CLAYTON HOMES INC, 424B5, 1996-10-23

CLAYTON HOMES INC
424B5, 1996-10-23
MOBILE HOMES

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Registration File No. 333-14033
Rule 424(b)(5)
Prospectus Supplement
(To Prospectus dated October 18, 1996)
$124,221,000 (APPROXIMATE)
VANDERBILT MORTGAGE AND FINANCE, INC.
SELLER AND SERVICER
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES, SERIES 1996C
$28,800,000 (APPROXIMATE) CLASS A-1
$27,300,000 (APPROXIMATE) CLASS A-2
$19,100,000 (APPROXIMATE) CLASS A-3
$11,800,000 (APPROXIMATE) CLASS A-4
$15,481,000 (APPROXIMATE) CLASS A-5
$9,938,000 (APPROXIMATE) CLASS A-6
$6,833,000 (APPROXIMATE) CLASS B-1
$4,969,000 (APPROXIMATE) CLASS B-2

(Principal and interest payable on the 7th day of each month, beginning
November 1996)

The Manufactured Housing Contract Senior/Subordinate Pass-Through
Certificates, Series 1996C (the "Certificates") will represent interests in
a trust fund (the "Trust Fund") consisting of a pool (the "Contract Pool")
of manufactured housing installment sales contracts and installment loan
agreements (the "Contracts") and certain related property conveyed by
Vanderbilt Mortgage and Finance, Inc. (the "Company"). The Company will
serve as servicer of the Contracts (together with any successor servicer,
herein referred to as the "Servicer"). The Contracts were originated or
purchased by the Company in the ordinary course of its business. The term
"Approximate," with respect to the aggregate principal amount of any
Certificates, means that the amount is subject to a permitted variance of
plus or minus 5%. Terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Prospectus, dated October
18, 1996, attached hereto (the "Prospectus").
(Continued on next page)
/________________/
CERTAIN FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
CERTIFICATES. SEE "RISK FACTORS" HEREIN AND IN THE PROSPECTUS.
THE OFFERED CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS
OF THE COMPANY OR ANY OF ITS AFFILIATES. THE OFFERED CERTIFICATES WILL NOT
BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY, THE
UNDERWRITERS OR ANY OF THEIR AFFILIATES OR THE COMPANY OR, EXCEPT FOR THE
LIMITED GUARANTEE APPLICABLE TO THE CLASS B-2 CERTIFICATES, ANY OF ITS
AFFILIATES, AND, EXCEPT FOR PAYMENTS, IF ANY, UNDER THE LIMITED GUARANTEE OR
ALTERNATE CREDIT ENHANCEMENT IN RESPECT OF THE CLASS B-2 CERTIFICATES, WILL
BE PAYABLE ONLY FROM COLLECTIONS ON THE CONTRACTS AS DESCRIBED HEREIN.
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION> Price to Underwriting Proceeds to
Public(1) Discount Company(1)(2)
<S> <C> <C> <C>
Class A-1 100.000000% 0.35% 99.650000%
Certificates . . . .

Class A-2 99.953125% 0.35% 99.603125%
Certificates . . . .

Class A-3 99.953125% 0.35% 99.603125%
Certificates . . . .

Class A-4 99.984375% 0.35% 99.634375%
Certificates . . . .

Class A-5 99.937500% 0.35% 99.587500%
Certificates . . . .

Class A-6 99.953125% 0.35% 99.603125%
Certificates . . . .

Class B-1 100.000000% 0.50% 99.500000%
Certificates . . . .

Class B-2 99.859375% 0.50% 99.359375%
Certificates . . . .

Total . . . . . . .
$124,176,085 $452,476 $123,723,608

</TABLE>

(1) Plus accrued interest, if any, at the applicable rate
from September 26, 1996.
(2) Before deducting expenses, estimated to be $250,000.

The Offered Certificates will be purchased by the Underwriters from the
Company and will be offered by the Underwriters from time to time to the
public in negotiated transactions or otherwise at varying prices to be
determined, in each case, at the time of sale.

The Offered Certificates are offered subject to receipt and acceptance
by the Underwriters, to prior sale and to the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of the Offered Certificates
will be made in book-entry form through the facilities of DTC, Cedel Bank,
soci t anonyme and the Euroclear System on or about October 24, 1996,
against payment therefor in immediately available funds.

PRUDENTIAL SECURITIES INCORPORATED J.P. MORGAN & CO.

The date of this Prospectus Supplement is October 18, 1996.

(Continued from the cover page)

The Certificates will consist of five classes of Senior Certificates
(the "Class A-1 Certificates," the "Class A-2 Certificates," the "Class A-3
Certificates", the "Class A-4 Certificates" and the "Class A-5 Certificates")
and four classes of Subordinated Certificates (the "Class A-6 Certificates,"
the "Class B-1 Certificates," the "Class B-2 Certificates" and the "Class R
Certificate"). The Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates and Class A-6
Certificates will evidence in the aggregate approximate initial 23.18%,
21.98%, 15.38%, 9.50%, 12.46% and 8.00% undivided interests, respectively,
in the Trust Fund. The Class B-1 Certificates and Class B-2 Certificates
will evidence in the aggregate approximate initial 5.50% and 4.00% undivided
interests, respectively, in the Trust Fund. The Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5 and Class A-6 Certificates are referred to
collectively as "Class A Certificates" herein. The Class B-1 and Class B-2
Certificates are referred to collectively as "Class B Certificates" herein.
Only the Class A and Class B Certificates (collectively, the "Offered
Certificates") are being offered hereby. The Trust Fund will be created
pursuant to a Pooling and Servicing Agreement between the Company, as Seller
and Servicer of the Contracts, The Chase Manhattan Bank, as trustee (the
"Trustee") and Clayton Homes, Inc. ("CHI") as provider of the Limited
Guarantee. The Trust Fund property will include all rights to payments
received on each Contract on or after September 26, 1996 (the "Cut-off
Date"), security interests in the manufactured homes securing the Contracts,
any related mortgages or deeds of trust, all rights under certain hazard
insurance policies with respect to the manufactured homes and the amounts in
the Certificate Account.

Payments of principal and interest on the Offered Certificates will be
distributed to Certificateholders on the 7th day of each month (or if the 7th
day is not a business day, the next business day) (each, a "Remittance
Date"), beginning in November 1996. The Class A-1 Certificates will have a
variable Remittance Rate which is equal to the lesser of (a) the sum of (i)
the London Interbank offered rate for one-month United States dollar deposits
("LIBOR") (calculated as described herein) and (ii) .110% and (b) the
Weighted Average Net Contract Rate (as defined herein). The Remittance Rates
for the Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class B-1 and
Class B-2 Certificates will be the lesser of (i) 6.400%, 6.700%, 6.975%,
7.235%, 7.525%, 7.450% and 8.000% per annum, respectively, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted Average
Net Contract Rate (as defined herein) for such Remittance Date. The rights
of the holders of the Class A-6 Certificates to receive distributions of
interest and principal are subordinated to such rights of the Senior
Certificateholders to the extent provided herein. The rights of the holders
of the Class B Certificates to receive distributions of amounts collected on
the Contracts will be subordinated to the rights of the Class A
Certificateholders to receive the distributions due thereon to the extent
provided herein. See "Description of the Certificates."

The Class B-2 Certificateholders will initially have the benefit of a
limited guarantee (the "Limited Guarantee") of CHI to protect against losses
that would otherwise be absorbed by the Class B-2 Certificateholders.
Pursuant to the Limited Guarantee, to the extent that funds in the
Certificate Account are insufficient to distribute to the holders of the
Class B-2 Certificates the Class B-2 Formula Distribution Amount (as
described herein), CHI will be obligated to pay an Enhancement Payment (as
defined herein). See "Description of the Certificates-Limited Guarantee of
CHI" herein. The Limited Guarantee may be replaced by an Alternate Credit
Enhancement (as defined herein).

An election will be made to treat the Trust Fund as a real estate
mortgage investment conduit (a "REMIC") for federal income tax purposes. See
"Certain Federal Income Tax Consequences" herein and in the Prospectus. The
Class A and Class B Certificates will represent "regular interests" in the
REMIC, and the Class R Certificate will represent the residual interest in
the REMIC.

The obligations of the Servicer (including the Company as initial
Servicer) with respect to the Certificates are limited to its contractual
servicing obligations. The Company, as seller, however, will make certain
representations and warranties relating to the Contracts. In the event of
an uncured breach of any such representation or warranty that materially
adversely affects a Contract, the Company may, under certain circumstances,
be obligated to repurchase such Contract or substitute another Contract
therefor, as described herein.

The interests of the owners of the Offered Certificates (the
"Certificate Owners") will be represented by book-entries on the records of
The Depository Trust Company and participating members thereof. See
"Description of the Certificates--Registration of the Offered Certificates"
herein. Prudential Securities Incorporated and J.P. Morgan Securities Inc.
(the "Underwriters") intend to make a secondary market in the Offered
Certificates, but have no obligation to do so. There can be no assurance
that a secondary market for the Offered Certificates will develop, or if it
does develop, that it will continue or provide sufficient liquidity.

----------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE OFFERED CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PURCHASERS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE OFFERED
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.

UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS
TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

____________________

SUMMARY OF TERMS OF THE CERTIFICATES

This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings assigned them in the
Prospectus or elsewhere in this Prospectus Supplement.

Securities Offered The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class B-1 and Class B-2
Certificates (the "Offered
Certificates") of the Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series
1996C. The Class R Certificate is not being
offered hereby. The Class R Certificate and the
Offered Certificates, are
collectively referred to as the "Certificates" herein.

Seller Vanderbilt Mortgage and Finance, Inc. (the
"Company"), a wholly-owned subsidiary of Clayton
Homes, Inc. ("CHI"). Neither CHI nor any of its
affiliates, including the Company, has guaranteed
or is otherwise obligated with respect to the
Certificates, except to the extent of the Limited
Guarantee of CHI or the Alternate Credit
Enhancement with respect to the Class B-2
Certificates. See "Risk Factors" herein
and in the Prospectus.

Servicer Vanderbilt Mortgage and Finance, Inc. (in such
capacity referred to herein as the "Servicer").
The Servicer may perform any of its obligations
under the Agreement through one
or more subservicers. Notwithstanding any such sub
servicing arrangement, the Servicer will remain
liable for its servicing duties
and obligations under the Agreement as if the Servicer
alone were servicing the Contracts.

Trustee The Chase Manhattan Bank, a New York banking
corporation (the "Trustee").

Cut-off Date Pool
Principal Balance
$124,221,906.53 (Approximate, subject to a
permitted variance of plus or minus 5%).

Certificates Offered $124,221,000 Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificates, Series 1996C,
to be issued in the following Classes (each, a
"Class"):

<TABLE>
<CAPTION>
Original Certificate Remittance
Principal Balance(1) Rate Class
--------------------- ------------ -----
<S> <C> <C>
$28,800,000 (2) Class A-1 Certificates
$27,300,000 6.400%(3) Class A-2 Certificates
$19,100,000 6.700%(3) Class A-3 Certificates
$11,800,000 6.975%(3) Class A-4 Certificates
$15,481,000 7.235%(3) Class A-5 Certificates
$ 9,938,000 7.525%(3) Class A-6 Certificates
$ 6,833,000 7.450%(3) Class B-1 Certificates
$ 4,969,000 8.000%(3) Class B-2 Certificates
</TABLE>

(1) Approximate, subject to a permitted variance
of plus or minus 5%.
(2) The initial Class A-1 Remittance Rate will be
approximately 5.485%. The Remittance Rate
for the Class A-1 Certificates shall be
determined as set forth in the immediately
succeeding paragraph.

(3) Subject to a maximum rate equal to the
Weighted Average Net Contract
Rate (as defined herein) for such
Remittance Date.

The Class A-1 Remittance Rate on any Remittance
Date shall be the lesser of (a) the sum of (i) the
London Interbank offered rate for one-month United
States dollar deposits ("LIBOR") (calculated as
described herein) and (ii) .110% and (b) the Weighted
Average Net Contract Rate (as defined herein) for
such Remittance Date.

Remittance Date The 7th day of each month (or if such 7th day is
not a business day, the next succeeding business day),
commencing in November 1996.

Record Date With respect to the Class A-1 Certificates, the
business day preceding the related Remittance Date.
With respect to the Offered Certificates (other than
the Class A-1 Certificates), the last
business day of the month preceding the month of the
related Remittance Date.

Cut-off Date September 26, 1996.

Agreement The Pooling and Servicing Agreement, dated as of
September 26, 1996 (the "Agreement"), between the
Company, as Seller and Servicer, CHI, as provider
of the Limited Guarantee, with respect to the Class
B-2 Certificates, and the Trustee.

Description of the
Offered Certificates The Offered Certificates evidence undivided
interests in the Contract Pool and certain other
property held in trust for the benefit of the
Certificateholders (the "Trust Fund"). The Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-5
Certificates are Senior Certificates and the Class
A-6, Class B-1 and Class B-2 Certificates are
Subordinated Certificates, all as described herein.
The Offered Certificates will be offered in
denominations of $50,000 and integral multiples of
$1,000 in excess thereof. The undivided percentage
interest (the "Percentage Interest") of a Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class
A-6, Class B-1 or Class B-2 Certificate in the
distributions on such Certificates will be equal to
the percentage obtained from dividing the
denomination of such Certificate by the Original
Certificate Principal Balance of such Class of
Certificates.

Distributions Distributions to the holders of Certificates of a
Class will be made in an amount equal to their
respective Percentage Interests multiplied by the
aggregate amount distributed on such Class of
Certificates for the related Remittance Date,
commencing in November 1996.
Distributions will be made on each Remittance Date to
holders of record on the preceding Record Date, except
that the final distribution in respect of
the Certificates will only be made upon presentation
and surrender of the Certificates at the office or
agency appointed by the Trustee for that
purpose in New York, New York. Distributions to the
Certificateholders of a Class will be applied
first to the payment of interest and, if any
principal is then due, then to the payment of
principal. The funds available
in the Certificate Account for distribution on
a Remittance Date (the "Available Distribution
Amount") will be applied in the amounts and the order
of priority set forth below. See "Description
of the Certificates/__/Distributions" for a detailed
description of the amounts on deposit in the
Certificate Account that will constitute the Available
Distribution Amount on each Remittance Date.
The aggregate amounts distributed to
the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class B-1 and Class B-2
Certificateholders from the Available Distribution
Amount in respect of a Remittance Date are the Class
A-1 Distribution Amount, the Class A-2 Distribution
Amount, the Class A-3 Distribution Amount, the Class
A-4 Distribution Amount, the Class A-5 Distribution
Amount, the Class A-6 Distribution Amount, the Class
B-1 Distribution Amount and the Class B-2
Distribution Amount, respectively.

A. On each Remittance Date on which the Class B
Principal Distribution Test is not met, the
Available Distribution Amount will be distributed
in the following amounts in the following order of
priority:

(i) interest accrued during the related Interest
Period on the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, at their
respective Remittance Rates on the outstanding Class
A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Principal Balances, respectively, together
with any previously undistributed shortfalls in
interest due on the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, respectively,
in respect of prior Remittance Dates; if the
Available Distribution Amount is not sufficient to
distribute the full amount of interest due on the
Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates, the Available Distribution Amount
will be distributed on such Classes of Certificates
pro rata on the basis of the interest due
thereon;

(ii) the Formula Principal Distribution Amount in
the following order of priority:

(a) to the Class A-1 Certificateholders until
the Class A-1 Principal Balance is reduced
to zero;

(b) to the Class A-2 Certificateholders until
the Class A-2 Principal Balance is reduced
to zero;

(d) to the Class A-4 Certificateholders until
the Class A-4 Principal Balance is reduced
to zero; and

(e) to the Class A-5 Certificateholders until
the Class A-5 Principal Balance is reduced
to zero;

(iii) interest accrued during the related Interest
Period on the Class A-6 Principal Balance
to the Class A-6 Certificateholders, together with
any previously undistributed shortfalls in
interest due on the Class A-6 Certificates in
respect of prior Remittance Dates;

(iv) the remainder of the Formula Principal
Distribution Amount, if any, to the Class A-6
Certificates until the Class
A-6 Principal Balance is reduced to zero;

(v) interest accrued during the related Interest
Period on the Class B-1 Principal Balance
to the Class B-1 Certificateholders, together with
any previously undistributed shortfalls in
interest due on the Class B-1 Certificates in
respect of prior Remittance Dates;

(vi) the remainder of the Formula Principal
Distribution Amount, if any, to the Class B-1
Certificates until the Class B-1 Principal Balance
is reduced to zero;

(vii) interest accrued during the related Interest
Period on the Class B-2 Principal Balance
to the Class B-2 Certificateholders, together with
any previously undistributed shortfalls in
interest due on the Class B-2 Certificates in
respect of prior Remittance Dates;

(viii) the remainder of the Formula Principal
Distribution Amount, if any, to the Class B-2
Certificates until the Class B-2 Principal Balance
is reduced to zero;

(ix) so long as the Company is the Servicer, any
remainder up to the amount equal to 1/12th of the
product of 1.25% and the Pool Scheduled Principal
Balance for the immediately preceding Remittance
Date (the "Monthly Servicing Fee") to the Servicer;

(x) the amount of any reimbursement to CHI for
Enhancement Payments with respect to the Class B-2
Certificates as provided in the Agreement; and

(xi) any remainder to the holder of the Class R
Certificate, which will initially be a special
purpose subsidiary of the Company.

