaining, if any, plus its interest through the last
day of the month in which that mortgage loan was finally liquidated, after
application of all amounts recovered, net of amounts reimbursable to the
servicer or the subservicer for expenses, including attorneys' fees, towards
interest and principal owing on the mortgage loan.
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Notwithstanding the foregoing, the provisions relating to subordination
will not be applicable in connection with a Bankruptcy Loss so long as the
servicer has notified the trustee in writing that:
o the servicer is diligently pursuing any remedies that may exist
in connection with the representations and warranties made
regarding the related mortgage loan and
o either:
o the related mortgage loan is not in default with regard to payments
due thereunder or
o delinquent payments of principal and interest under the related
mortgage loan and any premiums on any applicable primary hazard
insurance policy and any related escrow payments relating to that
mortgage loan are being advanced on a current basis by the servicer or
a subservicer.
The Special Hazard Amount, Fraud Loss Amount and Bankruptcy Amount may
be further reduced as described in the prospectus under "Description of Credit
Enhancement--Subordination."
Advances
Prior to each distribution date, the servicer is required to make
Advances which were due on the mortgage loans on the immediately preceding due
date and delinquent on the business day next preceding the related determination
date.
These Advances are required to be made only to the extent they are
deemed by the servicer to be recoverable from related late collections,
Insurance Proceeds or Liquidation Proceeds. The purpose of making these Advances
is to maintain a regular cash flow to the certificateholders, rather than to
guarantee or insure against losses. The servicer will not be required to make
any Advances for reductions in the amount of the monthly payments on the
mortgage loans due to Debt Service Reductions or the application of the Relief
Act or similar legislation or regulations. Any failure by the servicer to make
an Advance as required under the pooling and servicing agreement will constitute
an event of default thereunder, in which case the trustee, as successor
servicer, will be obligated to make any Advance, in accordance with the terms of
the pooling and servicing agreement.
All Advances will be reimbursable to the servicer on a first priority
basis from either (a) late collections, Insurance Proceeds and Liquidation
Proceeds from the mortgage loan as to which such unreimbursed Advance was made
or (b) as to any Advance that remains unreimbursed in whole or in part following
the final liquidation of the related mortgage loan, from any amounts otherwise
distributable on any of the Class A Certificates.
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<PAGE>
THE FINANCIAL GUARANTY INSURER
The following information has been supplied by the financial guaranty
insurer for inclusion in this Prospectus Supplement. No representation is made
by the depositor, the underwriters or any of their affiliates as to the accuracy
or completeness of such information.
[ ]
CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS
General
The yields to maturity and the aggregate amount of distributions on the
Class A Certificates will be affected by the rate and timing of principal
payments on the mortgage loans, the amount and timing of mortgagor defaults
resulting in Realized Losses and by adjustments to the mortgage rates. The rate
of default of mortgage loans secured by second liens may be greater than that of
mortgage loans secured by first liens. The yields may be adversely affected by a
higher or lower than anticipated rate of principal payments on the mortgage
loans in the trust fund. The rate of principal payments on the mortgage loans
will in turn be affected by the amortization schedules of the mortgage loans,
the rate and timing of mortgagor prepayments on the mortgage loans by the
mortgagors, liquidations of defaulted mortgage loans and repurchases of mortgage
loans due to breaches of some representations and warranties.
The timing of changes in the rate of prepayments, liquidations and
repurchases of the mortgage loans may, and the timing of Realized Losses will,
significantly affect the yield to an investor, even if the average rate of
principal payments experienced over time is consistent with an investor's
expectation. In addition, the rate of prepayments of the mortgage loans and the
yield to investors on the certificates may be affected by refinancing programs,
which may include general or targeted solicitations, as described under
"Maturity and Prepayment Considerations" in the prospectus. Since the rate and
timing of principal payments on the mortgage loans will depend on future events
and on a variety of factors, as described in this prospectus supplement and in
the prospectus under "Yield Considerations" and "Maturity and Prepayment
Considerations," no assurance can be given as to the rate or the timing of
principal payments on the Class A Certificates.
The amount of Excess Cash Flow may be adversely affected by the
prepayment of mortgage loans with higher mortgage rates. Any reduction of this
type will reduce the amount of Excess Cash Flow that is available to cover
Realized Losses, increase overcollateralization on the related classes of Class
A Certificates and cover Prepayment Interest Shortfalls, to the extent and in
the manner described in this prospectus supplement. See "Description of the
Mortgage Pool--General," "Description of the Certificates--Overcollateralization
Provisions" and "--Allocation of Losses; Subordination" in this prospectus
supplement.
The Class A Certificates are subject to various priorities for payment
of principal as described in this prospectus supplement. Distributions of
principal on classes of Class A Certificates having an earlier priority of
payment will be affected by the rates of prepayment of the mortgage loans early
in the life of the mortgage pool. The timing of commencement of principal
distributions and the weighted average lives of classes of Class A Certificates
with a later priority of payment will be affected by the rates of prepayment of
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the mortgage loans both before and after the commencement of principal
distributions on those classes. In addition, the yield to maturity of the Class
A Certificates will depend on whether, to what extent, and the timing with
respect to which, Excess Cash Flow is used to accelerate payments of principal
on the Class A Certificates or any Subordination Reduction Amount is released.
