<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
______________________________
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File Number 33-53016
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1995-1
ISSUE DATE: FEBRUARY 27, 1995
(Exact name of the registrant as specified in charter)
Delaware 36-4012443
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
75 NORTH FAIRWAY DRIVE
VERNON HILLS, ILLINOIS 60061
Registrant's telephone number, including area code:
(847) 549-6500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ] Not applicable.
<PAGE>
Registrant has not been involved in bankruptcy proceedings during the
preceding five years and is not reporting as a corporate issuer.
Part I
------
Item 1. Business. Not applicable.
------ --------
Item 2. Properties.
------ ----------
The Registrant furnishes information regarding the mortgaged properties by
reference to the annual report (the "Annual Report") filed under Item 14
hereof and attached hereto as Exhibit 99.1. Page 3 of the Annual Report pro-
vides the number and aggregate principal balance of delinquent or fore-
closed mortgage loans as well as the available special hazard, bankruptcy
and fraud coverage available to certain Certificates.
Item 3. Legal Proceedings.
------ -----------------
There are no material pending legal proceedings involving either the Mortgage
Pool or the Trustee or the Registrant with respect to the Mortgage Pool,
other than ordinary routine litigation incidental to the Trustee's or the
Registrant's duties under the Pooling and Servicing Agreement.
Item 4. Submission of Matters to a Vote of Security Holders.
------ ---------------------------------------------------
No vote or consent of Certificateholders has been solicited for any purpose
during the fourth quarter of the fiscal year covered by this report.
Part II
-------
Item 5. Market for Registrant's Common Equity and Related Stockholder
------ -------------------------------------------------------------
Matters. Not applicable.
- -------
Item 6. Selected Financial Data. Not applicable.
------ -----------------------
Item 7. Management's Discussion and Analysis of Financial Condition and
------ ---------------------------------------------------------------
Results of Operation. Not applicable.
- --------------------
Item 8. Financial Statements and Supplementary Data. Not applicable.
------ -------------------------------------------
Item 9. Changes in and Disagreements With Accountants on Accounting and
------ ---------------------------------------------------------------
Financial Disclosure. No material disagreement concerning accounting proce-
- --------------------
dures or change of accountants has occurred.
<PAGE>
Part III
--------
Item 10. Directors and Executive Officers of the Registrant. Not
------- --------------------------------------------------
applicable.
Item 11. Executive Compensation. Not applicable.
------- ----------------------
Item 12. Security Ownership of Certain Beneficial Owners and Manage-
------- -----------------------------------------------------------
ment. As of December 31, 1996, the following persons were known to the
- ----
Registrant to be the registered beneficial owners of more than 5% of the
aggregate fractional undivided interest evidenced by any publicly offered
Certificates:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and Address Amount and Nature of Percent of
Title of Class of Beneficial Owner Beneficial Ownership Class
- -------------- ------------------- -------------------- -----------
<S> <C> <C> <C>
Mortgage Chase Manhattan Bank $ 20,000,000.00 88.89
Pass-Through Two Chase Manhattan
Certificates, Plaza, 5th Floor
Class A-2 New York, NY 10081
Mortgage Northern Trust $ 2,500,000.00 11.11
Pass-Through Company
Certificates, 801 S. Canal C-In
Class A-2 Chicago, IL 60607
Mortgage Citicorp Services, $ 14,812,000.00 100
Pass-Through PO Box 30576
Certificates, Tampa, FL 33630-3576
Class A-3
Mortgage The Bank of New York $ 13,258,000.00 100
Pass-Through 925 Patterson Plank Rd.
Certificates, Secaucus, NJ 07094
Class A-4
</TABLE>
<PAGE>
Item 13. Certain Relationships and Related Transactions. Not applicable.
------- ----------------------------------------------
Part IV
-------
Item 14. Financial Statements, Exhibits Filed, and Reports on Form 8-K.
------- -------------------------------------------------------------
EX-99.1 Report on the mortgaged properties filed under Part I, Item 2.
EX-99.2 Report of Ernst & Young regarding Master Servicer's servicing
activities, prepared pursuant to the Pooling and Servicing
Agreement.