B. On each Remittance Date on which the Class B
Principal Distribution Test is met, the Available
Distribution Amount will be distributed in the
following amounts in the following order of priority:

(i) interest accrued during the related Interest
Period on the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, at their
respective Remittance Rates on the outstanding Class
A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Principal Balances, respectively, together with
any previously undistributed shortfalls in
interest due on the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Certificates, respectively,
in respect of prior Remittance Dates; if the
Available Distribution Amount is not sufficient to
distribute the full amount of interest due on the
Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates, the Available Distribution Amount
will be distributed on such Classes of Certificates
pro rata on the basis of the interest due
thereon;

(ii) the Class A Percentage of the Formula
Principal Distribution Amount in the following order
of priority:

(a) to the Class A-1 Certificateholders
until the Class A-1 Principal Balance
is reduced to zero;

(b) to the Class A-2 Certificateholders
until the Class A-2 Principal Balance is
reduced to zero;

(d) to the Class A-4 Certificateholders
until the Class A-4 Principal Balance is
reduced to zero; and

(e) to the Class A-5 Certificateholders until
the Class A-5 Principal Balance is reduced
to zero;

(iv) the remainder of the Class A Percentage of the
Formula Principal Distribution Amount, if any, to the
Class A-6 Certificates until the Class A-6 Principal
Balance is reduced to zero;

(v) interest accrued during the related Interest
Period on the Class B-1 Principal Balance
to the Class B-1 Certificateholders, together
with any previously undistributed shortfalls in
interest due on the Class B-1 Certificates in
respect of prior Remittance Dates;

(vi) the Class B Percentage of the Formula
Principal Distribution Amount to the Class B-1
Certificates until the Class B-1 Principal Balance
is reduced to zero;

(viii) the remainder of the Formula Principal
Distribution Amount to the Class B-2 Certificates
until the Class B-2 Principal Balance is reduced
to zero;

(ix) so long as the Company is the Servicer, any
remainder up to the Monthly Servicing Fee to the
Servicer;

(x) the amount of any reimbursement to CHI for
Enhancement Payments with respect to the Class B-2
Certificates as provided in the Agreement; and

(xi) any remainder to the holder of the Class R
Certificate.

The "Class B Principal Distribution Test" is met in
respect of a Remittance Date on which each of the
following requirements is satisfied:

(i) such Remittance Date is on or after the
November 2001 Remittance Date;

(ii) the Class B Percentage for such Remittance
Date is equal to at least 16.625% (which is 1.75 times
the original Class B Percentage);

(iii) the Performance Tests are satisfied; and

(iv) the Class B-2 Principal Balance is not less
than $2,484,420 (which represents approximately 2% of
the Total Original Contract Pool Principal Balance).

The "Performance Tests" are satisfied in respect of
a Remittance Date if all of the following conditions
are met:

(i) the Average Sixty-Day Delinquency Ratio (as
defined in the Agreement) as of such Remittance Date
does not exceed 5%;

(ii) the Average Thirty-Day Delinquency Ratio (as
defined in the Agreement) as of such Remittance Date
does not exceed 7%;

(iii) the Cumulative Realized Losses (as defined
in the Agreement) as of such Remittance Date
do not exceed a certain specified percentage of the
Total Original Contract Pool Principal Balance,
depending on the year in which such Remittance Date
occurs; and

(iv) the Current Realized Loss Ratio (as defined
in the Agreement) as of such Remittance Date does
not exceed 2.75%.

The "Total Original Contract Pool Principal
Balance" is equal to the aggregate principal balance
of the Contracts as of the Cut-off Date.

The Principal Balance of each Class of Certificates
is its original Principal Balance reduced by all
distributions on such Class in reduction of its
Principal Balance. The Class A Principal Balance
is the sum of the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 and Class A-6 Principal
Balances. The Class B Principal Balance is the
sum of the Class B-1 Principal Balance and the Class
B-2 Principal Balance.

The Class A Percentage for a Remittance Date is the
percentage derived from the fraction (which shall
not be greater than 1), the numerator of which is the
aggregate Principal Balance of the Class A
Certificates immediately prior to such Remittance
Date and the denominator of which is the Pool
Scheduled Principal Balance. The Class B Percentage
is equal to 100% less the Class A Percentage.

The Formula Principal Distribution Amount in
respect of a Remittance Date equals the sum of (i) all
scheduled payments of principal due on each
outstanding Contract during the Due Period preceding
the month in which the Remittance Date occurs,
(ii) the Scheduled Principal Balance (as defined below)
of each Contract which, during the Due Period
preceding the month of such Remittance Date, was
purchased by the Company pursuant to the Agreement on
account of certain breaches of its representations
and warranties, (iii) all Partial Prepayments
(as defined in the Agreement) received during such
preceding Due Period, (iv) the Scheduled Principal
Balance of each Contract that was prepaid in
full during such preceding Due Period, (v) the
Scheduled Principal Balance of each Contract
that became a Liquidated Contract during such
preceding Due Period and (vi) any previously
undistributed shortfalls in the amounts in clauses
(i) through (v) in respect of the prior Remittance
Dates (other than any such shortfall with respect
to which an Enhancement Payment has been made to the
Class B-2 Certificateholders). The Due Period with
respect to any Remittance Date is the period beginning
on the 26th day of the second month preceding the
month of such Remittance Date and ending on the 25th
day of the month preceding the month of such
Remittance Date.

The Scheduled Principal Balance of a Contract for
any Due Period is its principal balance after giving
effect to any previous Partial Prepayments and after
giving effect to all previous scheduled principal
payments (whether or not paid) and the scheduled
principal payment, or payments, in the case of
Bi-weekly Contracts, due on the Due Date (or Due
Dates, as applicable) in that Due Period, but without
giving effect to any adjustments due to bankruptcy or
similar proceedings.

In general, a Liquidated Contract is a defaulted
Contract as to which all amounts that the Servicer
expects to recover through the date of disposition
of the Manufactured Home and any real property
securing such Contract have been received.

Notwithstanding the prioritization of the
distribution of the Formula Principal Distribution
Amount among the Senior Certificates pursuant to
clauses A(ii) and B(ii) above, on each Remittance
Date, on and after the Remittance Date, if any, on
which the Deficiency Event occurs, the Available
Distribution Amount remaining after making the
distributions of interest to the Senior
Certificateholders required by clauses A(i) and
B(i) above will be applied to distribute the
Formula Principal Distribution Amount on each Class of
Senior Certificates pro rata in accordance with the
outstanding Principal Balance of each Class of Senior
Certificates. The "Deficiency Event" will occur if
the sum of the Principal Balances of each Class
of Senior Certificates becomes equal to or greater
than the Pool Scheduled Principal Balance. The
"Pool Scheduled Principal Balance" as of a Remittance
Date is equal to (i) the Total Original Contract
Pool Principal Balance less (ii) the aggregate
of the Formula Principal Distribution Amounts
(exclusive of the amounts in clause (vi) of the
definition thereof) for all prior Remittance Dates.

In no event will the aggregate distributions of
principal to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class B-1 or Class
B-2 Certificateholders (including, in the case of the
Class B-2 Certificates, any principal amounts
included in any Enhancement Payments) exceed the
Original Class A-1 Principal Balance, the Original
Class A-2 Principal Balance, the Original Class A-3
Principal Balance, the Original Class A-4 Principal
Balance, the Original Class A-5 Principal Balance, the
Original Class A-6 Principal Balance, the
Original Class B-1 Principal Balance or the
Original Class B-2 Principal Balance, respectively.

Any undistributed interest shortfalls which are
carried forward will, to the extent legally
permissible, bear interest at the Remittance Rate
applicable to the affected Class or Classes of
Certificates.

Effect of Priority
Sequence of Principal
Distributions The principal amounts described in clause
A(ii) above will be distributed, if the Class B
Principal Distribution Test is not met, to the extent
of the Available Distribution Amount after payment
of interest on the Senior Certificates, to the Senior
Certificateholders (but only to the extent of the
outstanding principal balance of the Senior
Certificates). This should, unless offset by other
cash flow insufficiencies due to delinquencies and
liquidation losses, have the effect of accelerating
the amortization of the Senior Certificates, and
delaying the amortization of the Subordinate
Certificates, from what it would be without
such prioritization, thereby increasing the respective
interest in the Trust Fund evidenced by the
Subordinate Certificates. Increasing the respective
interest of the Subordinate Certificates relative
to that of the Senior Certificates is intended
to preserve as provided herein the availability on
each Remittance Date of the subordination provided
by the Subordinate Certificates. See "Description
of the Certificates."

Prepayment Considerations
and Risks In general, the Contracts may be prepaid at
any time without penalty and, accordingly, the
rate of principal payments thereon is likely
to vary considerably from time to time. The
Offered Certificates may be sold at a discount to
their principal amounts. A slower than anticipated
rate of principal payments on the Contracts is
likely to result in a lower than anticipated yield
on the Offered Certificates if they are purchased at
a discount. See "Yield Considerations" and "Maturity
and Prepayment Considerations" in the Prospectus and
"Yield and Prepayment Considerations" herein.

Subordination of the
Class A-6, Class B
and Class R
Certificates The rights of the holders of the Class A-6
Certificates to receive distributions of amounts
collected on the Contracts in the Trust Fund will
be subordinated, to the extent described herein, to
such rights of the holders of the Senior Certificates.
This subordination is intended to enhance the
likelihood of receipt by the holders of the Senior
Certificates of the full amount of the scheduled
monthly payments of interest and the ultimate receipt
by such holders of principal equal to the applicable
Original Certificate Principal Balance.

The protection afforded to the holders of
Senior Certificates by means of the subordination of
the Class A-6 Certificates will be accomplished
(i) by the application of the Available Distribution
Amount in the order specified under "Distributions"
above, and (ii) if the Available Distribution Amount
on any Remittance Date is not sufficient to permit
the distribution of the entire specified portion of
the Formula Principal Distribution Amount, as
applicable, to the Senior Certificateholders, by
the right of the Senior Certificateholders to receive,
until any such shortfall is distributed, a
portion of the future distributions of Available
Distribution Amounts that would otherwise have
been distributable to the holders of the Class
A-6, Class B or Class R Certificates.

The rights of holders of the Class B
Certificates and Class R Certificate to receive
distributions of amounts collected on the Contracts
in the Trust Fund will be subordinated, to the
extent described herein, to such rights of the
holders of the Class A Certificates. This
subordination is intended to enhance the likelihood of
receipt by the holders of the Class A Certificates of
the full amount of the scheduled monthly payments of
interest and the ultimate receipt by such
holders of principal equal to the Original Class A
Principal Balance.

The protection afforded to the holders of
Class A Certificates by means of the subordination, to
the extent provided herein, of the Class B and Class R
Certificates will be accomplished (i) by the
application of the Available Distribution Amount in
the order specified under "Distributions" above and
(ii) if the Available Distribution Amount on
such Remittance Date is not sufficient to permit
the distribution of the entire specified portion
of the Formula Principal Distribution Amount, as
applicable, to the Class A Certificateholders, by
the right of the Class A Certificateholders to
receive, until, if ever, any such shortfall is
distributed, a portion of the future distributions of
Available Distribution Amounts that would otherwise
have been payable to the holders of the Class
B and Class R Certificates.

The rights of the holders of the Class B-2
Certificates to receive distributions of amounts
collected on the Contracts in the Trust Fund will be
subordinated, to the extent described herein, to
such rights of the Class B-1 Certificates. This
subordination is intended to enhance the likelihood
of receipt by the holders of the Class A
Certificates and the Class B-1 Certificates of
the full amount of the scheduled monthly payments
of interest and the ultimate receipt by such
holders of principal equal to the applicable Original
Certificate Principal Balance.

The protection afforded to the Class B-1
Certificates by means of the subordination of the
Class B-2 Certificates will be accomplished by (i)
the application of the Available Distribution Amount
in the order specified under "Distributions" above
and (ii) if the Available Distribution Amount on such
Remittance Date is not sufficient to permit the
distribution of the entire specified portion
of the Formula Principal Distribution Amount,
as applicable, to the Class B-1 Certificateholders and
the subordination provided by the Class B-2
Certificates has not been exhausted, by the right
of the Class B-1 Certificateholders to receive,
until, if ever, any such shortfall is distributed, a
portion of the future distributions of Available
Distribution Amounts that would otherwise have
been distributable to the holders of the Class B-2
Certificates.

See "Description of the Certificates--Subordination
of Class A-6 Certificates," "--Subordination of the
Class B and Class R Certificates" and "--Subordination
of the Class B-2 Certificates" herein.

Losses on Liquidated
Contracts As described above, the distribution of principal to
the Senior Certificateholders is intended to
include the Scheduled Principal Balance of each
Contract that became a Liquidated Contract during
the Due Period immediately preceding the month of such
distribution. If the Liquidation Proceeds, net
of related Liquidation Expenses, from such
Liquidated Contract are less than the Scheduled
Principal Balance of such Liquidated Contract, and
accrued and unpaid interest thereon, then to the
extent such deficiency is not covered by any
excess interest collections on nondefaulted
Contracts, the deficiency may, in effect, be
absorbed by the Class A-6 or Class B Certificateholders
since a portion of future Available Distribution
Amounts funded by future principal collections
on the Contracts, up to the aggregate amount of such
deficiencies, that would otherwise have been
distributable to them may be paid to the Senior
Certificateholders. If the protection afforded to
the holders of a Class of Subordinate Certificates by
the subordination of one or more Classes of more
junior Subordinate Certificates is exhausted, the
holders of such Class of Subordinate Certificates
will incur a loss on their investment.

If the Available Distribution Amount for any
Remittance Date is not sufficient to cover,
in addition to interest distributable to the
Class A Certificateholders, the entire specified
portion of the Formula Principal Distribution
Amount distributable to the Class A Certificateholders
then entitled to such payment on such Remittance Date,
then the amount of the Pool Scheduled Principal
Balance available to the Class B Certificates (i.e.,
such Pool Scheduled Principal Balance less the
Class A Principal Balance) on future Remittance Dates
will be reduced. If, because of liquidation losses,
the Pool Scheduled Principal Balance were to decrease
proportionately faster than distributions to
the Class A Certificateholders reduce the Class A
Principal Balance, the level of protection afforded
by the subordination of the Class B Certificates
(i.e., the percentage of the Pool Scheduled Principal
Balance available to the Class B Certificates) would
be reduced. On each Remittance Date, if any, on or
after the date on which the Class A Principal
Balance equals or becomes greater than the Pool
Scheduled Principal Balance, and so long as the Class
A-6 Certificates are outstanding, the Class A-6
Certificateholders will bear all losses on Liquidated
Contracts (with no ability to recover the amount of
any liquidation loss from future principal collections
on the Contracts) and incur a loss on their investment
in the Class A-6 Certificates. On each Remittance
Date, if any, on or after the date on which the
Deficiency Event occurs, the Senior
Certificateholders will receive only their
respective percentage interest of Liquidation Proceeds
(net of Liquidation Expenses) realized in respect
of Liquidated Contracts, rather than the
Scheduled Principal Balances thereof, and will
therefore bear all losses on Liquidated Contracts
(with no ability to recover the amount of any
liquidation loss from future principal collections
on the Contracts) and incur a loss on their
investment in the Senior Certificates. See
"Description of the Certificates--Subordination of
the Class B and Class R Certificates" and
"--Subordination of the Class A-6 Certificates" and
"Yield and Prepayment Considerations."