See "Description of the Certificates--Overcollateralization Provisions" in this
prospectus supplement.
[A subservicer may allow the refinancing of a mortgage loan by accepting
prepayments on the mortgage loan and permitting a new loan secured by a mortgage
on the same property, which may be originated by the subservicer or the Servicer
or any of their respective affiliates or by an unrelated entity. In the event of
such a refinancing, the new loan would not be included in the trust and,
therefore, the refinancing would have the same effect as a prepayment in full of
the related mortgage loan. A subservicer or the Servicer may, from time to time,
implement refinancing or modification programs designed to encourage
refinancing. The programs may include, without limitation, modifications of
existing loans, general or targeted solicitations, the offering of pre-approved
applications, reduced origination fees or closing costs, or other financial
incentives. Targeted solicitations may be based on a variety of factors,
including the credit of the borrower or the location of the mortgaged property.
In addition, subservicers or the Servicer may encourage assumptions of mortgage
loans, including defaulted mortgage loans, under which creditworthy borrowers
assume the outstanding indebtedness of those mortgage loans which may be removed
from the trust. As a result of these programs, the rate of principal prepayments
of the mortgage loans may be higher than would otherwise be the case, and, in
some cases, the average credit or collateral quality of the mortgage loans
remaining in the trust may decline.]
The mortgage loans in most cases may be prepaid by the mortgagors at any
time. However, in some circumstances, some of the mortgage loans will be subject
to a prepayment charge. See "Description of the Mortgage Pool" in this
prospectus supplement.
Most of the mortgage loans contain due-on-sale clauses. As described
under "Description of the Certificates--Principal Distributions on the Class A
Certificates" in this prospectus supplement, during specified periods all or a
disproportionately large percentage of principal prepayments on the mortgage
loans will be allocated among the Class A Certificates, other than the Lockout
Certificates, and during specified periods no principal prepayments on the
mortgage loans will be distributed to the Lockout Certificates. Furthermore, if
the Certificate Principal Balances of the Class A Certificates, other than the
Lockout Certificates, have been reduced to zero, the Lockout Certificates may,
under some circumstances, receive all mortgagor prepayments made during the
preceding calendar month.
Prepayments, liquidations and purchases of the mortgage loans will
result in distributions to holders of the Class A Certificates of principal
amounts which would otherwise be distributed over the remaining terms of the
mortgage loans. Factors affecting prepayment, including defaults and
liquidations, of mortgage loans include changes in mortgagors' housing needs,
job transfers, unemployment, mortgagors' net equity in the mortgaged properties,
changes in the value of the mortgaged properties, mortgage market interest
rates, solicitations and servicing decisions. In addition, if prevailing
mortgage rates fell significantly below the mortgage rates on the mortgage
loans, the rate of prepayments, including refinancings, would be expected to
increase. Conversely, if prevailing mortgage rates rose significantly above the
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mortgage rates on the mortgage loans, the rate of prepayments on the mortgage
loans would be expected to decrease. Furthermore, since mortgage loans secured
by second liens are not generally viewed by borrowers as permanent financing and
generally carry a high rate of interest, the mortgage loans secured by second
liens may experience a higher rate of prepayment than traditional first lien
mortgage loans. Prepayment of the related first lien may also affect the rate of
prepayments in the mortgage loans.
The rate of defaults on the mortgage loans will also affect the rate and
timing of principal payments on the mortgage loans. In general, defaults on
mortgage loans are expected to occur with greater frequency in their early
years. The rate of default of mortgage loans secured by second liens is likely
to be greater than that of mortgage loans secured by traditional first lien
mortgage loans, particularly in the case of mortgage loans with high combined
LTV ratios or low junior ratios. The rate of default on mortgage loans which are
refinance or reduced documentation mortgage loans, and on mortgage loans with
high LTV ratios, may be higher than for other types of mortgage loans.
Furthermore, the rate and timing of prepayments, defaults and liquidations on
the mortgage loans will be affected by the general economic condition of the
region of the country in which the related mortgaged properties are located. The
risk of delinquencies and loss is greater and prepayments are less likely in
regions where a weak or deteriorating economy exists, as may be evidenced by,
among other factors, increasing unemployment or falling property values. See
"Maturity and Prepayment Considerations" in the prospectus. In addition, because
borrowers of Balloon Loans are required to make a relatively large single
payment upon maturity, it is possible that the default risk associated with
Balloon Loans is greater than that associated with fully-amortizing mortgage
loans. See "Risk Factors" in this prospectus supplement.
To the extent that any losses are incurred on any of the mortgage loans
that are not covered by the Excess Cash Flow, a reduction in the Subordinated
Amount or the financial guaranty insurance policy, holders of the Class A
Certificates will bear the risk of losses resulting from default by mortgagors.