The Registrant has filed a Report on Form 8-K on or before the tenth
day of each month during the last quarter of the period covered by this
report. Each such Report on Form 8-K described distributions made to
Certificateholders on the Distribution Date occurring in the month pre-
ceding the month in which such Report on Form 8-K was filed, as well as
provided certain information regarding delinquent Mortgage Loans and credit
enhancements as of such Distribution Date.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements for Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PNC MORTGAGE SECURITIES CORP.
as Sponsor
(Registrant)
March 28, 1997 By: \s\Thomas G. Lehmann Vice President
--------------------
Thomas G. Lehmann
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Signatures Title
- ---- ---------- -----
Principal Executive Officers and Directors:
March 28, 1997 \s\Saiyid T. Naqvi President and Director
------------------
Saiyid T. Naqvi
March 28, 1997 \s\Alexander T. Topping, Jr. Director and Senior
----------------------------- Vice President
Alexander T. Topping, Jr.
Principal Financial Officer and Director:
March 28, 1997 \s\Douglas H. Burr Director, Senior Vice
------------------- President and Chief
Douglas H. Burr Financial Officer
Principal Accounting Officer:
March 28, 1997 \s\John W. Lauber Vice President and
----------------- Controller
John W. Lauber
<PAGE>
PNC MORTGAGE SECURITIES CORP.
MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1995-1
Annual Accounting Report Reference Sheet
----------------------------------------
The Annual Accounting Report discloses relevant Mortgage Pool information for
each month of the current reporting year as well as aggregates of such infor-
mation for the reporting year. The descriptions below refer primarily to
the aggregate information which is located in the "Total" column on page two
of the report.
SECTION A ("BALANCES FROM LAST FISCAL MONTH-END")
Carries forward the loan count and the aggregate principal balance of the
Mortgage Pool from the previous Annual Report.
SECTION B ("PRINCIPAL POOL COLLECTIONS")
Shows detailed information regarding principal collections on the mortgage
loans. The line "Scheduled Principal Collected Due Current Month" repre-
sents the current year's aggregate principal installments applied to the
Certificate Principal Balance. The line "Unscheduled Principal Collections/
Reversals" represents partial prepayments of principal (curtailments) applied
or reversed in the current year. The line "Liquidations-in-Full" represents
the proceeds of prepaid mortgage loans and foreclosed mortgage loans, as
well as insurance proceeds applied to liquidate defaulted mortgage loans.
The lines "Principal Balance Sale Adjustments" represent adjustments to
original Certificate Principal Balances purchased by the Certificateholders
resulting from incorrect data supplied by the Seller/Servicers at the Mortgage
Pool origination. The line "Net Principal Distributed" represents the actual
distribution to Certificateholders respecting principal applied to the Certi-
ficate Principal Balance.
SECTION C ("CAPITAL LOSS")
Shows the amount of principal written off as a result of receiving sale and
insurance proceeds on acquired property insufficient to cover the outstanding
principal balance of the mortgage loan at the time of liquidation.
SECTION D ("BALANCE CURRENT FISCAL MONTH-END")
Provides the outstanding Mortgage Pool Principal Balance reported in dollars
at the close of the current fiscal year.
<PAGE>
SECTION E ("SCHEDULED INTEREST AT MORTGAGE RATE")
Shows scheduled interest collections. The fiscal year's aggregate interest
installments at the pass-through rate due on the Certificate Principal
Balance outstanding at the beginning of each fiscal month is shown under
the appropriate column. The actual amount of interest distributed for the
current fiscal year after the rounding adjustment is shown in the "Total"
column.
SECTION F ("UNSCHEDULED INTEREST AT MORTGAGE RATE")
Provides detailed information regarding interest collections or reversals
other than the scheduled interest collections. The line "Unscheduled
Interest Collections/Reversals" represents interest collected or reversals
of previous interest applications. The lines "Interest Sale Adjustments"
represent the interest, at the pass-through rate, applicable to the Certi-
ficate Principal Balance increased, or the Certificate Principal Balance
decreased, as reported in Section B. The line "Interest Accrual Adjustment"
represents adjustments to the scheduled interest resulting from the appli-
cation of the partial prepayment of principal (curtailment) before the
installment due in any one fiscal month during the current fiscal year.
The line "Interest Uncollected on Liquidation" represents that portion of
the accrued interest (based on a 30 day month) that was not collected as
a result of a liquidation-in-full in the current fiscal year. The line
"Interest Uncollected on Non-Earning Assets" represents the interest accrued
but not collected as a result of a mortgage loan in a non-earning (non
accruing) status. The line "Net Unscheduled Interest Distributed" represents
the actual distribution of unscheduled items to Certificateholders.