Enhancement Payments to
Class B-2
Certificateholders
under the Limited
Guarantee of CHI In order to mitigate the effect of the subordination
of the Class B-2 Certificates and liquidation
losses and delinquencies on the Contracts, CHI
will initially provide a Limited Guarantee.
Such Limited Guarantee may be replaced by an Alternate
Credit Enhancement. See "Alternate Credit Enhancement"
herein and "Description of the Certificates--Alternate
Credit Enhancement." Pursuant to the Limited
Guarantee, the Class B-2 Certificateholders are
entitled to receive on each Remittance Date the
amount equal to the Enhancement Payment, if any.
Prior to the Remittance Date (the "Initial Class
B-2 Principal Remittance Date") on which the Class
B-1 Principal Balance is reduced to zero, the
Enhancement Payment will equal the amount, if any, by
which (a) the sum of (i) the Class B-2 Formula
Distribution Amount (which will be equal to one
month's interest on the Class B-2 Principal Balance)
for such Remittance Date and (ii) the Class B-2
Principal Liquidation Loss Amount, if any, exceeds
(b) the amount (other than the Enhancement Payment)
that will otherwise be distributed on the Class
B-2 Certificates on such Remittance Date (the
"Class B-2 Distribution Amount"). On each Remittance
Date on or after the Initial Class B-2 Principal
Remittance Date, the Enhancement Payment will equal
the amount, if any, by which the Class B-2
Formula Distribution Amount (which will include
both interest and principal) exceeds the Class B-2
Distribution Amount for such Remittance Date.

The "Class B-2 Principal Liquidation Loss
Amount" for any Remittance Date will equal the amount,
if any, by which (a) the Formula Principal Distribution
Amount (exclusive of the portion thereof specified in
clause (vi) of the definition of Formula Principal
Distribution Amount) for such Remittance Date exceeds
(b) the amount (exclusive of the Enhancement Payment)
distributed on the Certificates on account of
principal on such Remittance Date. The Class
B-2 Principal Liquidation Loss Amount represents
future principal payments on the Contracts that,
because of the subordination of the Class B-2
Certificates and liquidation losses on the Contracts,
will not be paid to the Class B-2
Certificateholders from the assets of the Trust Fund
but may be paid to the Class B-2 Certificateholders
in the form of an Enhancement Payment.

The Limited Guarantee, if applicable, will be
an unsecured general obligation of CHI and will
not be supported by any letter of credit or other
enhancement arrangement.

In the event that, on a particular Remittance
Date, the Class B-2 Distribution Amount in the
Certificate Account plus any amounts actually paid
under the Limited Guarantee or Alternative Credit
Enhancement are not sufficient to make a full
distribution of interest to the Class B-2
Certificateholder, the amount of the deficiency will
be carried forward as an amount that the Class B-2
Certificateholders are entitled to receive on the
next Remittance Date.

Alternate Credit Enhancement In the event that, at
CHI's option, Alternate Credit Enhancement (as
defined herein) is provided and, upon prior written
notice to Moody's (as defined herein), Moody's shall
have notified CHI, the Company, the Servicer and
the Trustee in writing that substitution of such
Alternate Credit Enhancement for the Limited
Guarantee will not result in the downgrade or
withdrawal of the then current rating of any
class of the Certificates, and upon the delivery
by CHI to the Trustee of an opinion of counsel,
acceptable to the Trustee, that such action would
not cause the Trust to fail to qualify as a REMIC,
the Limited Guarantee shall be released
and shall terminate. The Alternate Credit Enhancement
may consist of cash or securities deposited by
CHI or any other person in a segregated escrow,
trust or collateral account or a letter of
credit, certificate insurance policy or surety
bond provided by a third party (an "Alternate
Credit Enhancement"). On each Remittance Date
after delivery of the Alternate Credit Enhancement,
an amount, equal to the lesser of the amount which
would have been payable under the Limited Guarantee
and the amount available under such Alternate Credit
Enhancement, shall be transferred from such account to
the Certificate Account to make payments to the
Class B-2 Certificateholders (an "Enhancement
Payment"). CHI shall have no obligation to replace
such enhancement once it has been exhausted.

Monthly Advance For each Remittance Date, the Servicer will be
obligated to make advances ("Monthly Advances")
in respect of delinquent scheduled payments on
the Contracts that were due in the preceding Due
Period and would, in the Servicer's judgment,
be recoverable from related late payments,
Liquidation Proceeds or otherwise. Assuming that in
the judgment of the Servicer all delinquent payments
on the Contracts were recoverable, the amount of
the Monthly Advance paid out of the funds of the
Servicer is calculated such that, if it is made,
it will permit a distribution to both the Class A
Certificateholders and Class B Certificateholders
undiminished by such delinquent payments.
Monthly Advances are reimbursable to the Servicer
as described under "Description of the Certificates
--Advances."

Optional Repurchase
of the Contracts
by the Servicer The Company (if it is no longer the Servicer)
and the Servicer will each have the option to
purchase, on any Remittance Date, from the Trust
Fund all Contracts then outstanding and all other
property in the Trust Fund if on the preceding
Remittance Date the Pool Scheduled Principal
Balance was less than 10% of the Total Original
Contract Pool Principal Balance. See "Description
of the Certificates--Optional Termination" herein.

The Contracts Fixed rate manufactured housing installment
sales contracts and installment loan
agreements (collectively, the "Contracts")
secured by security interests in manufactured homes,
as defined herein (the "Manufactured Homes"),
purchased with the proceeds of the Contracts and,
with respect to certain of the Contracts
("Land-and-Home Contracts"), secured by liens
on the real estate on which the related
Manufactured Homes are located. The Contract Pool
conveyed to the Trust Fund on the Closing Date
(the "Contract Pool") will consist of approximately
4,293 Contracts having an aggregate unpaid principal
balance as of the Cut-off Date of approximately
$124,221,906.53. 3,862 of the Contracts, having an
aggregate unpaid principal balance of approximately
$109,161,341 as of the Cut-off Date, are manufactured
housing installment sales contracts originated
by manufactured housing dealers and purchased by
the Company from such dealers or originated by the
Company. Certain of these dealers are affiliates
of CHI, the parent of the Company. The Company
purchased the remaining 431 Contracts (the "Acquired
Contracts") having an aggregate unpaid principal
balance of approximately $15,060,565 as of the
Cut-off Date, from different financial institutions,
as described under "The Contract Pool" herein.
Approximately 410 of the Acquired Contracts
having an aggregate unpaid principal balance of
approximately $14,647,432 as of the Cut-off Date
were originated or acquired by 21st Century
Mortgage Corporation. The Contracts, as of
origination, were secured by Manufactured Homes
located in 33 states and the District of Columbia
and have been selected by the Company from the
Company's portfolio of manufactured housing
installment sale contracts and installment loans
on the basis of criteria specified in the Agreement.
Substantially all of the Contracts bear interest at
an annual percentage rate ("APR") which is equal to
or higher than the Class A-1 Remittance Rate plus
1.25%. Monthly or bi-weekly payments of principal and
interest on the Contracts will be due on various
days (each a "Due Date") throughout each Due
Period, as defined herein. Approximately 28.60% of
the Contracts by Cut-off Date principal balance have
scheduled level payments of principal and interest
due every two weeks (the "Bi-weekly Contracts") and
the remainder have one such payment due each
month. The APRs on the Contracts range from
7.750% to 18.000% with a weighted average of
approximately 11.513% each as of the Cut-off Date.
The Contracts had a weighted average term to
scheduled maturity as of origination of approximately
184.16 months and a weighted average term to
scheduled maturity as of the Cut-off Date of
approximately 182.17 months. The final scheduled
payment date on the Contract with the latest maturity
is September 15, 2026. The Contracts in the Contract
Pool were originated from January 27, 1986 through
September 25, 1996, inclusive. See "The Contract
Pool" herein and "Yield Considerations" in the
Prospectus. The Agreement requires the Servicer to
maintain one or more standard hazard insurance
policies with respect to each Manufactured Home
(other than a Manufactured Home in repossession) in an
amount at least equal to the lesser of its maximum
insurable value or the remaining principal balance on
the related Contract. The standard hazard insurance
policies, at a minimum, are required to provide fire
and extended coverage on terms and conditions
customary in manufactured housing hazard insurance
policies, with customary deductible amounts. No
other insurance policies will be provided with
respect to any Contract or the Contract Pool.
See "Description of the Certificates--Servicing"
in the Prospectus.

Security Interests and
Mortgages on the
Manufactured Homes; Re-
purchase or Substitution
Obligations In connection with the transfer of the
Contracts to the Trustee, the Company will assign
the security interests in the Manufactured Homes and
(with respect to the Land-and-Home Contracts) the
liens on the real property on which the Manufactured
Homes are located to the Trustee. Assignments in
recordable form for the mortgages or deeds of trust
(each, a "Mortgage") evidencing the liens on real
property that secure the Land-and-Home Contracts will
not be delivered by the Company. However, the
Company will deliver to the Trustee a power of
attorney to enable the Trustee to execute such
assignments of such Mortgages securing the
Land-and-Home Contracts, in the event that the
recordation of such assignments becomes necessary
to foreclose upon the related real property. The
Servicer, with the cooperation of the Company, is
required to take such steps as are necessary to
perfect and maintain perfection of the security
interest in each Manufactured Home, but as long
as the Company is the Servicer, the Servicer will
not be required to cause notations to be made on
any document of title relating to any Manufactured
Home or to execute any instrument relating to
any Manufactured Home (other than a notation
or a transfer instrument necessary to show the
Company as the lienholder or legal titleholder).

Consequently, the security interests in the
Manufactured Homes in certain states may not be
effectively transferred to the Trustee or perfected.
See "Risk Factors--Security Interests and
Mortgages on the Manufactured Homes" in the Prospectus.
To the extent such security interest is perfected and
is effectively transferred to the Trustee, the Trustee
will have a prior claim over subsequent purchasers
of the Manufactured Home, holders of subsequently
perfected security interests and creditors of the
Company. Under the laws of most states, Manufactured
Homes constitute personal property, and perfection
of a security interest in the Manufactured Home is
obtained, depending on applicable state law, either by
noting the security interest on the certificate of
title for the Manufactured Home or by filing a
financing statement under the Uniform Commercial
Code. If the Manufactured Home were relocated to
another state without reperfection of the security
interests, or if the Manufactured Home were to
become attached to its site and a determination were
made that the security interest was subject to real
estate title and recording laws, or as a result of
fraud or negligence, the Trustee could lose its prior
perfected security interest in a Manufactured Home.
Federal and state consumer protection laws impose
requirements upon creditors in connection with
extensions of credit and collections on installment
sales contracts, and certain of these laws make
an assignee of such a contract, such as the Trust
Fund, liable to the obligor thereon for any violation
by the lender. The Company is obligated, subject
to certain conditions described under "Description
of the Certificates--Conveyance of Contracts" to
repurchase or, at its option, to substitute
another contract for, any Contract as to which it
has failed to perfect a security interest in the
Manufactured Home securing such Contract, or as to
which a breach of federal or state laws exists if
such breach materially adversely affects the
Trustee's interest in the Contract, unless such
failure or breach has been cured within 90 days
from notice of such breach. See "Risk Factors--
Security Interests and Mortgages on the Manufactured
Homes," "--Consumer Protection Laws and Other
Limitations on Lenders" and "--Priority of Possible
Tennessee Tax Lien" in the Prospectus.

The discussion in the previous paragraph as it
relates to maintaining a security interest in a
Manufactured Home does not apply to any Mortgages
securing Land-and-Home Contracts. See "Risk Factors--
Security Interests and Certain Other Aspects of the
Contracts" herein for a description of certain
considerations relating to the assignment of liens on
the real property securing Land-and-Home Contracts.

Certain Federal Income
Tax Consequences For federal income tax purposes, the Trust
Fund will be treated as a real estate mortgage
investment conduit ("REMIC"). The Class A and
Class B Certificates will constitute "regular
interests" in the REMIC and generally will be treated
as debt instruments of the Trust Fund for federal
income tax purposes with payment terms equivalent to
the terms of such Certificates. The Class R
Certificate will be treated as the residual interest
for federal income tax purposes. The Offered
Certificates may be issued with original issue
discount for federal income tax purposes. For
purposes of determining the amount and the rate of
accrual of original issue discount and market
discount, the Company intends to assume that there
will be prepayments on the Contracts at a rate
equal to 175% of the Prepayment Model as defined
herein. No representation is made as to whether
the Contracts will prepay at that rate or any other
rate. See "Certain Federal Income Tax Consequences"
herein and in the Prospectus.

ERISA Considerations A fiduciary of an employee benefit plan
subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the
"Code"), should carefully review with its legal
advisors whether the purchase or holding of Class
A-1, Class A-2, Class A-3, Class A-4 or Class
A-5 Certificates could give rise to a transaction
prohibited or not otherwise permissible under ERISA
or the Code. See "ERISA Considerations" herein and
in the Prospectus.

An employee benefit plan or other plan subject
to ERISA and/or Section 4975 of the Code will not
be permitted to purchase or hold the Class A-6,
Class B-1 or Class B-2 Certificates unless the
certification or opinion of counsel described under
"ERISA Considerations" is delivered to the Trustee.
See "ERISA Considerations" herein and in
the Prospectus.

Legal Investment
Considerations The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5 and Class A-6 Certificates will
constitute "mortgage related securities" under the
Secondary Mortgage Market Enhancement Act of 1984 and,
as such, will be "legal investments" for certain
types of institutional investors to the extent
provided in that Act.

Since the Class B Certificates will not be
rated by a nationally recognized rating agency in
one of its two highest rating categories, the Class
B Certificates will not constitute "mortgage
related securities" under the Secondary Mortgage
Market Enhancement Act of 1984. No representation is
made as to the appropriate characterization of
the Class B Certificates under any laws relating to
investment restrictions, as to which investors
should consult their legal advisors. See "Legal
Investment Considerations" herein and in the
Prospectus.

Rating It is a condition to the issuance of the
Senior Certificates that they be rated "Aaa" by
Moody's Investors Service, Inc. ("Moody's"). It is
a condition to the issuance of the Class A-6
Certificates that they be rated at least "Aa3" by
Moody's. It is a condition to the issuance of the
Class B Certificates that they be rated at least
"Baa2" by Moody's. The Company has not
requested a rating on the Certificates by any
rating agency other than Moody's. However, there can
be no assurance as to whether any other rating agency
will rate the Certificates, or if it does, what
rating would be assigned by any such other rating
agency. A rating on any or all of the Offered
Certificates by certain other rating agencies, if
assigned at all, may be lower than the rating
assigned to such Certificates by Moody's. A security
rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time. The rating of the Class B-2
Certificates is based in part on an assessment of
CHI's ability to make payments under the Limited
Guarantee. Any reduction in Moody's rating of
CHI's debt securities may result in a similar
reduction of the rating of the Class B-2 Certificates.
See "Ratings" in the Prospectus.

Registration of the
Offered Certificates The Offered Certificates initially will be
represented by certificates registered in the name of
Cede & Co. ("Cede") as the nominee of The
Depository Trust Company ("DTC"), and will only
be available in the form of book-entries on the
records of DTC and participating members thereof.

Certificates representing the Offered
Certificates will be issued in definitive form
only under the limited circumstances described
herein. All references herein to "holders" or
"holders of the Offered Certificates" shall reflect
the rights of Owners of the Offered Certificates as
they may indirectly exercise such rights through
DTC in the United States, or Cedel Bank, socit
anonyme ("Cedel") or the Euroclear System
("Euroclear"), in Europe, and participating members
thereof, except as otherwise specified herein. See
"Risk Factors" and "Description of the Certificates--
Registration of the Offered Certificates" herein and
"Description of the Certificates--Global
Certificates" in the Prospectus.

RISK FACTORS

Prospective investors in the Offered Certificates should consider among
other things, the following special considerations and the special
considerations in the Prospectus in connection with the purchase of the
Offered Certificates. See "Risk Factors" in the Prospectus.