See "Risk Factors--The return on your certificates will be reduced if losses
exceed the credit enhancement available to your certificates" in this prospectus
supplement. Even where the financial guaranty insurance policy covers all losses
incurred on the mortgage loans, this coverage may accelerate principal payments
on the Class A Certificates, thus reducing the weighted average life of the
Class A Certificates.
The periodic increase in interest paid by the mortgagor of a Buy-Down
Loan may increase the risk of default with respect to the related mortgage loan.
See "Yield Considerations" in the prospectus.
The amount of interest otherwise payable to holders of the Class A
Certificates will be reduced by any interest shortfalls to the extent not
covered by subordination or the servicer, including Prepayment Interest
Shortfalls. These shortfalls will not be offset by a reduction in the servicing
fees payable to the servicer or otherwise, except as described in this
prospectus supplement with respect to some Prepayment Interest Shortfalls. See
"Yield Considerations" in the prospectus and "Description of the
Certificates--Interest Distributions" in this prospectus supplement for a
discussion of the effect of principal prepayments on the mortgage loans on the
yield to maturity of the Class A Certificates and possible shortfalls in the
collection of interest.
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<PAGE>
In addition, the yield to maturity on each class of the Class A
Certificates will depend on, among other things, the price paid by the holders
of the Class A Certificates and the related pass-through rate. The extent to
which the yield to maturity of any Class A Certificate is sensitive to
prepayments will depend, in part, upon the degree to which it is purchased at a
discount or premium. In general, if a class of Class A Certificates is purchased
at a premium and principal distributions thereon occur at a rate faster than
assumed at the time of purchase, the investor's actual yield to maturity will be
lower than anticipated at the time of purchase. Conversely, if a class of Class
A Certificates is purchased at a discount and principal distributions thereon
occur at a rate slower than assumed at the time of purchase, the investor's
actual yield to maturity will be lower than anticipated at the time of purchase.
For additional considerations relating to the yield on the certificates, see
"Yield Considerations" and "Maturity and Prepayment Considerations" in the
prospectus.
Because the mortgage rates on the mortgage loans and the pass-through
rates on the Class A Certificates (other than the Class A-1 Certificates) are
fixed, the rates will not change in response to changes in market interest
rates. Accordingly, if market interest rates or market yields for securities
similar to the offered certificates were to rise, the market value of the
offered certificates may decline.
The yield to investors on the Class A-1 Certificates will be sensitive
to fluctuations in the level of LIBOR and the pass-through rate will be capped.
See "Risk Factors--The yield on your certificates will be affected by the
specific characteristics that apply to that class, discussed below - Class A-1
Certificates". A number of factors affect the performance of any index, such as
LIBOR, and may cause such index to move in a manner different from other
indices. To the extent that any index may reflect changes in the general level
of interest rates less quickly than other indices, in a period of rising
interest rates, increases in the yield to the Class A-1 Certificateholders due
to such rising interest rates may occur later than that which would be produced
by other indices. Moreover, an increase in the level of LIBOR will increase the
likelihood that the pass-through rate on the Class A-1 Certificates will be
limited by the weighted average Net Loan Rate on the mortgage loans in
accordance with such index, than of mortgage loans which adjust in accordance
with other indices.
Class A Certificates: The rate and timing of principal payments on and
the weighted average lives of the Class A Certificates will be affected
primarily by the rate and timing of principal payments, including prepayments,
defaults, liquidations and purchases, on the mortgage loans.
Lockout Certificates: Investors in the Lockout Certificates should be
aware that because the Lockout Certificates do not receive any distributions of
payments of principal prior to the distribution date occurring in , and may
receive a disproportionately small percentage of principal prepayments until the
distribution date occurring in ______, unless the Certificate Principal Balances
of the Class A Certificates, other than the Lockout Certificates, have been
reduced to zero, the weighted average life of the Lockout Certificates will be
longer than would otherwise be the case. The effect on the market value of the
Lockout Certificates of changes in market interest rates or market yields for
similar securities will be greater than for other classes of Class A
Certificates entitled to principal distributions.
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<PAGE>
Assumed Final Distribution Date: The assumed final distribution date with
respect to each class of the Class A Certificates is __________ 25,____, which
is the distribution date immediately following the latest scheduled maturity
date for any mortgage loan. No event of default, change in the priorities for
distribution among the various classes or other provisions under the pooling and
servicing agreement will arise or become applicable solely by reason of the
failure to retire the entire Certificate Principal Balance of any class of
certificates on or before its assumed final distribution date.
The actual final distribution date with respect to each class of Class A
Certificates could occur significantly earlier than the assumed final
distribution date for that class because:
o Excess Cash Flow will be used to make accelerated payments of
principal, i.e. Subordination Increase Amounts, to the holders of the
Class A Certificates, which payments will have the effect of
shortening the weighted average lives of the Class A Certificates of
each class,
o prepayments are likely to occur, which will also have the effect of
shortening the weighted average lives of the Class A Certificates,
and
o the servicer may cause a termination of the trust when the aggregate
Stated Principal Balance of the mortgage loans in the trust is less
than 10% of the aggregate cut-off date balance.