SCHEDULE G ("OTHER")
Provides detailed information regarding collections of mortgage loan conversion
fees, expense reimbursements, i.e., property preservation expenses, etc., gains
on liquidated mortgage loans and hazard insurance premium refunds as a result
of a liquidations-in-full on defaulted mortgage loans.
SECTION H ("SCHEDULED SERVICING FEE EXPENSES")
Provides a break-down of servicing fees payable to PNC Mortgage Securities
Corp. and Seller/Servicers, representing the difference between interest
collected at the mortgage rates and interest passed through to Certifi-
cateholders at the pass-through rate (see Section E).
SECTION I ("UNSCHEDULED SERVICING FEES")
Provides detailed information on servicing fees directly related to the funds
reported under "Unscheduled Interest at Mortgage Rate" (Section F).
<PAGE>
SECTION J ("MISCELLANEOUS EXPENSES")
Shows the amount of expenses reimbursed to PNC Mortgage Securities Corp. and
Seller/Servicers for expenditures resulting from mortgage loans in foreclo-
sure, i.e., attorney fees, trustee fees, property preservation expenses,
etc., which are reimbursable under the terms of the Pooling and Servicing
Agreement. The expenses will not be reimbursed until all proceeds
available from primary mortgage insurance, if any, have been deposited to
the certificate account.
SECTION K ("NET FUNDS DISTRIBUTED")
Provides the aggregate amount distributed to Certificateholders for the
current fiscal year.
SECTION L ("MEMO ITEMS")
Provides a breakdown of Seller/Servicer compensation resulting from collection
of late charges, prepayment fees, and other miscellaneous fees; and of
advances of principal and interest made by Seller/Servicers and PNC
Mortgage Securities Corp.
SECTION M ("INSURANCE RESERVES")
Provides certain information regarding the status of the credit, special
hazard, bankruptcy and fraud support established for certain Certificates.
SECTION N ("DELINQUENT INSTALLMENTS")
Provides certain information regarding delinquent mortgage loans as of the
calendar year end.
<PAGE>
<TABLE>
PNC SERIES 1995-1 (1369) EXHIBIT 99.1
FISCAL 1996
<CAPTION>
JANUARY FEBRUARY MARCH APRIL MAY
<S> <C> <C> <C> <C> <C>
ISSUE DATE: 02/27/1995
CERTIFICATE BALANCE AT
ISSUE: $116,318,874.96
BALANCES FROM LAST FISCAL
MONTH-END:
PRINCIPAL DOLLARS $97,305,626.01 $93,871,872.93 $90,656,664.43 $86,584,257.84 $84,837,233.36
UNITS 357 348 335 320 314
PRINCIPAL POOL COLLECTIONS:
SCHEDULED PRINCIPAL COLLECTED
DUE CURRENT MONTH 70,784.15 69,582.55 68,179.80 65,931.15 65,277.00
UNSCHEDULED PRINCIPAL COLLEC-
TION/REVERSALS 41,183.50 21,923.67 18,419.99 16,231.39 13,253.70
LIQUIDATIONS-IN-FULL 3,321,785.43 3,123,702.28 3,985,806.80 1,664,861.94 1,721,709.90
PRINCIPAL BALANCE SALE ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
NET PRINCIPAL DISTRIBUTED 3,433,753.08 3,215,208.50 4,072,406.59 1,747,024.48 1,800,240.60
CAPITAL LOSS (PRINCIPAL WRITTEN OFF) 0.00 0.00 0.00 0.00 0.00
BALANCES CURRENT FISCAL MONTH-END:
PRINCIPAL DOLLARS 93,871,872.93 90,656,664.43 86,584,275.84 84,837,233.36 83,036,992.76
UNITS 348 335 320 314 308
SCHEDULED INTEREST AT MORTGAGE RATE: 702,717.22 676,653.73 652,609.22 622,092.54 609,075.91
UNSCHEDULED INTEREST AT MORTGAGE RATE:
UNSCHEDULED INTEREST COLLECTION/
REVERSALS 1.39 2.16 (0.13) 0.29 0.00
INTEREST SALE ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
INTEREST ACCRUAL ADJUSTMENT 0.00 0.00 0.00 0.00 0.00
INTEREST UNCOLLECTED ON LIQUIDA-
TION 0.00 0.00 0.00 0.00 0.00
INTEREST UNCOLLECTED ON NON-
EARNING ASSETS 0.00 0.00 0.00 0.00 0.00
NET UNSCHEDULED INTEREST
DISTRIBUTED 1.39 2.16 (0.13) 0.29 0.00
OTHER:
LOAN CONVERSION FEE 0.00 0.00 0.00 0.00 0.00
EXPENSE REIMBURSEMENTS 0.00 0.00 0.00 0.00 0.00
GAIN ON LIQUIDATIONS 0.00 0.00 0.00 0.00 0.00
HAZARD INSURANCE PREMIUM REFUNDS 0.00 0.00 0.00 0.00 0.00
NET OTHER DISTRIBUTIONS 0.00 0.00 0.00 0.00 0.00
SCHEDULED SERVICING FEE EXPENSES: 22,694.92 21,902.20 21,150.89 20,184.83 19,778.67
UNSCHEDULED SERVICING FEES:
UNSCHEDULED SERVICE FEE COLLEC-
TIONS/REVERSALS 0.05 0.05 0.00 0.01 0.00
SERVICING FEES SALE ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
SERVICING FEES ACCRUAL ADJUST-
MENTS 0.00 0.00 0.00 0.00 0.00
SERVICING FEES UNCOLLECTED ON
LIQUIDATIONS 0.00 0.00 0.00 0.00 0.00
SERVICING FEES UNCOLLECTED -
NON-EARNING ASSETS 0.00 0.00 0.00 0.00 0.00
NET UNSCHEDULED SERVICING FEE
DISTRIBUTED 0.05 0.05 0.00 0.01 0.00
MISCELLANEOUS EXPENSES: 0.00 0.00 0.00 0.00 0.00
NET FUNDS DISTRIBUTED 4,113,776.72 3,869,962.14 4,703,864.79 2,348,932.47 2,389,537.84
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
JUNE JULY AUGUST SEPTEMBER OCTOBER
<S> <C> <C> <C> <C> <C>
ISSUE DATE: 02/27/1995
CERTIFICATE BALANCE AT
ISSUE: $116,318,874.96
BALANCES FROM LAST FISCAL
MONTH-END:
PRINCIPAL DOLLARS $83,036,992.76 $81,493,600.28 $80,947,242.22 $79,394,648.68 $78,174,399.82
UNITS 308 304 302 297 292
PRINCIPAL POOL COLLECTIONS:
SCHEDULED PRINCIPAL
COLLECTED DUE CURRENT MONTH 64,693.15 64,394.15 64,680.81 63,516.03 63,394.62
UNSCHEDULED PRINCIPAL COLLECTION/
REVERSALS 34,101.96 19,967.10 20,409.50 16,783.34 57,811.17
LIQUIDATIONS-IN-FULL 1,444,597.37 461,996.81 1,467,503.23 1,139,949.59 345,094.63
PRINCIPAL BALANCE SALE ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
NET PRINCIPAL DISTRIBUTED 1,543,392.48 546,358.06 1,552,593.54 1,220,248.86 466,300.42
CAPITAL LOSS (PRINCIPAL WRITTEN OFF) 0.00 0.00 0.00 0.00 0.00
BALANCES CURRENT FISCAL MONTH-END:
PRINCIPAL DOLLARS 81,493,600.28 80,947,242.22 79,394,648.68 78,174,399.82 77,708,099.40
UNITS 304 302 297 292 291
SCHEDULED INTEREST AT MORTGAGE RATE: 595,204.06 583,869.94 579,848.27 568,029.22 558,471.55
UNSCHEDULED INTEREST AT MORTGAGE RATE:
UNSCHEDULED INTEREST COLLECTION/
REVERSALS 0.00 0.00 0.00 92.71 7.34
INTEREST SALE ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
INTEREST ACCRUAL ADJUSTMENT 0.00 0.00 0.00 0.00 0.00
INTEREST UNCOLLECTED ON LIQUIDA-
TION 0.00 0.00 0.00 0.00 0.00
INTEREST UNCOLLECTED ON NON-