1. General. An investment in the Offered Certificates evidencing
interests in Contracts may be affected by, among other things, a downturn in
regional or local economic conditions. These regional or local economic
conditions are often volatile and historically have affected the delinquency,
loan loss and repossession experience of manufactured housing installment
sales contracts. The geographic location of the Manufactured Homes is set
forth under "The Contract Pool" herein. As set forth under "The Contract
Pool," approximately 22.70%, 19.90%, 15.31% and 10.16% of the Contracts by
outstanding principal balance are located in Texas, North Carolina, Tennessee
and South Carolina, respectively. See "The Trust Fund--The Contract Pools"
in the Prospectus. Moreover, regardless of its location, manufactured
housing generally depreciates in value. Consequently, the market value of
the Manufactured Homes could be or become lower than the principal balances
of the related Contracts. See "The Contract Pool" herein. High
delinquencies and liquidation losses on the Contracts will have the effect
of reducing, and could eliminate, the protection against loss afforded by,
with respect to the Senior Certificates, the subordination of the Class A-6,
Class B and Class R Certificates, and with respect to the Class A-6
Certificates, the subordination of the Class B and Class R Certificates. If
such protection is eliminated, the Senior Certificateholders will bear the
risk of losses on the Contracts and must rely on the value of the
Manufactured Homes for recovery of the outstanding principal of and unpaid
interest on any defaulted Contracts. See "/__/Subordination of the Class A-6
Certificates" and "/__/Subordination of the Class B and Class R
Certificates." With respect to the Class A-6 Certificates, sufficiently high
delinquencies and liquidation losses on the Contracts will have the effect
of reducing, and could eliminate, the protection against loss afforded the
Class A-6 Certificates by the subordination of the Class B and Class R
Certificates. If such protection is eliminated, the Class A-6
Certificateholders will bear the risk of losses on the Contracts and must
rely on the value of the Manufactured Homes for recovery of the outstanding
principal of and unpaid interest on any defaulted Contracts. With respect
to the Class B-1 Certificates, sufficiently high delinquencies and
liquidation losses on the Contracts will have the effect of reducing and
could eliminate the protection against loss afforded the Class B-1
Certificates by the subordination of the Class B-2 Certificates. If such
protection is eliminated, the Class B-1 Certificateholders will bear the risk
of losses on the Contracts and must rely on the value of the Manufactured
Homes for recovery of the outstanding principal of and unpaid interest on any
defaulted Contracts. With respect to the Class B-2 Certificates,
sufficiently high delinquencies and liquidation losses on the Contracts will
have the effect of reducing, and could eliminate, the protection against loss
afforded by the collections of interest, if any, on the Contracts in excess
of the aggregate amount of interest due to be distributed on the Offered
Certificates, which excess interest amount, if any, would otherwise be
distributable on the Class R Certificate. If such protection is eliminated
and CHI fails to make payments as required under the Limited Guarantee or the
Alternate Credit Enhancement is less than the Class B-2 Formula Distribution
Amount, the Class B-2 Certificateholders will bear the risk of losses on the
Contracts.

Certain statistical information relating to the losses experienced by
the Company and its affiliates upon the liquidation of certain manufactured
housing contracts is set forth herein under "Vanderbilt Mortgage and Finance,
Inc." Such statistical information relates only to certain manufactured
housing contracts serviced by the Company during the periods indicated and
is included herein only for illustrative purposes. There is no assurance
that the Contracts will have the characteristics that are similar to the
manufactured housing contracts to which such statistical information relates.

In addition, the losses experienced upon recovery of principal upon the
liquidation of manufactured housing contracts historically have been sharply
affected by downturns in regional or local economic conditions. These
regional or local economic conditions are often volatile, and no predictions
can be made regarding future economic loss upon liquidation. In light of the
foregoing, no assurance can be given that the losses experienced upon the
liquidation of defaulted Contracts will be similar to any statistical
information contained herein under "Vanderbilt Mortgage and Finance, Inc."
See "The Trust Fund--The Contract Pools" in the Prospectus.

2. Prepayment Considerations. The prepayment experience on the
Contracts may affect the average life of the Offered Certificates. In the
event a Contract is prepaid in full, interest on such Contract will cease to
accrue on the date of prepayment. If such prepayments and related interest
shortfalls were sufficiently high in a month, the Available Distribution
Amount for the next Remittance Date could be less than the amount of
principal and interest that would be distributable to the Class A and Class
B Certificateholders in the absence of such shortfalls. See "Yield and
Prepayment Considerations" herein and "Maturity and Prepayment
Considerations" in the Prospectus.

3. Limited Obligations. The Offered Certificates will not represent
an interest in or obligation of the Company or any Servicer. The Offered
Certificates will not be insured or guaranteed by any governmental agency or
instrumentality, the Underwriters or any of their affiliates, or the Company
or any of its affiliates (except to the extent of the Limited Guarantee of
CHI in respect of the Class B-2 Certificates) and will be payable only from
amounts held in the Trust Fund.

4. Limited Liquidity. There can be no assurance that a secondary
market will develop for any Class of Offered Certificates or, if it does
develop, that it will provide the holders of the Offered Certificates with
liquidity of investment or that it will remain for the term of the Offered
Certificates. Issuance of the Offered Certificates in book-entry form may
reduce the liquidity of such Certificates in the secondary trading market
since investors may be unwilling to purchase Offered Certificates for which
they cannot obtain physical certificates. See "Description of the
Certificates--Registration of the Offered Certificates" herein. The Class
B Certificates will not constitute "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
Accordingly, many institutions with legal authority to invest in SMMEA
securities will not be able to invest in the Class B Certificates, limiting
the market for such securities.

5. Security Interests and Certain Other Aspects of the Contracts. A
variety of factors may limit the ability of the Certificateholders to realize
upon the Manufactured Homes securing the contracts or may limit the amount
realized to less than the amount due. See "Risk Factors--Security Interests
and Mortgages on the Manufactured Homes" and "--Consumer Protection Laws and
Other Limitations on Lenders" in the Prospectus.

6. Certain Matters Relating to Insolvency. The bankruptcy or
insolvency of the Company could have certain consequences for the holders of
the Offered Certificates. See "Risk Factors--Certain Matters Relating to
Insolvency" in the Prospectus.

7. Priority of Possible Tennessee Tax Lien. See "Risk Factors--
Priority of Possible Tennessee Tax Lien" in the Prospectus.

8. Louisiana Law. See "Risk Factors--Louisiana Law" in the Prospectus.

9. Limitations on Subordination. See "Risk Factors--Limitations on
Subordination" in the Prospectus.

10. Difficulty in Pledging. Since transactions in the Offered
Certificates can be effected only through The Depository Trust Company
("DTC"), Cedel, Euroclear, participating organizations, indirect participants
and certain banks, the ability of an Owner of the Offered Certificates to
pledge an Offered Certificate to persons or entities that do not participate
in the DTC, Cedel or Euroclear system, or otherwise to take action in respect
of such Certificates, may be limited due to lack of a physical certificate
representing the Offered Certificates. See "Description of the Certificates-
- -Registration of the Offered Certificates" herein.

11. Potential Delays in Receipt of Distributions. Owners of the
Offered Certificates may experience some delay in their receipt of
distributions of interest and principal on the Offered Certificates since
such distributions will be forwarded by the Trustee to DTC and DTC will
credit such distributions to the accounts of its Participants (as defined
herein), which will thereafter credit them to the accounts of Owners of the
Offered Certificates either directly or indirectly through indirect
participants. See "Description of the Certificates--Registration of the
Offered Certificates" herein.

12. Limited Guarantee of CHI. The Limited Guarantee, if applicable,
will be an unsecured general obligation of CHI and will not be supported by
any letter of credit or other enhancement arrangement. See "Incorporation
of Certain Documents of CHI by Reference" in the Prospectus.

13. Alternate Credit Enhancement. If CHI has replaced the Limited
Guarantee with an Alternate Credit Enhancement and such Alternate Credit
Enhancement is exhausted, CHI has no obligation to replace such enhancement.
Consequently, the Class B-2 Certificates may bear a greater risk of loss on
the Contracts than if the Limited Guarantee was in place and CHI was able to
make payments pursuant to the Limited Guarantee.

THE CONTRACT POOL

All of the Contracts in the Trust Fund (the "Contract Pool") will be
purchased or originated by the Company. Each Contract will be a manufactured
housing installment sales contract or installment loan agreement
(manufactured housing installment sales contracts and installment loan
agreements being collectively referred to herein as "manufactured housing
contracts" or "contracts"). The statistical information presented in this
Prospectus Supplement concerning the Contract Pool is based on the Contract
Pool of Contracts as of the Cut-off Date.

A description of the Company's general practice with respect to the
origination or purchase, on an individual basis, of manufactured housing
contracts is set forth under "Underwriting Policies" in the Prospectus.

Under the Agreement, the manufactured homes securing the Contracts (the
"Manufactured Homes") are required to comply with the requirements of certain
federal statutes which generally would require the Manufactured Homes to have
a minimum of 400 square feet of living space and a minimum width of 102
inches and to be of a kind customarily used at a fixed location. Such
statutes would also require the Manufactured Homes to be transportable in one
or more sections, built on a permanent chassis and designed to be used as
dwellings, with or without permanent foundations, when connected to the
required utilities. The Manufactured Homes are also required to include the
plumbing, heating, air conditioning, and electrical systems therein.
Management of the Company estimates that in excess of 95% of the Manufactured
Homes are used as primary residences by the Obligors under the Contracts
secured by such Manufactured Homes.

The Agreement requires the Servicer to maintain hazard insurance
policies with respect to each Manufactured Home in the amounts and manner set
forth herein under "Description of the Certificates-- Servicing" in the
Prospectus. Generally, no other insurance will be maintained with respect
to the Manufactured Homes, the Contracts or the Contract Pool.

The Company will cause to be conveyed to the Trustee the Contracts and
all rights to receive payments on the Contracts that have not been received
prior to September 26, 1996, including any such payments that were due prior
to such date but were not received prior to such date. Payments due on or
after September 26, 1996, that have been received by the Company prior to
September 26, 1996 will be the property of the Company and will not be part
of the Trust Fund. The Servicer will retain physical possession of the
Contract documents. See "Description of the Certificates--Conveyance of
Contracts."

The Contract Pool will consist of approximately 4,293 Contracts having
an aggregate principal balance as of the Cut-off Date of approximately
$124,221,906.53. Each Contract was originated on or after January 27, 1986.
3,862 of the Contracts, having an aggregate unpaid principal balance of
approximately $109,161,341 as of the Cut-off Date, are manufactured housing
installment sale contracts originated by manufactured housing dealers and
purchased by the Company from such dealers or originated by the Company.
Certain of these dealers are affiliates of CHI, the parent of the Company.
The Company purchased the remaining 431 Contracts (the "Acquired Contracts")
from different financial institutions. Approximately 410 of the Acquired
Contracts (the "21st Century Contracts") having an aggregate unpaid principal
balance of approximately $14,647,432 as of the Cut-off Date were originated
or acquired by 21st Century Mortgage Corporation, a Delaware corporation
("21st Century"). The 21st Century Contracts constitute approximately 11.79%
of the Contract Pool. 21st Century was founded in 1995 for the origination,
acquisition and servicing of manufactured housing contracts like the
Contracts. Certain of the officers of 21st Century were previously officers
of the Company and the President of the Company is on the Board of Directors
of 21st Century. CHI is a minority stockholder of 21st Century. 21st
Century will act as subservicer for the 21st Century Contracts. The
Servicer, however, will remain primarily liable for the servicing of the 21st
Century Contracts. See "Vanderbilt Mortgage and Finance, Inc." in the
Prospectus.

Based solely upon the Company's review of a sample of the Acquired
Contracts undertaken in connection with its purchase of such Contracts from
such institutions, the Company's management does not believe that the
Acquired Contracts, as a whole, were underwritten in accordance with
underwriting standards that are as strict as those used by the Company in
underwriting contracts that it originates or purchases on an individual
basis. See "Underwriting Policies" in the Prospectus.

Approximately 28.60% of the Contracts (the "Bi-weekly Contracts") by
principal balance as of the Cut-off Date have bi-weekly scheduled payments
of principal and interest, and the remainder of the Contracts have monthly
scheduled payments of principal and interest. Under a Bi-weekly Contract the
obligor authorizes the Company to automatically debit the obligor's account
for the payment of each scheduled payment. If the obligor terminates such
account or the authorization of the Company to debit such account, then such
Bi-weekly Contract is converted to a Contract with scheduled monthly
payments.

Approximately 10.02% of the Contracts (the "Escalating Principal Payment
Contracts") by principal balance as of the Cut-off Date provide for an annual
increase in monthly payments over the first five years of the term of the
Contract. Under an Escalating Principal Payment Contract, the original term
of the contract is 36 years, providing initially for lower monthly payments
than if the contract were of a shorter term. Each year for a period of five
years, the term of the Escalating Principal Payment Contract automatically
converts to a shorter term, and the monthly payment increases accordingly.
At year six, the monthly payment increases to a level monthly payment which
fully amortizes the remaining principal over a twelve year term. There is
no period in which the Escalating Principal Payment Contracts have negative
amortization.

Each Contract has a fixed annual percentage rate of interest (the "APR")
and, except for the Escalating Principal Payment Contracts, generally
provides for level payments over the term of such Contract. Each Contract
fully amortizes the principal balance of the Contract over the term of the
Contract. All of the Contracts are actuarial obligations. The portion of
each scheduled payment for any Contract allocable to principal is equal to
the total amount thereof less the portion allocable to interest. The portion
of each scheduled payment due in a particular month that is allocable to
interest is a precomputed amount equal to one month's interest (or 14 days'
interest in the case of a Bi-weekly Contract) on the principal balance of the
Contract, which principal balance is determined by reducing the initial
principal balance by the principal portion of all scheduled payments that
were due in prior months (whether or not such scheduled payments were timely
made) and all prior partial principal prepayments. Thus, each payment
allocated to a scheduled monthly or bi-weekly payment of a Contract will be
applied to interest and to principal in accordance with such precomputed
allocation whether such scheduled payments are received in advance of or
subsequent to their Due Dates. All payments received on the Contracts (other
than payments allocated to items other than principal and interest or
payments sufficient to pay the outstanding principal balance of and all
accrued and unpaid interest on such Contracts) will be applied when received
to current and any previously unpaid scheduled monthly payments in the order
of the Due Dates of such payments and any payments that exceed the amount
necessary to bring the Contract current are applied to the partial prepayment
of principal of the Contract.

Except as otherwise provided herein with respect to certain Acquired
Contracts, for each Land-and-Home Contract, the Company financed the purchase
of the Manufactured Home and either took as additional security a Mortgage
on the property on which the Manufactured Home is located or, in certain
cases, the Company took a Mortgage on other property pledged on behalf of the
Obligor, or took a Mortgage on the property on which the Manufactured Home
is located in lieu of a down payment in the form of cash or the value of a
trade-in unit, or as additional security. Approximately 8.161% of the
Contracts by outstanding principal balance as of the Cut-off Date are secured
by a Mortgage on the property on which the Manufactured Home is located in
lieu of a down payment in the form of cash or the value of a trade-in unit.
See "Certain Legal Aspects of the Contracts" in the Prospectus.

76.57% of the Contracts by outstanding principal balance as of the
Cut-off Date are secured by Manufactured Homes which were new at the time the
related Contracts were originated and 23.43% of the Contracts by outstanding
principal balance as of the Cut-off Date are secured by Manufactured Homes
which were used at the time the related Contracts were originated. Each
Contract has an APR of at least 7.750% and not more than 18.000%. The
weighted average APR of the Contracts as of the Cut-off Date is approximately
11.513%. The Contracts have remaining maturities as of the Cut-off Date of
at least 48 months but not more than 360 months and original maturities of
at least 48 months but not more than 360 months. As of the Cut-off Date, the
Contracts had a weighted average original term to scheduled maturity of
approximately 184.16 months, and a weighted average remaining term to
scheduled maturity of approximately 182.17 months. The remaining term to
stated maturity of a Contract is calculated as the number of months from the
Cut-off Date to the original scheduled maturity date of such Contract. The
average outstanding principal balance of the Contracts as of the Cut-off Date
was approximately $28,935.92. The weighted average loan-to-value ratio at
the time of origination of the Contracts was approximately 86.17%.
Generally, "value" in such calculation is equal to the sum of the down
payment (which includes the value of any trade-in unit), the original amount
financed on the related Contract, which may include sales and other taxes,
and, in the case of a Land-and-Home Contract, the value of the land securing
the Contract as estimated by the dealer. Manufactured Homes, unlike
site-built homes, generally depreciate in value, and it has been the
Company's experience that, upon repossession, the market value of a
Manufactured Home securing a manufactured housing contract is generally lower
than the principal balance of the related manufactured housing contract. The
Contracts are secured by Manufactured Homes and real estate located in 33
states and the District of Columbia. Approximately 22.70%, 19.90%, 15.31%
and 10.16% of the Contracts by outstanding principal balance as of the
Cut-off Date were secured by Manufactured Homes or real estate located in
Texas, North Carolina, Tennessee and South Carolina, respectively; 7.59% in
Virginia; and 4.85% in Kentucky. No other state represented more than 4.0%
of the Contracts.