Weighted Average Life: Weighted average life refers to the average
amount of time that will elapse from the date of issuance of a security to the
date of distribution to the investor of each dollar distributed in reduction of
principal of the security assuming no losses. The weighted average life of the
Class A Certificates will be influenced by, among other things, the rate at
which principal of the mortgage loans is paid, which may be in the form of
scheduled amortization, prepayments or liquidations.
Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The model used in this prospectus supplement, the
prepayment speed assumption, represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of new mortgage
loans. A prepayment assumption of 100% PSA assumes constant prepayment rates of
0.20% per annum of the then outstanding principal balance of the mortgage loans
in the first month of the life of the mortgage loans and an additional 0.20% per
annum in each month thereafter until the 30th month. Beginning in the 30th month
and in each month thereafter during the life of the mortgage loans , 100% PSA
assumes a constant prepayment rate of 6% per annum each month. As used in the
table below, "0% PSA" assumes prepayment rates equal to 0% of PSA--no
prepayments. Correspondingly, "100% PSA" and "___ % PSA" assumes prepayment
rates equal to 100% of PSA and % of PSA, respectively, and so forth. PSA does
not purport to be a historical description of prepayment experience or a
prediction of the anticipated rate of prepayment of any pool of mortgage loans ,
including the mortgage loans .
The table captioned "Percent of Initial Certificate Principal Balance
Outstanding at the Following Percentages of PSA" has been prepared on the basis
of assumptions as listed in this paragraph regarding the weighted average
characteristics of the Mortgage loans that are expected to be included in the
trust fund as described under "Description of the Mortgage Pool" in this
prospectus supplement and their performance. The table assumes, among other
things, that: (i) as of the date of issuance of the Class A Certificates, the
mortgage loans have the following characteristics:
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<PAGE>
Aggregate principal balance $ $
Weighted average mortgage rate % %
Weighted average servicing fee % %
rate
Weighted average original term
to maturity (months)
Weighted average remaining term
to maturity (months)
(ii) except with respect to the Balloon Loans the scheduled monthly
payment for each mortgage loan has been based on its outstanding balance,
mortgage rate and remaining term to maturity, so that the mortgage loan will
amortize in amounts sufficient for its repayment over its remaining term to
maturity; (iii) none of the unaffiliated sellers, the servicer or the depositor
will repurchase any mortgage loan, as described under "The
Trusts--Characteristics of Loans" and "Description of the Securities--Assignment
of Loans" in the prospectus, and neither the servicer nor the depositor
exercises any option to purchase the mortgage loans and thereby cause a
termination of the trust fund; (iv) there are no delinquencies or Realized
Losses on the mortgage loans , and principal payments on the mortgage loans will
be timely received together with prepayments, if any, at the respective constant
percentages of PSA set forth in the table; (v) there is no Prepayment Interest
Shortfall or any other interest shortfall in any month; (vi) payments on the
certificates will be received on the 25th day of each month, commencing in
_________; (vii) payments on the mortgage loans earn no reinvestment return;
(viii) there are no additional ongoing trust fund expenses payable out of the
trust fund; and (ix) the certificates will be purchased on _______________,
_______. Clauses (i) through (ix) above are collectively referred to as the
structuring assumptions.
The actual characteristics and performance of the mortgage loans will
differ from the assumptions used in constructing the table below, which is
hypothetical in nature and is provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the mortgage loans will prepay at a constant
level of PSA until maturity or that all of the mortgage loans will prepay at the
same level of PSA. Moreover, the diverse remaining terms to maturity and
mortgage rates of the mortgage loans could produce slower or faster principal
distributions than indicated in the table at the various constant percentages of
PSA specified, even if the weighted average remaining term to maturity and
weighted average mortgage rate of the mortgage loans are as assumed. Any
difference between the assumptions and the actual characteristics and
performance of the mortgage loans, or actual prepayment or loss experience, will
affect the percentages of initial Certificate Principal Balances outstanding
over time and the weighted average lives of the classes of Class A Certificates.
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<PAGE>
In accordance with the foregoing discussion and assumptions, the
following table indicates the weighted average life of each class of Class A
Certificates, and sets forth the percentages of the initial Certificate
Principal Balance of each class of Class A Certificates that would be
outstanding after each of the distribution dates at the various percentages of
PSA shown.
<TABLE>
<CAPTION>
Percent of Initial Certificate Principal Balance Outstanding
at the Following Percentages of PSA
Class A-1 Class A-2 Class A-3
<S> <C> <C> <C> <C> <C> <C>
DISTRIBUTION DATE % % % % % % % % %
Initial Percentage
Weighted Average Life in
Years (**)
------------
</TABLE>
o Indicates a number that is greater than zero but less than 0.5%.
o (Table continued on next page.)