EARNING ASSETS 0.00 0.00 0.00 0.00 0.00
NET UNSCHEDULED INTEREST
DISTRIBUTED 0.00 0.00 0.00 92.71 7.34
OTHER:
LOAN CONVERSION FEE 0.00 0.00 0.00 0.00 0.00
EXPENSE REIMBURSEMENTS 0.00 0.00 0.00 0.00 0.00
GAIN ON LIQUIDATIONS 0.00 0.00 0.00 0.00 0.00
HAZARD INSURANCE PREMIUM REFUNDS 0.00 0.00 0.00 0.00 0.00
NET OTHER DISTRIBUTIONS 0.00 0.00 0.00 0.00 0.00
SCHEDULED SERVICING FEE EXPENSES: 19,376.33 19,005.51 18,874.15 18,509.03 18,235.40
UNSCHEDULED SERVICING FEES:
UNSCHEDULED SERVICE FEE COLLEC-
TIONS/REVERSALS 0.00 0.00 0.00 2.55 0.23
SERVICING FEES SALE ADJUSTMENTS 0.00 0.00 0.00 0.00 0.00
SERVICING FEES ACCRUAL ADJUST-
MENTS 0.00 0.00 0.00 0.00 0.00
SERVICING FEES UNCOLLECTED ON
LIQUIDATIONS 0.00 0.00 0.00 0.00 0.00
SERVICING FEES UNCOLLECTED -
NON-EARNING ASSETS 0.00 0.00 0.00 0.00 0.00
NET UNSCHEDULED SERVICING FEE
DISTRIBUTED 0.00 0.00 0.00 2.55 0.23
MISCELLANEOUS EXPENSES: 0.00 0.00 0.00 0.00 0.00
NET FUNDS DISTRIBUTED 2,119,220.21 1,111,222.49 2,113,576.66 1,769,859.21 1,006,543.68
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOVEMBER DECEMBER TOTAL
<S> <C> <C> <C>
ISSUE DATE: 02/27/1995
CERTIFICATE BALANCE AT
ISSUE: $116,318,874.96
BALANCES FROM LAST FISCAL
MONTH-END:
PRINCIPAL DOLLARS $77,708,099.40 0.00 $116,318,874.96
UNITS 291 0 418
PRINCIPAL POOL COLLECTIONS:
SCHEDULED PRINCIPAL
COLLECTED DUE CURRENT MONTH 64,013.15 0.00 74,266.48
UNSCHEDULED PRINCIPAL COLLECTION/
REVERSALS 36,809.04 0.00 18,318.80
LIQUIDATIONS-IN-FULL 1,055,327.15 0.00 0.00
PRINCIPAL BALANCE SALE ADJUSTMENTS 0.00 0.00 0.00
NET PRINCIPAL DISTRIBUTED 1,156,149.34 0.00 92,585.28
CAPITAL LOSS (PRINCIPAL WRITTEN OFF) 0.00 0.00 0.00
BALANCES CURRENT FISCAL MONTH-END:
PRINCIPAL DOLLARS 76,551,950.06 0.00 116,226,289.68
UNITS 289 0 418
SCHEDULED INTEREST AT MORTGAGE RATE: 554,918.48 0.00 848,486.15
UNSCHEDULED INTEREST AT MORTGAGE RATE:
UNSCHEDULED INTEREST COLLECTION/
REVERSALS 0.00 0.00 (3.88)
INTEREST SALE ADJUSTMENTS 0.00 0.00 0.00
INTEREST ACCRUAL ADJUSTMENT 0.00 0.00 0.00
INTEREST UNCOLLECTED ON LIQUIDA-
TION 0.00 0.00 0.00
INTEREST UNCOLLECTED ON NON-
EARNING ASSETS 0.00 0.00 0.00
NET UNSCHEDULED INTEREST
DISTRIBUTED 0.00 0.00 (3.88)
OTHER:
LOAN CONVERSION FEE 0.00 0.00 0.00
EXPENSE REIMBURSEMENTS 0.00 0.00 0.00
GAIN ON LIQUIDATIONS 0.00 0.00 0.00
HAZARD INSURANCE PREMIUM REFUNDS 0.00 0.00 0.00
NET OTHER DISTRIBUTIONS 0.00 0.00 0.00
SCHEDULED SERVICING FEE EXPENSES: 18,125.76 0.00 27,133.75
UNSCHEDULED SERVICING FEES:
UNSCHEDULED SERVICE FEE COLLEC-
TIONS/REVERSALS 0.00 0.00 0.00
SERVICING FEES SALE ADJUSTMENTS 0.00 0.00 0.00
SERVICING FEES ACCRUAL ADJUST-
MENTS 0.00 0.00 0.00
SERVICING FEES UNCOLLECTED ON
LIQUIDATIONS 0.00 0.00 0.00
SERVICING FEES UNCOLLECTED -
NON-EARNING ASSETS 0.00 0.00 0.00
NET UNSCHEDULED SERVICING FEE
DISTRIBUTED 0.00 0.00 0.00
MISCELLANEOUS EXPENSES: 0.00 0.00 0.00
NET FUNDS DISTRIBUTED 1,692,942.06 0.00 913,933.80
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PNC MORTGAGE SECURITIES CORP.