Set forth below is a description of certain additional characteristics
of the Contracts as of the Cut-off Date. Percentages may not add to 100.00%
due to rounding. Totals may not add to aggregate balances due to rounding.

GEOGRAPHICAL DISTRIBUTION OF MANUFACTURED HOMES AS OF ORIGINATION

<TABLE>
<CAPTION> Percentage of
Contract Pool
Aggregate Principal by Outstanding
Number of Contracts Balance Outstanding Principal Balance
State As of Cut-off Date As of Cut-Off Date As of Cut-off Date
<S> <C> <C> <C>
Alabama 28 $ 695,546 .56%
Arkansas 11 325,899 .26
Arizona 49 1,665,447 1.34
California 2 55,328 .04
Colorado 45 1,647,529 1.33
Delaware 14 435,547 .35
District of Columbia 1 30,674 .02
Florida 174 4,743,545 3.82
Georgia 78 1,838,972 1.48
Illinois 10 271,699 .22
Indiana 31 841,081 .68
Iowa 11 312,490 .25
Kansas 2 83,712 .07
Kentucky 229 6,023,376 4.85
Louisiana 82 2,554,313 2.06
Maryland 10 324,623 .26
Michigan 5 158,353 .13
Mississippi 37 959,270 .77
Missouri 35 1,240,042 1.00
Montana 2 45,652 .04
Nevada 7 201,999 .16
New Jersey 4 105,100 .08
New Mexico 34 1,190,429 .96
New York 15 403,305 .32
North Carolina 851 24,720,198 19.90
Ohio 52 1,422,329 1.14
Oklahoma 57 2,195,611 1.77
Pennsylvania 12 259,199 .21
South Carolina 452 12,617,366 10.16
South Dakota 1 8,127 .01
Tennessee 690 19,016,447 15.31
Texas 942 28,201,040 22.70
Virginia 313 9,433,021 7.59
West Virginia 7 194,641 .16
----- ------------ -------
Total 4,293 $124,221,907 100.00%
===== ============ =======
</TABLE>

YEARS OF ORIGINATION OF CONTRACTS

<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Principal Control Pool
Contracts Balance by Outstanding
Year of as of Outstanding Principal Balance
Origination Cut-off Date As of Cut-off Date As of Cut-off Date
- ----------- ----------- ------------------ ------------------
<S> <C> <C> <C>
1986 . . . . . . . . . 4 $ 57,990 .05%
1987 . . . . . . . . . 1 13,200 .01
1988 . . . . . . . . . 4 69,479 .06
1989 . . . . . . . . . 6 116,109 .09
1990 . . . . . . . . . 27 545,319 .44
1991 . . . . . . . . . 22 467,423 .38
1992 . . . . . . . . . 5 122,494 .10
1993 . . . . . . . . . 1 27,676 .02
1994 . . . . . . . . . 24 660,938 .53
1995 . . . . . . . . . 23 710,737 .57
1996 . . . . . . . . . 4,176 121,430,541 97.75
----- ------------ ------
Total . . . . . . . . . 4,293 $124,221,907 100.00%
===== ============ ======
</TABLE>

DISTRIBUTION OF ORIGINAL CONTRACT AMOUNTS(1)

<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Principal Control Pool
Contracts Balance by Outstanding
Original contract Amount as of Outstanding Principal Balance
(in Dollars) Cut-off Date As of Cut-off Date As of Cut-off Date
- ------------------------ ----------- ------------------ ------------------
<S> <C> <C> <C>
$0 - 5,000 . . . . . . . 3 $ 13,307 0.01%
$5,001 - 10,000 . . . . . 176 1,441,939 1.16
$10,001 - 15,000 . . . . . 446 5,595,769 4.50
$15,001 - 20,000 . . . . . 574 9,981,631 8.04
$20,001 - 25,000 . . . . . 697 15,580,291 12.54
$25,001 - 30,000 . . . . . 646 17,482,137 14.07
$30,001 - 35,000 . . . . . 550 17,634,251 14.20
$35,001 - 40,000 . . . . . 395 14,666,295 11.81
$40,001 - 45,000 . . . . . 247 10,433,928 8.40
$45,001 - 50,000 . . . . . 188 8,908,232 7.17
$50,001 - 55,000 . . . . . 135 7,062,673 5.69
$55,001 - 60,000 . . . . . 96 5,499,642 4.43
$60,001 - 65,000 . . . . . 50 3,101,845 2.50
$65,001 - 70,000 . . . . . 35 2,351,427 1.89
$70,001 - 75,000 . . . . . 15 1,086,178 0.87
$75,001 - 80,000 . . . . . 18 1,385,684 1.12
$80,001 - 85,000 . . . . . 10 821,294 0.66
$85,001 - 90,000 . . . . . 5 436,151 0.35
$90,001 - 95,000 . . . . . 1 91,370 0.07
$95,001 - 100,000 . . . . 1 96,151 0.08
$100,001 - 105,000 . . . . 1 104,839 0.08
$105,001 - 110,000 . . . . 3 322,291 0.26
$120,001 - 125,000 . . . . 1 124,584 0.10
----- ------------ ------
Total . . . . . . . . . . . . 4,293 $124,221,907 100.00%
===== ============ ======
</TABLE>

________________
* Indicates an amount greater than zero but less than 0.005% of Contract
Pool by Outstanding Principal Balance as of Cut-off Date.
(1) The greatest original Contract amount is $124,666.49, which represents
0.10% of the aggregate principal balance of the Contracts at origination.

DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS(1)

<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Principal Control Pool
Contracts Balance by Outstanding
Original as of Outstanding Principal Balance
Loan-to-Value Ratio Cut-off Date As of Cut-off Date As of Cut-off Date
- -------------------- ----------- ------------------ ------------------
<S> <C> <C> <C>

Less than 60.01% . . . . . 168 $ 3,910,989 3.15%
60.01% - 65% . . . . . . 119 2,708,194 2.18
65.01% - 70% . . . . . . 146 4,105,540 3.31
70.01% - 75% . . . . . . 205 6,296,557 5.07
75.01% - 80% . . . . . . 303 9,297,879 7.48
80.01% - 85% . . . . . . 525 14,651,881 11.79
85.01% - 90% . . . . . . 641 18,959,530 15.26
90.01% - 91% . . . . . . 757 22,534,532 18.14
91.01% - 94% . . . . . . 311 8,239,015 6.63
94.01% - 96% . . . . . . 949 29,388,201 23.66
96.01% or greater . . . . 169 4,129,588 3.32
----- ------------ ------
Total . . . . . . . . . 4,293 $124,221,907 100.00%
====== ============ ======
</TABLE>
_________
(1) The definition of "Value" is set forth above. Manufactured Homes,
unlike site-built homes, generally depreciate in value, and it should
generally be expected, especially with Contracts with high loan-to-value
ratios at origination, that any time after the origination of a Contract,
the market value of the Manufactured Home securing such Contract
may be lower than the outstanding principal balance of such Contract.

CONTRACT RATES

<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Principal Control Pool
Contracts Balance by Outstanding
Ranges of Contracts by as of Outstanding Principal Balance
Contract Rate Cut-off Date As of Cut-off Date As of Cut-off Date
- ----------------------- ----------- ------------------ ------------------
<S> <C> <C> <C>

7.000% - 8.00% . . 3 $ 234,605.02 .19%
8.001% - 9.00% . . 48 2,507,190.99 2.02
9.001% - 10.00% . . 291 10,614,889.55 8.55
10.001% - 11.00% . . 991 30,543,302.48 24.59
11.001% - 12.00% . . 1,303 44,042,505.92 35.45
12.001% - 13.00% . . 1,061 26,653,337.04 21.46
13.001% - 14.00% . . 414 7,022,421.00 5.65
14.001% - 15.00% . . 104 1,688,593.35 1.36
15.001% - 16.00% . . 9 136,665.87 .11
16.001% - 17.00% . . 9 107,729.21 .09
17.001% - 18.00% . . 60 670,666.10 .54
----- --------------- ------
Total . . . . . . . . 4,293 $124,221,906.53 100.00%
===== =============== ======
</TABLE>

REMAINING MONTHS TO MATURITY

<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Principal Control Pool
Contracts Balance by Outstanding
Months Remaining As of as of Outstanding Principal Balance
Cut-off Date Cut-off Date As of Cut-off Date As of Cut-off Date
- ---------------------- ----------- ------------------ ------------------
<S> <C> <C> <C>

36-48 . . . . . . . . . . 18 $ 145,455 .12%
49-60 . . . . . . . . . . 154 1,710,946 1.38
61-72 . . . . . . . . . . 34 433,342 .35
73-84 . . . . . . . . . . 381 6,137,360 4.94
85-96 . . . . . . . . . . 61 930,607 .75
97-108 . . . . . . . . . 307 7,142,666 5.75
109-120 . . . . . . . . . 445 8,370,106 6.74
121-132 . . . . . . . . . 70 1,802,794 1.45
133-144 . . . . . . . . . 317 7,518,105 6.05
145-156 . . . . . . . . . 147 4,570,956 3.68
157-168 . . . . . . . . . 54 1,454,402 1.17
169-180 . . . . . . . . . 816 23,340,325 18.79
181-192 . . . . . . . . . 322 12,249,553 9.86
193-204 . . . . . . . . . 346 13,478,612 10.85
205-216 . . . . . . . . . 87 3,761,431 3.03
217-228 . . . . . . . . . 72 2,929,912 2.36
229-240 . . . . . . . . . 477 18,187,330 14.64
241-252 . . . . . . . . . 5 254,479 .20
253-264 . . . . . . . . . 9 554,126 .45
265-276 . . . . . . . . . 3 176,084 .14
277-288 . . . . . . . . . 1 40,019 .03
289-300 . . . . . . . . . 153 8,238,101 6.63
348-360 . . . . . . . . . 14 795,197 .64
----- ------------ ------
Total . . . . . . . . . 4,293 $124,221,907 100.00%
===== ============ ======
</TABLE>

VANDERBILT MORTGAGE AND FINANCE, INC.

The following information supplements the information in the Prospectus
under the heading "Vanderbilt Mortgage and Finance, Inc." and "Underwriting
Policies" in the Prospectus.

The volume of manufactured housing contracts originated by the Company
for the periods indicated below and certain other information at the end of
such periods are as follows:

CONTRACT ORIGINATION

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Balance
of Contracts Originated (in
thousands). . . . . . . . . $90,041 $102,717 $119,071 $156,340 $177,311 $230,733 $292,435 $343,260 $476,467

Number of Contracts
Originated . . . . . . . . 5,692 6,629 6,719 8,346 9,230 10,880 12,401 13,857 16,910

Average Contract
Size (1). . . . . . . . . $15,819 $ 15,495 $ 17,722 $ 18,732 $ 19,210 $ 21,207 $ 23,582 $ 24,916 $ 28,177

Average Interest
Rate (1) . . . . . . . . . 13.85% 14.26% 13.95% 13.74% 13.40% 11.61% 10.84% 12.24% 10.72%
</TABLE>
___________________
(1) As of period end.

The following table shows the size of the portfolio of manufactured
housing contracts serviced by the Company on the dates indicated:

CONTRACT SERVICING PORTFOLIO

Total Number of
Contracts Being
serviced(1) . . 16,794 21,140 28,745 41,346 46,623 52,433 60,165 66,960 74,154
Originated by the
Company . . . 16,794 20,645 24,565 31,007 36,335 42,656 47,944 55,923 64,298
Acquired from
other -- 495 4,180 10,339 10,288 9,777 12,221 11,037 9,856
institutions..
</TABLE>
_____________________

(1) Excludes contracts serviced by the Company on behalf of the Resolution
Trust Corporation trust and other trusts previously serviced by First
Manufactured Housing Credit Corporation.

DELINQUENCY EXPERIENCE(1)

<TABLE>
<CAPTION>
AT JUNE 30,

-------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Number of Contracts
Outstanding(2)(3) . . . . . . . 16,794 21,140 28,745 41,346 46,623 52,433 60,165 66,960 74,154
Company Originations . . . 16,794 20,645 24,565 31,007 36,335 42,656 47,944 55,923 64,298

Acquisitions from other
institutions . . . . . . . -- 495 4,180 10,339 10,288 9,777 12,221 11,037 9,856
Number of Contracts
Delinquent(4):
Total 30 to 59 days
past due . . . . . . . . . . 268 270 406 734 680 610 772 819 953
Company Originations . . . 268 270 274 415 452 391 353 565 761
Acquisitions from other
institutions . . . . . . . . -- -- 132 319 228 219 419 254 192
Total 60 to 89 days past due . . 81 86 125 218 206 136 209 227 285
Company Originations . . . . 81 86 81 122 117 97 109 167 238
Acquisitions from other
institutions . . . . . . . . . -- -- 44 96 89 39 100 60 47
Total 90 days or more past due . 68 157 218 452 569 407 498 625 516
Company Originations . . . . 68 157 155 239 243 213 203 315 341
Acquisitions from other
institutions . . . . . . . . . -- -- 63 213 326 194 295 310 175
Total Contracts Delinquent(5) . . 417 513 749 1,404 1,455 1,153 1,479 1,671 1,754

Company Originations . . . . 417 513 510 776 812 701 665 1,047 1,340
Acquisitions from other
institutions . . . . . . . . -- -- 239 628 643 452 814 624 414
Total Contracts Delinquent(6) . . 369 436 654 1,134 1,119 857 1,184 1,208 1,511
Company Originations . . . . 369 436 449 669 713 595 556 873 1,211
Acquisitions from other
institutions . . . . .. . -- -- 205 465 406 262 628 335 300
Total Delinquencies as a
Percent(7) of
Contracts Outstanding(5) . . . 2.48% 2.43% 2.61% 3.40% 3.12% 2.20% 2.46% 2.50% 2.37%
Company Originations . . . . 2.48% 2.48% 2.08% 2.50% 2.23% 1.64% 1.39% 1.87% 2.08%
Acquisitions from other
institutions . . . . . . . . -- N/A 5.72% 6.07% 6.25% 4.62% 6.66% 5.65% 4.20%

Total Delinquencies as a
Percent(7) of
Contracts
Outstanding(6) . . . . . . 2.20% 2.06% 2.27% 2.74% 2.40% 1.63% 1.97% 1.80% 2.04%
Company Originations . . . . 2.20% 2.11% 1.83% 2.16% 1.96% 1.39% 1.16% 1.56% 1.88%
Acquisitions from other
institutions . . . . . . . -- N/A 4.90% 4.50% 3.95% 2.68% 5.14% 3.04% 3.04%
</TABLE>
__________________
(1) Includes data on contracts originated by the Company and portfolios
acquired by the Company from other financial institutions, as
described above under "Vanderbilt Mortgage and Finance, Inc."
(2) Excludes contracts serviced by others for which the Company is
contingently liable.
(3) Excludes contracts serviced by the Company on behalf of the Resolution
Trust Corporation trust and other trusts previously serviced by First
Manufactured Housing Credit Corporation.
(4) Including contracts that were repossessed during the prior 30-day
period, and based on number of days payments are contractually past
due (assuming 30-day months). Consequently, a payment due on the
first day of a month is not 30 days delinquent until the first day of
the following month.
(5) Including contracts that were repossessed during the prior 30-day
period; figures for Acquisitions from other institutions at June 30,
1995 also include all such repossessed contracts on hand.
(6) Excluding contracts that were repossessed during the prior 30-day
period.
(7) By number of contracts.

The following table sets forth the loan loss/repossession experience of
the Company and its affiliates for the manufactured housing contracts
serviced by the Company.