** The weighted average life of a certificate of any class is determined by
(i) multiplying the net reduction, if any, of the Certificate Principal
Balance by the number of years from the date of issuance of the
certificate to the related distribution date, (ii) adding the results,
and (iii) dividing the sum by the aggregate of the net reduction of the
Certificate Principal Balance described in (i) above.
This table has been prepared based on the structuring assumptions,
including the assumptions relating to the characteristics and performance of the
mortgage loans, which differ from their actual characteristics, and should be
read in conjunction therewith.
POOLING AND SERVICING AGREEMENT
General
The certificates will be issued under a pooling and servicing agreement
dated as of __________, ____, among the depositor, the seller, the servicer, and
__________, as trustee. Reference is made to the prospectus for important
information in addition to that described in this prospectus supplement
regarding the terms and conditions of the pooling and servicing agreement and
the Class A Certificates. The trustee will appoint ____________________to serve
as custodian in connection with the certificates. The Class A Certificates will
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be transferable and exchangeable at the corporate trust office of the trustee,
which will serve as certificate registrar and paying agent. The depositor will
provide a prospective or actual certificateholder without charge, on written
request, a copy, without exhibits, of the pooling and servicing agreement.
Requests should be addressed to the President, Residential Asset Mortgage
Products, Inc., 8400 Normandale Lake Boulevard, Suite 600, Minneapolis,
Minnesota 55437.
Servicing and Other Compensation and Payment of Expenses
The servicing fees for each mortgage loan are payable out of the
interest payments on that mortgage loan. The servicing fees relating to each
mortgage loan will be at least % per annum and not more than % per annum of the
outstanding principal balance of that mortgage loan, with a weighted average
servicing fee of approximately % per annum.
The servicer is obligated to pay some ongoing expenses associated with
the trust fund and incurred by the servicer in connection with its
responsibilities under the pooling and servicing agreement. See "The Agreements"
in the prospectus for information regarding other possible compensation to the
servicer and subservicers and for information regarding expenses payable by the
servicer.
[Refinancing of Senior Lien
The servicer may permit the refinancing of any existing lien senior to a
mortgage loan, provided that some conditions described in the pooling and
servicing agreement are satisfied and the resulting combined LTV ratio does not
exceed 100%.
Collection and Liquidation Practices; Loss Mitigation
The servicer will make reasonable efforts to collect all payments called
for under the mortgage loans and will, consistent with the pooling and servicing
agreement, follow such collection procedures which shall be normal and usual in
its general mortgage servicing activities with respect to mortgage loans
comparable to the mortgage loans. The servicer is authorized to engage in a wide
variety of loss mitigation practices to the mortgage loans, including waivers,
modifications, payment forbearances, partial forgiveness, entering into
repayment schedule arrangements, and capitalization of arrearages; provided in
any case that the servicer determines that the action is not materially adverse
to the interests of the certificateholders and is generally consistent with the
servicer's policies with respect to similar loans; and provided further that
some modifications, including reductions in the loan rate, partial forgiveness
or a maturity extension, may only be taken if the mortgage loan is in default or
if default is reasonably foreseeable. For mortgage loans that come into and
continue in default, the servicer may take a variety of actions including
foreclosure upon the mortgaged property, writing off the balance of the mortgage
loan as bad debt, taking a deed in lieu of foreclosure, accepting a short sale,
permitting a short refinancing, arranging for a repayment plan, modifications as
described above, or taking an unsecured note. See "Description of the Securities
- Servicing and Administration of Loans" in the prospectus.]
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Voting Rights
There are actions specified in the prospectus that may be taken by
holders of certificates evidencing a specified percentage of all undivided
interests in the trust fund and may be taken by holders of certificates entitled
in the aggregate to that percentage of the voting rights. ___% of all voting
rights will be allocated among all holders of the Class A Certificates, ___% of
all voting rights will be allocated among all holders of the Class R
Certificates and ___% of all voting rights will be allocated among all holders
of the Class SB Certificates, respectively, in each case in proportion to the
percentage interests evidenced by their respective certificates. The pooling and
servicing agreement may be amended without the consent of the holders of the
Class R Certificates in specified circumstances.
Termination
The circumstances under which the obligations created by the pooling and
servicing agreement will terminate relating to the Class A Certificates are
described in "The Agreements--Termination; Retirement of Securities" in the
prospectus. The servicer will have the option, on any distribution date on which
the aggregate Stated Principal Balance of the mortgage loans is less than 10% of
the aggregate principal balance of the mortgage loans as of the cut-off date,
either to purchase all remaining mortgage loans and other assets in the trust
fund, except for the policy, thereby effecting early retirement of the Class A
Certificates or to purchase, in whole but not in part, the certificates. Any
such purchase of mortgage loans and other assets of the trust fund shall be made
at a price equal to the sum of (a) 100% of the unpaid principal balance of each
mortgage loan or the fair market value of the related underlying mortgaged
properties with respect to defaulted mortgage loans as to which title to such
mortgaged properties has been acquired if such fair market value is less than
such unpaid principal balance, net of any unreimbursed Advance attributable to
principal, as of the date of repurchase plus (b) accrued interest thereon at the
Net Loan Rate to, but not including, the first day of the month in which the
repurchase price is distributed plus (c) any amounts due to the financial
guaranty insurer under the insurance and indemnity agreement.