MASTER SERVICING
MORTGAGE PASS-THROUGH CERTIFICATES
12/1996 DISTRIBUTION REPORT
PROCESSING MONTH: 11/1996
SERIES 1995-1 (1369) WEIGHTED AVERAGE PC RATE: 8.2818
- ----------------------------------------------------------------------------------------
MEMO ITEMS
-----------
MEMO INCOME/EXPENSES TO SERVICERS ISSUER P & I ADVANCES:
- --------------------------------- -----------------------------------
<S> <C> <C> <C>
Late Charges $0.00 Beginning Advance Balance $0.00
Prepayment Fees $0.00 New Advances $0.00
Miscellaneous Fees $0.00 Advances Recovered $0.00
Ending Advance Balances $0.00
<CAPTION>
INSURANCE RESERVES*
- -------------------
COVERAGE
INSURANCE TYPE ORIGINAL BALANCE CLAIMS IN PROGRESS CLAIMS PAID ADJUSTMENTS REMAINING
-------------- ---------------- ------------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
MPI $0.00 $0.00 $0.00 $0.00 $0.00
SPECIAL HAZARD $1,694,642.00 $0.00 $0.00 $0.00 $1,694,642.00
BANKRUPTCY BOND
SINGLE-UNITS $100,000.00 $0.00 $0.00 $0.00 $100,000.00
MULTI-UNITS $0.00 $0.00 $0.00 $0.00 $0.00
MORTGAGE
REPURCHASE $2,326,378.00 $0.00 $0.00 $0.00 $2,326,378.00
<CAPTION>
DELINQUENT INSTALLMENTS
- -----------------------
ONE TWO THREE
----------------------- ---------------------- ----------------------
COUNT PRIN BALANCE COUNT PRIN BALANCE COUNT PRIN BALANCE
----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
4 $940,183.91 0 $0.00 0 $0.00
IN FORECLOSURE ACQUIRED
----------------------- ----------------------
COUNT PRIN BALANCE COUNT PRIN BALANCE
----------------------- ----------------------
<S> <C> <C> <C>
2 $479,791.64 0 $0.00
</TABLE>
The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates (the "Class B Certificates") provide credit support, special
hazard, bankruptcy and fraud coverage to the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates (the "Senior Certificates") to the extent
described in the prospectus supplement (the "Prospectus Supplement") pursuant
to which the Senior Certificates, other than the Class A-5 Certificates, were
offered.
The Class Principal Balances of the Class B Certificates immediately after the
principal and interest distribution on December 26, 1996 are as follows:
<TABLE>
<CAPTION>
CLASS CLASS PRINCIPAL BALANCE
<S> <C>
B-1 $2,861,805.55
B-2 $2,289,424.82
B-3 $1,430,853.60
B-4 $972,929.25
B-5 $228,912.95
B-6 $801,705.84
</TABLE>
The amount of special hazard, bankruptcy and fraud coverage is $1,694,642,
$100,000, and $2,326,378, respectively.
<PAGE>
Exhibit 99.2
[Ernst & Young LLP Letterhead]
Report of Independent Auditors on Agreement With
First Bank National Association
Audit Committee
PNC Bank Corp.
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of PNC Bank Corp. and subsidiaries
(including PNC Mortgage Securities Corp. (PNCMSC)) as of and for the year
ended December 31, 1996, and have issued our report thereon dated
January 24, 1997.