LOAN LOSS/REPOSSESSION EXPERIENCE(1)

<TABLE>
<CAPTION> AT OR FOR YEAR ENDED JUNE 30,
------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Number of Contracts Serviced(2)(3)... 16,794 21,140 28,745 41,346 46,623 52,433 60,165 66,960 74,154
Company Originations ............... 16,794 20,645 24,565 31,007 36,335 42,656 47,944 55,923 64,298
Acquisitions from other institutions.. __ 495 4,180 10,339 10,288 9,777 12,221 11,037 9,856
Aggregate Principal Balance of
contracts Services (4)................ $274,000 $331,000 $446,000 $622,675 $707,273 $812,430 $1,006,794 $1,200,893 $1,456,103
Company Originations ................. $274,000 $323,777 $386,176 $479,336 $569,475 $691,052 $ 852,536 $1,074,302 $1,456,103
Acquisitions from other institutions __ $7,223 $ 59,824 $143,339 $137,798 $121,378 $ 154,258 $ 126,591 $1,351,324
Net Losses from Contract Liquidations(5):

Total Dollars......................... $ 830 $ 1,599 $ 2,404 $ 5,075 $ 7,248 $ 5,220 $ 2,758 $ 2,262 $ 2,052
Company Originations.................. $ 830 $ 1,057 $ 1,478 $ 1,361 $ 2,141 $ 1,129 $ 528 $ 362 $ (442)
Acquisitions from other institutions.. -- $ 542 $ 926 $ 3,714 $ 5,107 $ 4,091 $ 2,230 $ 1,900 $ 2,494
Percentage of Average Principal Balance(6). 0.34% 0.53% 0.59% 0.89% 1.10% 0.64% 0.30% 0.20% 0.15%

Company Originations .................. 0.34% 0.35% 0.42% 0.32% 0.41% 0.17% 0.07% 0.04% (0.04)%

Acquisitions from other institutions... -- 7.50% 1.63% 2.59% 3.83% 2.96% 1.62% 1.35% 2.16%

Total Number of Contracts in Repossession (3) 189 228 312 617 652 523 565 540 709

Company Originations(7)................. 189 228 275 349 379 333 388 422 635
Acquisitions from Other Institutions.... -- N/A 37 268 273 190 177 118 74

</TABLE>

___________________
(1) Includes data on contracts originated by the Company and portfolios
acquired by the Company from other financial institutions, as
described above under "Vanderbilt Mortgage and Finance, Inc."
(2) As of period end. Excludes contracts serviced by others for which the
Company is contingently liable.
(3) Excludes contracts serviced by the Company on behalf of the Resolution
Trust Corporation trust and the other trusts previously serviced
by First Manufactured Housing Credit Corporation.
(4) As of period end. Includes principal balances of contracts serviced
by others for which the Company is contingently liable.
(5) Includes net losses on contracts serviced by others for which the
Company is contingently liable. The calculation of net losses is
determined after all accrued and unpaid interest is written off
and does not include repossession and other liquidation expenses.
In general, data with respect to repossession and other liquidation
expenses are not maintained by dealers on a separately identifiable
basis, and, therefore, this information is not available to the
Company. The Company believes that it would not be unusual for
such expenses to be equal to 15% of the Scheduled Principal Balance of
a defaulted Contract. However, actual expenses may be higher or
lower.
(6) As a percentage of the average principal balance of all contracts
being serviced during the period.
(7) Includes repossessions from contracts serviced by others for which the
Company is contingently liable.

The Company believes that its historical loss experience has been
favorably affected by its capacity to resell repossessed units through
dealers owned by CHI and to make needed repairs on repossessed units through
the facilities of such dealers, rather than paying the rates charged by
unaffiliated parties. If the Company is replaced as Servicer of the
Contracts, the successor Servicer may not have access to the CHI dealer
network and, as a consequence, the loss experience on the Contracts may be
adversely affected.

The data presented in the preceding tables are for illustrative purposes
only, and there is no assurance that the delinquency, loan loss and
repossession experience of Contracts in the Contract Pool will be similar to
that set forth above. The delinquency, loan loss and repossession experience
of manufactured housing contracts historically has been sharply affected by
a downturn in regional or local economic conditions. For instance, such a
downturn and higher levels of delinquency, loan loss and repossession were
experienced in areas dependent on the oil and gas industry. These regional
or local economic conditions are often volatile, and no predictions can be
made regarding future economic loss upon repossession. In addition, an
increased supply of used units in one region may in turn affect the supply
in other regions, thus affecting economic loss upon liquidation in such other
regions. Information regarding the geographic location, at origination, of
the Manufactured Homes securing the Contracts in the Contract Pool is set
forth under "The Contract Pool" herein.

RATIO OF EARNINGS TO FIXED CHARGES FOR CHI

Set forth below are CHI's ratios of earnings to fixed charges for the
past five years. For the purposes of compiling these ratios, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense and the interest portion of rent expense.

<TABLE>
<CAPTION> Year Ended June 30,
-------------------------------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges . . . 3.00 3.88 6.12 10.12 21.64 36.00
</TABLE>

YIELD AND PREPAYMENT CONSIDERATIONS

The Contracts have maturities at origination from 48 to 360 months, but
may be prepaid in full or in part at any time. The prepayment experience of
the Contracts (including prepayments due to liquidations of defaulted
contracts) will affect the life of the Certificates. Based on the Company's
experience with the portfolio of conventional manufactured housing contracts
serviced by it, the Company anticipates that a number of Contracts will be
prepaid in full prior to their maturity. A number of factors, including
homeowner mobility, general and regional economic conditions and prevailing
interest rates may influence prepayments. In addition, repurchases of
Contracts on account of certain breaches of representations and warranties
as described below under "Descriptions of the Certificates--Conveyance of
Contracts" will have the effect of prepayment of such Contracts and therefore
will affect the life of the Certificates. Most of the Contracts contain
provisions that prohibit the owner from selling the Manufactured Home without
the prior consent of the holder of the related Contract. Such provisions are
similar to the "due-on-sale" clauses and may not be enforceable in some
states. See "Certain Legal Aspects of the Contracts--Transfers of
Manufactured Homes; Enforceability of 'Due-on-Sale' Clauses" in the
Prospectus. The initial Servicer's policy is to permit most sales of
Manufactured Homes where the proposed buyer meets the initial Servicer's then
current underwriting standards and enters into an assumption agreement. See
"Weighted Average Life of the Offered Certificates" below and "Maturity and
Prepayment Considerations" in the Prospectus.

The allocation of distributions to the Certificateholders in accordance
with the Agreement will have the effect of accelerating the amortization of
the Senior Certificates in the sequence indicated under "Description of the
Certificates--Distributions" from the amortization that would be applicable
if distributions in respect of the Formula Principal Distribution Amount
were made pro rata according to the respective Principal Balances of each
Class of Certificates. As described under "Description
of the Certificates-- Subordination of the Class A-6
Certificates," "/__/Subordination of the Class B and Class R Certificates"
and "/__/Subordination of the Class B-2 Certificates," to the extent that,
on any Remittance Date, the Available Distribution Amount is not sufficient
to permit a full distribution of the Formula Principal Distribution Amount
or the portion thereof due on such Remittance Date to the Class of Offered
Certificates entitled to such distribution, the effect will be to delay the
amortization of such Class of Offered Certificates. If a purchaser of a
Class of Offered Certificates purchases them at a discount and calculates
its anticipated yield to maturity based on an assumed rate of payment of
principal on such Offered Certificates that is faster than the rate actually
realized, such purchaser's actual yield to maturity will be lower than the
yield so calculated by such purchaser.

The effective yield to each holder of an Offered Certificate (other than
a Class A-1 Certificate) will be below that otherwise produced by the
applicable Remittance Rate and the purchase price of such holder's
Certificate because, while interest will accrue in respect of each calendar
month, the distribution of such interest to such holders will be made on the
7th day (or, if such day is not a business day, the next succeeding business
day) of the month following the Due Period in which it accrues.

The rate of distributions of principal of the Offered Certificates and
the yield to maturity of the Offered Certificates also will be directly
related to the rate of payment of principal (including prepayments) of the
Contracts. The rate of principal distributions on the Offered Certificates
will be affected by the amortization schedules of the Contracts and the rate
of principal payments on the Contracts (including prepayments due to
liquidations upon default). The Contracts may be prepaid by the Obligors at
any time without payment of any prepayment fee or penalty.

The Class B-1 Certificateholders will not receive any distributions of
principal until the Class B Principal Distribution Test is met or the Class
A Principal Balance is reduced to zero. The rate of principal payments on
the Class B-1 Certificates, the aggregate amount of distributions on the
Class B-1 Certificates and the yield to maturity of the Class B-1
Certificates will be affected by the rate of Obligor defaults resulting in
losses on Liquidated Contracts, by the severity of those losses and by the
timing of those losses. If a purchaser of Class B-1 Certificates calculates
its anticipated yield based on an assumed rate of default and an assumed
amount of losses that are lower than the default rate and amount of losses
actually incurred and such amount of losses actually incurred is not entirely
covered by the subordination of the Class B-2 Certificates, its actual yield
to maturity will be lower than that so calculated. The timing of losses on
Liquidated Contracts will also affect an investor's actual yield to maturity,
even if the rate of defaults and severity of losses are consistent with an
investor's expectations. If the protection afforded to the Class B-1
Certificateholders by the subordination of the Class B-2 Certificates is
exhausted, the Class B-1 Certificateholders will bear all losses and
delinquencies on the Contracts and will incur a loss on their investment.
There can be no assurance that the delinquency or repossession experience set
forth under "Vanderbilt Mortgage and Finance, Inc." will be representative
of the results that may be experienced with respect to the Contracts. There
can be no assurance as to the delinquency, repossession or loss experience
with respect to the Contracts.

As described herein under the "Description of the Certificates--
Subordination of the Class A-6 Certificates," on any Remittance Date on or
after the Remittance Date, if any, on which the Class A Principal Balance is
greater than the Pool Scheduled Principal Balance, if the Available
Distribution Amount is not sufficient to permit a full distribution of the
Formula Principal Distribution Amount to the Class of Class A
Certificateholders then entitled to such amount, the Class A-6
Certificateholders will absorb (i) all losses on each Liquidated Contract in
the amount by which its Liquidation Proceeds (net of Liquidation Expenses and
applicable Advances) are less than its unpaid principal balance plus accrued
and unpaid interest thereon at the weighted average Remittance Rate and the
percentage rate used to calculate the monthly servicing fee and (ii) other
shortfalls in the Available Distribution Amount and will incur a loss on
their investments. See "Description of the Certificates--Distributions"
herein.

On any Remittance Date on or after the Remittance Date, if any, on which
the Principal Balance of the Senior Certificates is greater than the Pool
Scheduled Principal Balance, if the Available Distribution Amount is not
sufficient to permit a full distribution of the Formula Principal
Distribution Amount to the Senior Certificateholders, the Senior
Certificateholders will absorb (i) all losses on each Liquidated Contract in
the amount by which its Liquidation Proceeds (net of Liquidation Expenses and
applicable Advances) are less than its unpaid principal balance plus accrued
and unpaid interest thereon at the weighted average Remittance Rate and the
percentage rate used to calculate the monthly servicing fee and (ii) other
shortfalls in the Available Distribution Amount and will incur a loss on
their investments. See "Description of the Certificates--Distributions"
herein.

The Company (if it is no longer the Servicer) and the Servicer (whether
or not the Company remains the Servicer) each has the option to repurchase
the Contracts and any other property constituting the Trust Fund if on any
Remittance Date the Pool Scheduled Principal Balance is less than 10% of the
Total Original Contract Pool Principal Balance. See "Description of the
Certificates--Optional Termination" herein. The exercise of such option
would effect the early retirement of the then outstanding Offered
Certificates.

In the event that there were a sufficiently large number of
delinquencies on the Contracts in any Due Period that were not covered by
Monthly Advances as described herein, the amounts paid to Certificateholders
could be less than the amount of principal and interest that would otherwise
be payable on the Offered Certificates with respect to such Due Period. In
such event, even if delinquent payments on the Contracts were eventually
recovered upon liquidation, since the amounts received would not include
interest on delinquent interest payments, the effective yield on the
Contracts would be reduced, and under certain circumstances it is possible
that sufficient amounts might not be available for the ultimate payment of
all principal of the Offered Certificates plus accrued interest thereon at
the related Remittance Rate, thus also reducing the effective yield on the
Offered Certificates.

The Class A-1 Remittance Rate for a Remittance Date will be variable and
will equal the sum of (a) LIBOR appearing on the Telerate Screen Page 3750,
as of the second LIBOR Business Day (as defined herein) prior to the first
day of the related Interest Period (or as of two LIBOR Business Days prior
to the Closing Date, in the case of the first Interest Period) and (b)
0.110%, unless the Contracts prepay in such a manner that the applicable
Weighted Average Net Contract Rate is less than such amount, in which case
the Class A-1 Remittance Rate will equal such Weighted Average Net Contract
Rate. The Class A-2 Remittance Rate will be 6.400% per annum (computed on
the basis of a 360-day year of twelve 30-day months), unless the Contracts
prepay in such a manner that the applicable Weighted Average Net Contract
Rate is less than 6.400%, in which case the Class A-2 Remittance Rate will
equal such Weighted Average Net Contract Rate. The Class A-3 Remittance Rate
will be 6.700% per annum (computed on the basis of a 360-day year of twelve
30-day months), unless the Contracts prepay in such a manner that the
applicable Weighted Average Net Contract Rate is less than 6.700%, in which
case the Class A-3 Remittance Rate will equal such Weighted Average Net
Contract Rate. The Class A-4 Remittance Rate will be 6.975% per annum
(computed on the basis of a 360-day year of twelve 30-day months), unless the
Contracts prepay in such a manner that the applicable Weighted Average Net
Contract Rate is less than 6.975%, in which case the Class A-4 Remittance
Rate will equal such Weighted Average Net Contract Rate. The Class A-5
Remittance Rate will be 7.235% per annum (computed on the basis of a 360-day
year of twelve 30-day months), unless the Contracts prepay in such a manner
that the applicable Weighted Average Net Contract Rate is less than 7.235%,
in which case the Class A-5 Remittance Rate will equal such Weighted Average
Net Contract Rate. The Class A-6 Remittance Rate will be 7.525% per annum
(computed on the basis of a 360-day year of twelve 30-day months), unless the
Contracts prepay in such a manner that the applicable Weighted Average Net
Contract Rate is less than 7.525%, in which case the Class A-6 Remittance
Rate will equal such Weighted Average Net Contract Rate. The Class B-1
Remittance Rate will be 7.450% per annum (computed on the basis of a 360-day
year of twelve 30-day months), unless the Contracts prepay in such a manner
that the applicable Weighted Average Net Contract Rate is less than 7.450%,
in which case the Class B-1 Remittance Rate will equal such Weighted Average
Net Contract Rate. The Class B-2 Remittance Rate will be 8.000% per annum
(computed on the basis of a 360-day year of twelve 30-day months), unless the
Contracts prepay in such a manner that the applicable Weighted Average Net
Contract Rate is less than 8.000%, in which case the Class B-2 Remittance
Rate will equal such Weighted Average Net Contract Rate.

While partial prepayments of the principal on the Contracts are applied
on Due Dates, Obligors are not required to pay interest on the Contracts
after the date of a full prepayment of principal. As a result, full
prepayments in advance of the related Due Dates for such Contracts in any Due
Period will reduce the amount of interest received from Obligors during such
Due Period to less than one month's interest. On the other hand, when a
Contract (other than a Bi-weekly Contract) is prepaid in full during any
period, but after the Due Date for such Contract in such Due Period, the
effect will be to increase the amount of interest received from the related
Obligor during such Due Period to more than one month's interest. If a
sufficient number of Contracts are prepaid in full in a given Due Period in
advance of their respective Due Dates, interest payable on all of the
Contracts during that Due Period may be less than the interest payable on the
Class A and Class B Certificates with respect to such Due Period. In
addition, because the principal balance of the Bi-weekly Contracts is reduced
on a bi-weekly basis, the amount of interest due from Obligors on such
Contracts is less than that which would have accrued if such Contracts were
amortized on a monthly basis. As a result, the Trust Fund may not receive
sufficient monies to pay the interest on the Senior and/or Subordinate
Certificates in the amounts set forth herein under "Description of the
Certificates--Distributions" and to make a full distribution to the Senior
and/or Subordinate Certificateholders of the Formula Principal Distribution
Amounts respectively allocable to them. Although no assurance can be given
in this matter, the Company does not anticipate that the net shortfall of
interest received because of prepayments in full or the amortization of the
Bi-weekly Contracts in any Due Period would be great enough, in the absence
of delinquencies and Liquidation Losses, to reduce the Available Distribution
Amount for a Remittance Date below the amount required to be distributed to
Class A and Class B Certificateholders on that Remittance Date in the absence
of such prepayment interest shortfalls.

Each scheduled payment on a Bi-weekly Contract in any Due Period will
contain only two weeks of interest, rather than one month's interest. In
addition, the second, and in some Due Periods the third, scheduled payment
in each Due Period will be calculated on a principal balance that is lower
than the principal balance at the beginning of that Due Period. These
characteristics may result in the interest due on a Bi-weekly Contract in a
particular Due Period being less than thirty days' interest on the principal
balance thereof at the beginning of the Due Period.