Distributions on the certificates relating to any optional termination
will be paid, first, to the Class A Certificates and second, to the Class SB
Certificates in the order of their payment priority. The proceeds of any such
distribution may not be sufficient to distribute the full amount to each class
of certificates if the purchase price is based in part on the fair market value
of the underlying mortgaged property and the fair market value is less than 100%
of the unpaid principal balance of the related mortgage loan. Any purchase of
mortgage loans and termination of the trust requires the consent of the
financial guaranty insurer if it would result in a draw on the policy. Any such
purchase of the certificates will be made at a price equal to 100% of their
Certificate Principal Balance plus the sum of interest thereon for the
immediately preceding Interest Accrual Period at the then-applicable
pass-through rate and any previously unpaid Accrued Certificate Interest. Upon
the purchase of such certificates or at any time thereafter, at the option of
the servicer, the mortgage loans may be sold, thereby effecting a retirement of
the certificates and the termination of the trust fund, or the certificates so
purchased may be held or resold by the servicer or the depositor.
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Upon presentation and surrender of the Class A Certificates in
connection with the termination of the trust fund or a purchase of certificates
under the circumstances described in the two preceding paragraphs, the holders
of the Class A Certificates will receive an amount equal to the Certificate
Principal Balance of that class plus interest thereon for the immediately
preceding Interest Accrual Period at the then-applicable pass-through rate, plus
any previously unpaid Accrued Certificate Interest. However, distributions to
the holders of the most subordinate class of certificates outstanding will be
reduced, as described in the preceding paragraph, in the case of the termination
of the trust fund resulting from a purchase of all the assets of the trust fund.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
_________________, counsel to the depositor, has filed with the depositor's
registration statement an opinion to the effect that, assuming compliance with
all provisions of the pooling and servicing agreement, for federal income tax
purposes, the trust fund will qualify as a REMIC under the Internal Revenue
Code.
For federal income tax purposes:
o the Class R Certificates will constitute the sole class of "residual
interests" in the REMIC and
o each class of Class A Certificates and the Class SB Certificates will
represent ownership of "regular interests" in the REMIC and will be
treated as debt instruments of the REMIC
See "Material Federal Income Tax Consequences--Classification of REMICs
and FASITs" in the prospectus.
For federal income tax purposes, the Class ___________ Certificates will,
[the Class ______________ Certificates may] [and all other Classes of Class A
Certificates will not] be treated as having been issued with original issue
discount. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes will be based on the assumption that, subsequent to
the date of any determination the mortgage loans will prepay at a rate equal to
___% PSA. No representation is made that the mortgage loans will prepay at that
rate or at any other rate. See "Material Federal Income Tax
Consequences--General" and "--Taxation of Owners of REMIC and FASIT Regular
Certificates--Original Issue Discount" 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 that
period would be zero and the certificateholder will be permitted to offset that
negative amount only against future original issue discount, if any,
attributable to those certificates.
In some circumstances the 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
S-66
discount that differs from that used by the servicer in preparing reports to the
certificateholders and the IRS.
Some of the classes of Class A Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
one of those classes 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 those classes of
certificates should consult their tax advisors regarding the possibility of
making an election to amortize such premium. See "Material Federal Income Tax
Consequences--Taxation of Owners of REMIC and FASIT Regular Certificates" and
"--Premium" in the prospectus.
The Class A Certificates will be treated as assets described in Section
7701(a)(19)(C) of the Internal Revenue Code and "real estate assets" under
Section 856(c)(4)(A) of the Internal Revenue Code in the same proportion that
the assets of the trust fund would be so treated. In addition, interest on the
Class A Certificates will be treated as "interest on obligations secured by
mortgages on real property" under Section 856(c)(3)(B) of the Internal Revenue
Code to the extent that the Class A Certificates are treated as "real estate
assets" under Section 856(c)(4)(A) of the Internal Revenue Code. Moreover, the
Class A Certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Internal Revenue Code if transferred to another REMIC on its
startup day in exchange for a regular or residual interest therein. However,
prospective investors in Class A Certificates that will be treated as assets
described in Section 860G(a)(3) of the Internal Revenue Code should note that,
notwithstanding that treatment, any repurchase of a certificate pursuant to the
right of the servicer or the depositor to repurchase the Class A Certificates
may adversely affect any REMIC that holds the Class A Certificates 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 "Material Federal Income Tax Consequences--Taxation of Owners of
REMIC Residual Certificates--Prohibited Transaction and Other Taxes" in the
prospectus.