In connection with our audit of the consolidated financial statements
referred to above, nothing came to our attention that caused us to believe
that PNCMSC failed to comply with the terms, covenants, provisions, or
conditions of the sections of the agreements between PNCMSC and First
Bank National Association (First Bank), as listed for each series of
certificates described in the accompanying schedule, insofar as they relate
to accounting matters. However, our audit of the consolidated financial
statements was not directed primarily toward obtaining knowledge of such
noncompliance.
This report is intended solely for the use and information of the audit
committee, management, and First Bank, acting as trustee or custodian, as
applicable, and should not be used for any other purpose. However, this
report may become a matter of public record as a result of being included as
an exhibit to certain Form 10-Ks that are prepared by PNCMSC and filed with
the Securities and Exchange Commission on behalf of the trusts that are
established in connection with the series of certificates listed on the
accompanying schedule.
\s\Ernst & Young LLP
--------------------
January 24, 1997
Ernst & Young LLP is a member of Ernst & Young International, Ltd.
<PAGE>
<TABLE>
<CAPTION>
Schedule of Agreements With
First Bank National Association
Description Sections
- ----------- --------
<S> <C>
PARTICIPATION AND SERVICING AGREEMENT, Participation (a)
Certificates Conventional Residential Fixed Rate
Mortgage Loans, Series 1993-PA2b, Dated as of November
1, 1993.
POOLING AND SERVICING AGREEMENT, $151,911,197.42, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1993-12, Cut-Off Date: December 1, 1993. 3.11, 3.12,
3.13
POOLING AND SERVICING AGREEMENT, $230,592,119.02, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1994-1 (Certificate Trust), Mortgage Trust 3.11, 3.12,
Pass-Through Certificates, Series 1994-1 (Mortgage Trust), 3.13
Cut-Off Date: January 1, 1994.
POOLING AND SERVICING AGREEMENT, $139,416,667.25, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1994-2, Cut-Off Date: April 1, 1994. 3.11, 3.12,
3.13
POOLING AND SERVICING AGREEMENT, $293,549,022.70, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1994-3, Cut-Off Date: July 1, 1994. 3.11, 3.12,
3.13
POOLING AND SERVICING AGREEMENT, $71,005,304.01, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1994-4, Cut-Off Date: August 1, 1994. 3.11, 3.12,
3.13
PARTICIPATION AND SERVICING AGREEMENT, Dated as of (a)
February 1, 1994, Series 1994 PA-1, Mortgage Participa-
tion Certificates, Closing Date: February 18, 1994,
Cut-Off Date: February 1, 1994.
PARTICIPATION AND SERVICING AGREEMENT, Dated as of (a)
July 1, 1994, Series 1994 PA-2, Mortgage Participation
Certificates.
POOLING AND SERVICING AGREEMENT, $116,318,874.96, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1995-1, Cut-Off Date: February 1, 1995. 3.11, 3.12,
3.13
POOLING AND SERVICING AGREEMENT, $269,988,933.11, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1995-2 (Certificate Trust), Mortgage Trust 3.11, 3.12,
Pass-Through Certificates, Series 1995-2 (Mortgage Trust), 3.13
Cut-Off Date: September 1, 1995.
PARTICIPATION AND SERVICING AGREEMENT, Dated as of June (a)
1, 1995, Series 1995 PA-1, Mortgage Participation Certi-
ficates, Closing Date: June 30, 1995, Cut-Off Date:
June 1, 1995.
PARTICIPATION AND SERVICING AGREEMENT, Dated as of (a)
October 1, 1995, Series 1995 PA-2, Mortgage Participation
Certificates, Closing Date: October 31, 1995, Cut-Off
Date: October 1, 1995.
POOLING AND SERVICING AGREEMENT, $68,101,510.34, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1995 PR-1, Cut-Off Date: September 1, 1995. 3.11, 3.12,
3.13
POOLING AND SERVICING AGREEMENT, $79,829,153.84, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1995-3, Cut-Off Date: November 1, 1995. 3.11, 3.12,
3.13
POOLING AND SERVICING AGREEMENT, $86,542,998.26, PNC 3.02, 3.03,
Mortgage Securities Corp., Mortgage Pass-Through Certifi- 3.04, 3.05,
cates, Series 1996-2, Cut-Off Date: June 1, 1996. 3.11, 3.12
3.13
</TABLE>
(a) Servicing in compliance with the terms of this agreement.