WEIGHTED AVERAGE LIFE OF THE OFFERED CERTIFICATES

The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Offered
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.

Weighted average life refers to the average amount of time from the date
of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average life of the Offered
Certificates will be affected by the rate at which principal on the Contracts
is paid. Principal payments on Contracts may be in the form of scheduled
amortization or prepayments (for this purpose, the term "prepayment" includes
repayments and liquidations due to default or other dispositions of
Contracts). Prepayments on contracts may be measured by a prepayment
standard or model. The model used in this Prospectus Supplement ("Prepayment
Model") is based on an assumed rate of prepayment each month of the then
unpaid principal balance of a pool of new Contracts. 100% of the Prepayment
Model assumes prepayment rates of 3.7% per annum of the then unpaid principal
balance of such Contracts in the first month of the life of the Contracts and
an additional 0.1% per annum in each month thereafter until the 24th month.
Beginning in the 24th month and in each month thereafter during the life of
the Contracts, 100% of the Prepayment Model assumes a constant prepayment
rate of 6.00% per annum.

As used in the following tables "0% of the Prepayment Model"
assumes no prepayments on the Contracts; "100% of the Prepayment
Model" assumes the Contracts will prepay at rates equal to 100% of
the Prepayment Model assumed prepayment rates; "175% of the Prepayment
Model" assumes the Contracts will prepay at rates equal to 175% of the
Prepayment Model assumed prepayment rates; "250% of the Prepayment Model"
assumes the Contracts will prepay at rates equal to 250% of the
Prepayment Model assumed prepayment rates; and "350% of the Prepayment
Model" assumes the Contracts will prepay at rates equal to 350% of the
Prepayment Model assumed prepayment rates.

There is no assurance, however, that prepayments of the Contracts
will conform to any level of the Prepayment Model, and no
representation is made that the Contracts will prepay at the prepayment
rates shown or any other prepayment rate. The rate of principal payments
on pools of manufactured housing contracts is influenced by a variety of
economic, geographic, social and other factors, including the level of
interest rates and the rate at which manufactured homeowners sell their
manufactured homes or default on their contracts. Other factors
affecting prepayment of contracts include changes in obligors'
housing needs, job transfers, unemployment and obligors' net equity in
the manufactured homes. In the case of mortgage loans secured by
site-built homes, in general, if prevailing interest rates fall
significantly below the interest rates on such mortgage loans, the mortgage
loans are likely to be subject to higher prepayment rates than if
prevailing interest rates remain at or above the rates borne by such
mortgage loans. Conversely, if prevailing interest rates rise above the
interest on such mortgage loans, the rate of prepayment would be expected to
decrease. In the case of manufactured housing contracts, however, because
the outstanding principal balances are, in general, much smaller than
mortgage loan balances and the original term to maturity of each such
contract is generally shorter, the reduction or increase in the size of
the monthly payments on contracts of the same maturity and principal
balance arising from a change in the interest rate thereon is
generally much smaller. Consequently, changes in prevailing interest rates
may not have a similar effect, or may have a similar effect, but to a
smaller degree, on the prepayment rates on manufactured housing contracts.

The tables set forth below assume that there are no
delinquencies on the Contracts and that there will be a sufficient Available
Distribution Amount to distribute interest on the Offered Certificates and
the Formula Principal Distribution Amount to the Certificateholders then
entitled thereto and to pay the Monthly Servicing Fee to the Company.

The percentages and weighted average lives in the following
tables were determined assuming that (i) scheduled interest and principal
payments on the Contracts are received in a timely manner and prepayments
are made at the indicated percentages of the Prepayment Model set forth
in the tables; (ii) neither the Servicer nor the Company exercises its right
of optional termination described above; (iii) the Contracts will, as of
the Cut-off Date, be grouped into six pools having the additional
characteristics set forth below under "Assumed Contract Characteristics";
(iv) the Class A-1 Certificates initially represent 23.18% of the
entire ownership interest in the Trust Fund and have a Class A-1 Remittance
Rate of 5.485% per annum, the Class A-2 Certificates initially represent
21.98% of the entire ownership interest in the Trust Fund and have a
Class A-2 Remittance Rate of 6.400% per annum, the Class A-3 Certificates
initially represent 15.38% of the entire ownership interest in the Trust
Fund and have a Class A-3 Remittance Rate of 6.700% per annum, the
Class A-4 Certificates initially represent 9.50% of the entire ownership
interest in the Trust Fund and have a Class A-4 Remittance Rate of 6.975%
per annum, the Class A-5 Certificates initially represent 12.46% of the
entire ownership interest in the Trust Fund and have a Class A-5
Remittance Rate of 7.235% per annum, the Class A-6 Certificates initially
represent 8.00% of the entire ownership interest in the Trust Fund
and have a Class A-6 Remittance Rate of 7.525% per annum, the Class B-1
Certificates initially represent 5.50% of the entire ownership interest
in the Trust Fund and have a Class B-1 Remittance Rate of 7.450% per
annum and the Class B-2 Certificates initially represent 4.00% of the entire
ownership interest in the Trust Fund and have a Class B-2 Remittance Rae of
8.000% per annum; (v) no interest shortfalls will arise in connection
with prepayment in full of the Contracts; (vi) there will be no losses
on the Contract Pool; (vii) a servicing fee of 1.25% per annum will be
paid to the Servicer; and (viii) the Class B Principal Distribution Test
is satisfied. No representation is made that the Contracts will
experience delinquencies or losses at the respective rates assumed above or
at any other rates.

<TABLE>
<CAPTION>
ASSUMED CONTRACT CHARACTERISTICS
REMAINING ORIGINAL
CURRENT TERM TO TERM TO
PRINCIPAL MATURITY MATURITY
POOL BALANCE APR (MONTHS) (MONTHS)
<S> <C> <C> <C> <C>
1/(1)/ . . . . . . . . . . . $12,449,094.62 11.594% 203 204
2 . . . . . . . . . . . . . . $8,236,935.70 12.157% 77 78
3 . . . . . . . . . . . . . . $15,207,613.03 11.960% 110 111
4 . . . . . . . . . . . . . . $9,208,614.29 12.138% 137 139
5 . . . . . . . . . . . . . . $28,768,311.00 11.731% 170 174
6 . . . . . . . . . . . . . . $40,293,332.47 11.200% 214 216
7 . . . . . . . . . . . . . . $10,058,005.42 10.266% 300 301
Total . . . . . . . . . $124,221,906.53

</TABLE>
________
(1) The Contracts in Pool 1 provide for an annual increase in monthly
scheduled payments. Initially, the Contracts in Pool 1 provide for a
monthly scheduled payment of $122,198.07. On September 26, 1997,
1998, 1999, 2000 and 2001, respectively, monthly scheduled payments
increase to $124,175.95, $127,397.71, $133,568.06, $146,173.86 and
$150,989.03, respectively. From September 26, 2001 to the end of
such Contracts' terms, the monthly scheduled payment shall be
$150,989.03. The Contracts in the other pools provide for level
payments over the term of such Contracts.

Since the tables were prepared on the basis of the assumptions in the
preceding paragraph, there are discrepancies between the characteristics
of the actual Contracts and the characteristics of the Contracts assumed
in preparing the tables. Any such discrepancy may have an effect upon the
percentages of the Original Class A-1 Principal Balance, Original Class
A-2 Principal Balance, Original Class A-3 Principal Balance, Original
Class A-4 Principal Balance, Original Class A-5 Principal Balance,
Original Class A-6 Principal Balance, Original Class B-2 Principal Balance
and Original Class B-2 Principal Balance outstanding and weighted average
lives of the Class A-1 Certificates, Class A-2 Certificates, Class A-3
Certificates, Class A-4 Certificates, Class A-5 Certificates, Class A-6
Certificates, Class B-1 Certificates and Class B-2 Certificates set forth
in the tables. In addition, since the actual Contracts and the Trust Fund
have characteristics which differ from those assumed in preparing the
tables set forth below, the distributions of principal on the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates, Class A-6 Certificates, Class B-1
Certificates and Class B-2 Certificates may be made earlier or later than
as indicated in the tables.

It is not likely that Contracts will prepay at any constant
percentage of the Prepayment Model to maturity or that all Contracts will
prepay at the same rate. In addition, the diverse remaining terms to
maturity of the Contracts (which include recently originated Contracts)
could produce slower distributions of principal than as indicated in the
tables at the various percentages of the Prepayment Model specified even
if the weighted average remaining term to maturity of the Contracts is the
same as the weighted average remaining term to maturity of the Assumed
Contract Characteristics.

Investors are urged to make their investment decisions on a basis
that includes their determination as to anticipated prepayment rates under
a variety of the assumptions discussed herein.

Based on the foregoing assumptions, the following tables indicate the
resulting weighted average lives of the Offered Certificates and set forth
the percentage of the Original Class A-1 Principal Balance, Original Class
A-2 Principal Balance, Original Class A-3 Principal Balance, Original
Class A-4 Principal Balance, Original Class A-5 Principal Balance,
Original Class A-6 Principal Balance, Original Class B-1 Principal Balance
and Original Class B-2 Principal Balance that would be outstanding after
each of the dates shown at the indicated percentages of the Prepayment
Model.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-1
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%

<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 86 68 54 40 30
October 7, 1998 . . . . . . 70 31 3 0 0
October 7, 1999 . . . . . . 53 0 0 0 0
October 7, 2000 . . . . . . 32 0 0 0 0
October 7, 2001 . . . . . . 9 0 0 0 0
October 7, 2002 . . . . . . 0 0 0 0 0
Weighted Average Life 3.0 1.5 1.1 0.8 0.7
(years)(1) . . . . . . . .

</TABLE>

(table continued)

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%

</TABLE>
___________________________
(1) The weighted average life of the Class A-1 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class A-1
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class A-1 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-2
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%

<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 74 56
October 7, 1999 . . . . . . 100 94 52 13 0
October 7, 2000 . . . . . . 100 56 6 0 0
October 7, 2001 . . . . . . 100 19 0 0 0
October 7, 2002 . . . . . . 82 0 0 0 0
October 7, 2003 . . . . . . 55 0 0 0 0
October 7, 2004 . . . . . . 27 0 0 0 0
October 7, 2005 . . . . . . 0 0 0 0 0
Weighted Average Life 7.1 4.2 3.1 2.4 2.1
(years)(1) . . . . . . . .

</TABLE>

(table continued)

</TABLE>

___________________________
(1) The weighted average life of the Class A-2 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class A-2
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class A-2 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-3
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%

<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 85
October 7, 2000 . . . . . . 100 100 100 46 9
October 7, 2001 . . . . . . 100 100 49 0 0
October 7, 2002 . . . . . . 100 83 7 0 0
October 7, 2003 . . . . . . 100 45 0 0 0
October 7, 2004 . . . . . . 100 10 0 0 0
October 7, 2005 . . . . . . 98 0 0 0 0
October 7, 2006 . . . . . . 67 0 0 0 0
October 7, 2007 . . . . . . 34 0 0 0 0
October 7, 2008 . . . . . . 2 0 0 0 0
October 7, 2009 . . . . . . 0 0 0 0 0
Weighted Average Life 10.5 6.9 5.1 3.9 3.4
(years)(1) . . . . . . . .

</TABLE>

(table continued)

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>

Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 85
October 7, 2000 . . . . . . 100 100 100 46 9
October 7, 2001 . . . . . . 100 100 49 0 0
October 7, 2002 . . . . . . 100 83 7 0 0
October 7, 2003 . . . . . . 100 45 0 0 0
October 7, 2004 . . . . . . 100 10 0 0 0
October 7, 2005 . . . . . . 98 0 0 0 0
October 7, 2006 . . . . . . 67 0 0 0 0
October 7, 2007 . . . . . . 34 0 0 0 0
October 7, 2008 . . . . . . 2 0 0 0 0
October 7, 2009 . . . . . . 0 0 0 0 0
Weighted Average Life 10.5 6.9 5.1 3.9 3.4
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-3 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class A-3
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class A-3 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-4
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 74 14
October 7, 2002 . . . . . . 100 100 100 12 0
October 7, 2003 . . . . . . 100 100 52 0 0
October 7, 2004 . . . . . . 100 100 3 0 0
October 7, 2005 . . . . . . 100 62 0 0 0
October 7, 2006 . . . . . . 100 17 0 0 0
October 7, 2007 . . . . . . 100 0 0 0 0
October 7, 2008 . . . . . . 100 0 0 0 0
October 7, 2009 . . . . . . 48 0 0 0 0
October 7, 2010 . . . . . . 0 0 0 0 0
Weighted Average Life 13.0 9.3 7.1 5.4 4.6
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-4 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class A-4
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class A-4 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-5
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 100 100
October 7, 2002 . . . . . . 100 100 100 100 68
October 7, 2003 . . . . . . 100 100 100 71 35
October 7, 2004 . . . . . . 100 100 100 40 10
October 7, 2005 . . . . . . 100 100 68 15 0
October 7, 2006 . . . . . . 100 100 42 0 0
October 7, 2007 . . . . . . 100 82 19 0 0
October 7, 2008 . . . . . . 100 54 0 0 0
October 7, 2009 . . . . . . 100 28 0 0 0
October 7, 2010 . . . . . . 91 0 0 0 0
October 7, 2011 . . . . . . 58 0 0 0 0
October 7, 2012 . . . . . . 26 0 0 0 0
October 7, 2013 . . . . . . 0 0 0 0 0
Weighted Average Life 15.2 12.2 9.8 7.7 6.6
(years)(1) . . . . . . . .

</TABLE>
(table continued)
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 100 100
October 7, 2002 . . . . . . 100 100 100 100 68
October 7, 2003 . . . . . . 100 100 100 71 35
October 7, 2004 . . . . . . 100 100 100 40 10
October 7, 2005 . . . . . . 100 100 68 15 0
October 7, 2006 . . . . . . 100 100 42 0 0
October 7, 2007 . . . . . . 100 82 19 0 0
October 7, 2008 . . . . . . 100 54 0 0 0
October 7, 2009 . . . . . . 100 28 0 0 0
October 7, 2010 . . . . . . 91 0 0 0 0
October 7, 2011 . . . . . . 58 0 0 0 0
October 7, 2012 . . . . . . 26 0 0 0 0
October 7, 2013 . . . . . . 0 0 0 0 0
Weighted Average Life 15.2 12.2 9.8 7.7 6.6
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-5 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class A-5
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class A-5 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS A-6
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 100 100
October 7, 2002 . . . . . . 100 100 100 100 100
October 7, 2003 . . . . . . 100 100 100 100 100
October 7, 2004 . . . . . . 100 100 100 100 100
October 7, 2005 . . . . . . 100 100 100 100 84
October 7, 2006 . . . . . . 100 100 100 93 62
October 7, 2007 . . . . . . 100 100 100 68 39
October 7, 2008 . . . . . . 100 100 99 43 20
October 7, 2009 . . . . . . 100 100 67 23 6
October 7, 2010 . . . . . . 100 99 39 6 0
October 7, 2011 . . . . . . 100 67 20 0 0
October 7, 2012 . . . . . . 100 39 5 0 0
October 7, 2013 . . . . . . 78 12 0 0 0
October 7, 2014 . . . . . . 31 0 0 0 0
October 7, 2015 . . . . . . 25 0 0 0 0
October 7, 2016 . . . . . . 19 0 0 0 0
October 7, 2017 . . . . . . 12 0 0 0 0
October 7, 2018 . . . . . . 4 0 0 0 0
October 7, 2019 . . . . . . 0 0 0 0 0
Weighted Average Life 18.2 15.6 13.8 11.8 10.6
(years)(1) . . . . . . . .