New Withholding Regulations
The Treasury Department has issued new regulations which make some
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 some
transition rules. Prospective investors are urged to consult their own tax
advisors regarding the new regulations.
For further information regarding federal income tax consequences of
investing in the Class A Certificates, see "Material Federal Income Tax
Consequences--Taxation of Owners of REMIC and FASIT Regular Certificates" in the
prospectus.
METHOD OF DISTRIBUTION
In accordance with the terms and conditions of an underwriting agreement,
dated _____________,________ will serve as underwriter and has agreed to
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purchase and the depositor has agreed to sell the Class A Certificates. The
certificates being sold to the underwriter are referred to as the underwritten
certificates. It is expected that delivery of the underwritten certificates will
be made only in book-entry form through the Same Day Funds Settlement System of
DTC on or about _____________, against payment therefor in immediately available
funds.
In connection with the underwritten certificates, the underwriter has
agreed, in accordance with the terms and conditions of the underwriting
agreement, to purchase all of the underwritten certificates if any of its
underwritten certificates are purchased thereby.
The underwriting agreement provides that the obligations of the
underwriter to pay for and accept delivery of the underwritten certificates are
subject to, among other things, the receipt of legal opinions and to the
conditions, among others, that no stop order suspending the effectiveness of the
depositor's registration statement shall be in effect, and that no proceedings
for that purpose shall be pending before or threatened by the Commission.
The distribution of the underwritten certificates by the underwriter may
be effected from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds to
the depositor from the sale of the underwritten certificates, before deducting
expenses payable by the depositor, will be approximately % of the aggregate
Certificate Principal Balance of the underwritten certificates plus accrued
interest thereon from the cut-off date.
The underwriter may effect these transactions by selling the
underwritten certificates to or through dealers, and those dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the underwriter for whom they act as agent. In connection with the sale of
the underwritten certificates, the underwriter may be deemed to have received
compensation from the depositor in the form of underwriting compensation. The
underwriter and any dealers that participate with the underwriter in the
distribution of the underwritten certificates may be deemed to be underwriters
and any profit on the resale of the underwritten certificates positioned by them
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933, as amended.
The underwriting agreement provides that the depositor will indemnify
the underwriter, and that under limited circumstances the underwriter will
indemnify the depositor, against some liabilities under the Securities Act, or
contribute to payments required to be made in respect thereof.
There can be no assurance that a secondary market for the Class A
Certificates will develop or, if it does develop, that it will continue. The
primary source of information available to investors concerning the certificates
will be the monthly statements discussed in the prospectus under "Description of
the Securities--Reports to Securityholders," which will include information as
to the outstanding principal balance of the certificates. There can be no
assurance that any additional information regarding the certificates will be
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available through any other source. In addition, the depositor is not aware of
any source through which price information about the certificates will be
generally available on an ongoing basis. The limited nature of this type of
information regarding the certificates may adversely affect the liquidity of the
certificates, even if a secondary market for the certificates becomes available.
The primary source of information available to investors concerning the
Class A Certificates will be the monthly statements discussed in the prospectus
under "Description of the Securities--Reports to Securityholders," which will
include information as to the outstanding principal balance of the Class A
Certificates. There can be no assurance that any additional information
regarding the Class A Certificates will be available through any other source.
In addition, the depositor is not aware of any source through which price
information about the Class A Certificates will be available on an ongoing
basis. The limited nature of this information regarding the Class A Certificates
may adversely affect the liquidity of the Class A Certificates, even if a
secondary market for the Class A Certificates becomes available.
LEGAL OPINIONS
[Certain legal matters with respect to the servicer and the seller will be
passed upon by the servicer and the seller by the General Counsel to GMAC
Mortgage Corporation.] Certain legal matters relating to the certificates will
be passed upon for the depositor by __________, and for the underwriter
by_________________,_____________ .
EXPERTS
The consolidated financial statements of [financial guaranty insurer]
____________ [and subsidiaries], as of December 31, [199_] and [199_] and for
each of the years in the three-year period ended December 31, [199_] are
incorporated by reference in this prospectus supplement and in the registration
statement in reliance upon the report of _________, independent certified public
accountants, incorporated by reference in this prospectus supplement, and upon
the authority of __________ as experts in accounting and auditing.
RATINGS
It is a condition of the issuance of the Class A Certificates that they be
rated "AAA" by _____________________ and _______________________.
[ __________________'s ratings on mortgage pass-through certificates
address the likelihood of the receipt by certificateholders of payments required
under the pooling and servicing agreement. _______________'s ratings take into
consideration the credit quality of the mortgage pool, structural and legal
aspects associated with the certificates, and the extent to which the payment
stream in the mortgage pool is adequate to make payments required under the
certificates. _____________________ 's rating on the certificates does not,
however, constitute a statement regarding frequency of prepayments on the
mortgages. See "Certain Yield and Prepayment Considerations" in this prospectus
supplement. In addition, the ratings do not address the likelihood of the
receipt of any amounts in respect of Prepayment Interest Shortfalls.
The ratings assigned by _____________ to mortgage pass-through certificates
address the likelihood of the receipt by certificateholders of all distributions
to which they are entitled under the transaction structure. ________________ 's
ratings reflect its analysis of the riskiness of the underlying mortgage loans
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and the structure of the transaction as described in the operative documents. 's
ratings do not address the effect on the certificates' yield attributable to
prepayments or recoveries on the underlying mortgage loans . In addition, the
ratings do not address the likelihood of the receipt of any amounts in respect
of Prepayment Interest Shortfalls.
The depositor has not requested a rating on the Class A Certificates by any
rating agency other than ______________and ______________. However, there can be
no assurance as to whether any other rating agency will rate the Class A
Certificates, or, if it does, what rating would be assigned by any other rating
agency. A rating on the Certificates by another rating agency, if assigned at
all, may be lower than the ratings assigned to the Class A Certificates
by_______________ and _________________.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating. In the event that the ratings
initially assigned to the Class A Certificates are subsequently lowered for any
reason, no person or entity is obligated to provide any additional support or
credit enhancement with respect to the Class A Certificates.
LEGAL INVESTMENT
The Class A Certificates will not constitute "mortgage related
securities" for purposes of SMMEA because the mortgage pool includes mortgage
loans that are secured by subordinate liens on the related mortgage properties.
One or more classes of the Class A Certificates may be viewed as
"complex securities" under TB13a, which applies to thrift institutions regulated
by the OTS.
The depositor makes no representations as to the proper characterization
of any class of the Class A Certificates for legal investment or other purposes,
or as to the ability of particular investors to purchase any class of the Class
A Certificates under applicable legal investment restrictions. These
uncertainties may adversely affect the liquidity of any class of Class A
Certificates. Accordingly, all investors whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their legal advisors in
determining whether and to what extent any class of the Class A Certificates
constitutes a legal investment or is subject to investment, capital or other
restrictions.
See "Legal Investment Matters" in the prospectus.
ERISA CONSIDERATIONS
A fiduciary of any ERISA plan, any insurance company, whether through
its general or separate accounts, or any other person investing ERISA plan
assets, as defined under "ERISA Considerations--Plan Asset Regulations" in the
prospectus, should carefully review with its legal advisors whether the purchase
or holding of Class A Certificates could give rise to a transaction prohibited
or not otherwise permissible under ERISA or Section 4975 of the Internal Revenue
Code. The purchase or holding of the Class A Certificates by or on behalf of an
ERISA plan or with ERISA plan assets may qualify for exemptive relief under the
Issuer Exemption, as described under "ERISA Considerations--Considerations for
ERISA Plans Regarding the Purchase of Certificates--Prohibited Transaction
Exemptions" in the prospectus. However, the Issuer Exemption contains a number
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of conditions which must be met for the exemption to apply, including the
requirement that any ERISA plan must be an "accredited investor" as defined in
Rule 501(a)(1) of Regulation D of the Commission under the Securities Act.
Insurance companies contemplating the investment of general account
assets in the Class A Certificates should consult with their legal advisors with
respect to the applicability of Section 401(c) of ERISA, as described under
"ERISA Considerations-- Considerations for ERISA Plans Regarding the Purchase of
Certificates--Insurance Company General Accounts" in the prospectus. The DOL
issued final regulations under Section 401(c) on January 4, 2000, but these
final regulations are not generally applicable until July 5, 2001.
Any fiduciary or other investor of ERISA plan assets that proposes to
acquire or hold the Class A Certificates on behalf of an ERISA plan or with
ERISA plan assets should consult with its counsel with respect to: (i) whether
the specific and general conditions and the other requirements of the Issuer
Exemption would be satisfied, or whether any other prohibited transaction
exemption would apply, and (ii) the potential applicability of the general
fiduciary responsibility provisions of ERISA and the prohibited transaction
provisions of ERISA and Section 4975 of the Internal Revenue Code to the
proposed investment. See "ERISA Considerations" in the prospectus.
The sale of any of the Class A Certificates to an ERISA plan is in no
respect a representation by the depositor or the underwriter that such an
investment meets all relevant legal requirements relating to investments by
ERISA plans generally or any particular ERISA plan, or that such an investment
is appropriate for ERISA plans generally or any particular ERISA plan.
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Residential Asset Mortgage Products, Inc.
$__________________
Mortgage Asset-Backed Pass-Through Certificates
Series 200_ - GMACM_
Prospectus supplement
[Name of Underwriter]
Underwriter
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the prospectus. We have not authorized anyone
to provide you with different information.
We are not offering the certificates offered hereby in any state where the offer
is not permitted.
Dealers will be required to deliver a prospectus supplement and prospectus when
acting as underwriters of the certificates offered hereby and with respect to
their unsold allotments or subscriptions. In addition, all dealers selling the
offered certificates, whether or not participating in this offering, may be
required to deliver a prospectus supplement and prospectus until _______,_____ .
<PAGE>