</TABLE>
(table continued)
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 100 100
October 7, 2002 . . . . . . 100 100 100 100 100
October 7, 2003 . . . . . . 100 100 100 100 100
October 7, 2004 . . . . . . 100 100 100 100 100
October 7, 2005 . . . . . . 100 100 100 100 84
October 7, 2006 . . . . . . 100 100 100 93 62
October 7, 2007 . . . . . . 100 100 100 68 39
October 7, 2008 . . . . . . 100 100 99 43 20
October 7, 2009 . . . . . . 100 100 67 23 6
October 7, 2010 . . . . . . 100 99 39 6 0
October 7, 2011 . . . . . . 100 67 20 0 0
October 7, 2012 . . . . . . 100 39 5 0 0
October 7, 2013 . . . . . . 78 12 0 0 0
October 7, 2014 . . . . . . 31 0 0 0 0
October 7, 2015 . . . . . . 25 0 0 0 0
October 7, 2016 . . . . . . 19 0 0 0 0
October 7, 2017 . . . . . . 12 0 0 0 0
October 7, 2018 . . . . . . 4 0 0 0 0
October 7, 2019 . . . . . . 0 0 0 0 0
Weighted Average Life 18.2 15.6 13.8 11.8 10.6
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class A-6 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class A-6
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class A-6 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS B-1
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:

</TABLE>
___________________________
(1) The weighted average life of the Class B-1 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class B-1
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class B-1 Principal
Balance.

PERCENT OF THE ORIGINAL PRINCIPAL BALANCE OF THE CLASS B-2
CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF THE
PREPAYMENT MODEL SET FORTH BELOW:
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 100 100
October 7, 2002 . . . . . . 100 100 100 100 100
October 7, 2003 . . . . . . 100 100 100 100 100
October 7, 2004 . . . . . . 100 100 100 100 100
October 7, 2005 . . . . . . 100 100 100 85 73
October 7, 2006 . . . . . . 100 100 83 64 54
October 7, 2007 . . . . . . 100 91 65 50 50
October 7, 2008 . . . . . . 100 73 50 50 50
October 7, 2009 . . . . . . 100 57 50 50 50
October 7, 2010 . . . . . . 97 50 50 50 39
October 7, 2011 . . . . . . 76 50 50 42 25
October 7, 2012 . . . . . . 56 50 50 27 15
October 7, 2013 . . . . . . 50 50 32 14 8
October 7, 2014 . . . . . . 50 38 16 6 3
October 7, 2015 . . . . . . 50 32 13 5 2
October 7, 2016 . . . . . . 50 26 10 4 2
October 7, 2017 . . . . . . 50 21 7 3 1
October 7, 2018 . . . . . . 50 15 5 2 1
October 7, 2019 . . . . . . 41 10 3 1 0
October 7, 2020 . . . . . . 21 5 2 0 0
October 7, 2021 . . . . . . 0 0 0 0 0
Weighted Average Life 19.4 16.2 14.4 13.0 12.2
(years)(1) . . . . . . . .
</TABLE>
(table continued)
<TABLE>
<CAPTION>
Prepayments (% of Prepayment Model)
0% 100% 175% 250% 300%
<S> <C> <C> <C> <C> <C>
Initial Percentage . . . . 100 100 100 100 100
October 7, 1997 . . . . . . 100 100 100 100 100
October 7, 1998 . . . . . . 100 100 100 100 100
October 7, 1999 . . . . . . 100 100 100 100 100
October 7, 2000 . . . . . . 100 100 100 100 100
October 7, 2001 . . . . . . 100 100 100 100 100
October 7, 2002 . . . . . . 100 100 100 100 100
October 7, 2003 . . . . . . 100 100 100 100 100
October 7, 2004 . . . . . . 100 100 100 100 100
October 7, 2005 . . . . . . 100 100 100 85 73
October 7, 2006 . . . . . . 100 100 83 64 54
October 7, 2007 . . . . . . 100 91 65 50 50
October 7, 2008 . . . . . . 100 73 50 50 50
October 7, 2009 . . . . . . 100 57 50 50 50
October 7, 2010 . . . . . . 97 50 50 50 39
October 7, 2011 . . . . . . 76 50 50 42 25
October 7, 2012 . . . . . . 56 50 50 27 15
October 7, 2013 . . . . . . 50 50 32 14 8
October 7, 2014 . . . . . . 50 38 16 6 3
October 7, 2015 . . . . . . 50 32 13 5 2
October 7, 2016 . . . . . . 50 26 10 4 2
October 7, 2017 . . . . . . 50 21 7 3 1
October 7, 2018 . . . . . . 50 15 5 2 1
October 7, 2019 . . . . . . 41 10 3 1 0
October 7, 2020 . . . . . . 21 5 2 0 0
October 7, 2021 . . . . . . 0 0 0 0 0
Weighted Average Life 19.4 16.2 14.4 13.0 12.2
(years)(1) . . . . . . . .

</TABLE>
___________________________
(1) The weighted average life of the Class B-2 Certificates is determined
by (i) multiplying the amount of each principal distribution by the
number of years from the initial date of issuance of the Class B-2
Certificates to the related Remittance Date, (ii) summing the results
and (iii) dividing the sum by the Original Class B-2 Principal
Balance.

DESCRIPTION OF THE CERTIFICATES

The Certificates will be issued pursuant to the Agreement. A copy of
a general form of a Pooling and Servicing Agreement has been filed with
the Securities and Exchange Commission. A copy of the execution form of
the Agreement (without certain exhibits) will be filed with the Securities
and Exchange Commission after the initial issuance of the Certificates.
The following description supplements the description of the Agreement and
the Certificates under the caption "Description of the Certificates" in
the Prospectus and must be read together therewith. The following
summaries describe certain terms of the Agreement, do not purport to be
complete and are subject to, and are qualified in their entirety by
reference to, the provisions of the Agreement. When particular provisions
or terms used in the Agreement are referred to, the actual provisions
(including definitions of terms) are incorporated by reference.

GENERAL

The Certificates will be issued in fully registered form only, in
denominations of $50,000 and integral multiples of $1,000 in excess
thereof, except for a denomination representing the remainder of a Class
of Certificates. The Percentage Interest of a Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class B-1 or Class B-2 Certificate
is the percentage obtained from dividing its denomination by the Original
Class A-1 Principal Balance, the Original Class A-2 Principal Balance, the
Original Class A-3 Principal Balance, the Original Class A-4 Principal
Balance, the Original Class A-5 Principal Balance, the Original Class A-6
Principal Balance, the Original Class B-1 Principal Balance and the
Original Class B-2 Principal Balance, respectively. Definitive
Certificates, if issued, will be transferable and exchangeable at the
corporate trust office of the Trustee. No service charge will be made for
any registration of exchange or transfer, but the Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge.

The Trust Fund includes (i) the Contract Pool, including all rights
to receive payments on the Contracts received on or after the Cut-off
Date, (ii) the amounts held from time to time in an account (the
Certificate Account") maintained by the Trustee pursuant to the Agreement,
(iii) any property which initially secured a Contract and which is
acquired in the process of realizing thereon and (iv) the proceeds of all
insurance policies described herein.

The Company will cause the Contracts to be assigned to the Trustee or
a co-trustee. The Company, as Servicer, will service the Contracts
pursuant to the Agreement. The Contract documents will be held for the
benefit of the Trustee by the Servicer.

Distributions of principal and interest on the Certificates will be
made on the 7th day of each month, or, if such day is not a business day,
the next succeeding business day (each, a "Remittance Date") beginning in
November 1996, to the persons in whose names the Certificates are
registered at the close of business on the related Record Date. With
respect to each Remittance Date, the Offered Certificates will accrue
interest in respect of each calendar month preceding such Remittance Date.
If definitive Offered Certificates are issued, distributions will
be made by check mailed to the address of the person entitled thereto as
it appears on the Certificate Register, except that a holder of Offered
Certificates with original denominations aggregating at least $5 million
may request payment by wire transfer of funds pursuant to written
instructions delivered to the Trustee at least five business days prior to
the Record Date. The final distribution in retirement of the Certificates
will be made only upon presentation and surrender of the Certificates at
the office or agency of the Trustee specified in the final distribution
notice to Certificateholders.

CONVEYANCE OF CONTRACTS

In addition to the representations and warranties described in the
Prospectus under "Description of Certificates--Conveyance of Contracts,"
the Company has also made certain warranties with respect to the Contracts
in the aggregate, including that (i) the aggregate principal amount
payable by the Obligors as of the Cut-off Date equals the Cut-off Date
Pool Principal Balance; (ii) approximately 76.57% of the Cut-off Date Pool
Principal Balance is attributable to loans to purchase new Manufactured
Homes and approximately 23.43% of the Cut-off Date Pool Principal Balance
is attributable to loans to purchase used Manufactured Homes; (iii) no
Contract has a remaining maturity of more than 360 months; (iv) the date
of each Contract is on or after January 27, 1986; and (v) no adverse
selection procedures were employed in selecting the Contracts.

PAYMENTS ON CONTRACTS

The Trustee will establish and maintain the Certificate Account (i)
at a depository institution organized under the laws of the United States
or any state, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation (the "FDIC")
whose commercial paper or unsecured long-term debt has a rating of P-1 by
Moody's of unsecured long-term debt, and which is subject to examination
by federal or state authorities or a depository institution otherwise
acceptable to Moody's, (ii) in the corporate trust department of the
Trustee or (iii) at an institution otherwise acceptable to Moody's (an
"Eligible Institution"). Funds in the Certificate Account will be
invested in Eligible Investments (as defined in the Agreement) that will
mature or be subject to redemption not later than the business day
preceding the applicable monthly Remittance Date. Eligible Investments
include, among other investments, obligations of the United States or of
any agency thereof backed by the full faith and credit of the United
States; federal funds, certificates of deposit, time deposits and bankers'
acceptances sold by eligible financial institutions; commercial paper
rated P-1 by Moody's; money market funds acceptable to Moody's; and other
obligations acceptable to Moody's.

All payments in respect of principal and interest on the Contracts
received by the Servicer, including Principal Prepayments and Liquidation
Proceeds (net of Liquidation Expenses), will be paid into the Certificate
Account no later than the second business day following receipt thereof.
Amounts received as late payment fees, extension fees, assumption fees or
similar fees will be retained by the Servicer as part of its servicing
fees. See "Description of Certificates--Servicing Compensation and
Payment of Expenses" in the Prospectus. In addition, amounts paid by the
Company for Contracts repurchased as a result
of breach of a representation or warranty under the Agreement and amounts
required to be deposited upon substitution of an Eligible Substitute
Contract because of breach of a representation or warranty, as described
under "Conveyance of Contracts" above, will be paid into the Certificate
Account. The Servicer will deposit the Monthly Advance (described under
"Advances" below), if any, in the Certificate Account on or before each
Determination Date.

On the fifth business day prior to each Remittance Date (the
"Determination Date"), the Servicer will determine the Available
Distribution Amount and the amounts to be distributed on the Certificates
for the following Remittance Date. The Available Distribution Amount is
the sum of (a) the Monthly Advance for such Remittance Date and (b) the
amount in the Certificate Account on the close of business on the last day
of the immediately preceding Due Period less the sum of (i) scheduled
payments that are due in a Due Period subsequent to such Due Period; (ii)
payments on Contracts that have been repurchased as a result of a breach
of a representation or warranty and any other payments not required to be
deposited in the Certificate Account; (iii) reimbursements to the Servicer
in the amount of Liquidation Expenses incurred and taxes and insurance
premiums advanced by the Servicer in respect of Manufactured Homes; (iv)
if Vanderbilt is no longer the Servicer, the Monthly Servicing Fee equal
to 1/12th of the product of 1.25% and the Pool Scheduled Principal Balance
for the immediately preceding Remittance Date; (v) reimbursements to the
Servicer for Nonrecoverable Advances and Monthly Advances in respect of
Liquidated Contracts, to the extent permitted by the Agreement; and (vi)
certain expenses reimbursable to the Company as provided in the Agreement.

The Trustee or its Paying Agent will withdraw funds from the
Certificate Account (but only to the extent of the related Available
Distribution Amount) to make payments to Certificateholders as specified
under "Distributions" below. From time to time, as provided in the
Agreement, the Servicer will also withdraw funds from the Certificate
Account to make payments to it as permitted by the Agreement and described
in clauses (ii), (iii), (iv), (v) and (vi) in the previous paragraph.

DISTRIBUTIONS

Distributions of principal and interest to holders of a Class of
Certificates will be made on each Remittance Date in an amount equal to
the respective Percentage Interests multiplied by the aggregate amount
distributed on such Class of Certificates on such Remittance Date.
Distributions to a Class of Certificateholders will be applied first to
the payment of interest and then to the payment of principal. Interest
will be calculated on the basis of a 360-day year consisting of twelve
30-day months.

Each distribution with respect to a Book-Entry Certificate will be
paid to DTC, which will credit the amount of such distribution to the
accounts of its Participants in accordance with its normal procedures.
Each Participant will be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm will
be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to Book-Entry
Certificates are to be made by DTC and the Participants in accordance with
DTC's rules.

A. On each Remittance Date on which the Class B Principal
Distribution Test is not met, the Available Distribution Amount will be
distributed in the following amounts in the following order of priority:

(i) interest accrued during the related Interest Period on the Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates, at
their respective Remittance Rates on the outstanding Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Principal Balances,
respectively, together with any previously undistributed shortfalls
in interest due on the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-5 Certificates, respectively, in respect of prior Remittance
Dates; if the Available Distribution Amount is not sufficient to
distribute the full amount of interest due on the Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Certificates, the Available
Distribution Amount will be distributed on such Classes of Certifi-
cates pro rata on the basis of the interest due thereon;

(ii) the Formula Principal Distribution Amount in the following
order of priority:

(a) to the Class A-1 Certificateholders until the Class A-1
Principal Balance is reduced to zero;

(b) to the Class A-2 Certificateholders until the Class A-2
Principal Balance is reduced to zero;

(d) to the Class A-4 Certificateholders until the Class A-4
Principal Balance is reduced to zero; and

(e) to the Class A-5 Certificateholders until the Class A-5
Principal Balance is reduced to zero;

(iii) interest accrued during the related Interest Period on the
Class A-6 Principal Balance to the Class A-6 Certificateholders,
together with any previously undistributed shortfalls in interest due
on the Class A-6 Certificates in respect of prior Remittance Dates;

(iv) the remainder of the Formula Principal Distribution Amount, if
any, to the Class A-6 Certificates until the Class A-6 Principal
Balance is reduced to zero;

(v) interest accrued during the related Interest Period on the Class
B-1 Principal Balance to the Class B-1 Certificateholders, together
with any previously undistributed shortfalls in interest due on the
Class B-1 Certificates in respect of prior Remittance Dates;

(vi) the remainder of the Formula Principal Distribution Amount, if
any, to the Class B-1 Certificates until the Class B-1 Principal
Balance is reduced to zero;

(vii) interest accrued during the related Interest Period on the
Class B-2 Principal Balance to the Class B-2 Certificateholders,
together with any previously undistributed shortfalls in interest due
on the Class B-2 Certificates in respect of prior Remittance Dates;

(viii) the remainder of the Formula Principal Distribution Amount,
if any, to the Class B-2 Certificates until the Class B-2 Principal
Balance is reduced to zero;

(ix) the remainder up to the Monthly Servicing Fee to the Servicer
so long as the Company is the Servicer;

(x) the amount of any reimbursement to CHI for Enhancement Payments
with respect to the Class B-2 Certificates as provided in the
Agreement; and

(xi) any remainder to the holder of the Class R Certificate, which
will initially be a special purpose subsidiary of the Company.

B. On each Remittance Date on which the Class B Principal
Distribution Test is met, the Available Distribution Amount will be
distributed in the following amounts in the following order of priority:

(i) interest accrued during the related Interest Period on the Class
A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Certificates, at
their respective Remittance Rates on the outstanding Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Principal Balances,
respectively, together with any previously undistributed shortfalls
in interest due on the Class A-1, Class A-2, Class A-3, Class A-4 and
Class A-5 Certificates, respectively, in respect of prior Remittance
Dates; if the Available Distribution Amount is not sufficient to
distribute the full amount of interest due on the Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Certificates, the Available
Distribution Amount will be distributed on such Classes of Certifi-
cates pro rata on the basis of the interest due thereon;

(ii) the Class A Percentage of the Formula Principal Distribution
Amount in the following order of priority:

(a) to the Class A-1 Certificateholders until the Class A-1
Principal Balance is reduced to zero;

(b) to the Class A-2 Certificateholders until the Class A-2
Principal Balance is reduced to zero;

(d) to the Class A-4 Certificateholders until the Class A-4
Principal Balance is reduced to zero; and

(e) to the Class A-5 Certificateholders until the Class A-5
Principal Balance is reduced to zero;

(iii) interest accrued during the related Interest Period on the
Class A-6 Principal Balance to the Class A-6 Certificateholders,
together with any previously undistributed shortfalls in interest due
on the Class A-6 Certificates in respect of prior Remittance Dates;

(iv) the remainder of the Class A Percentage of the Formula Principal
Distribution Amount, if any, to the Class A-6 Certificates until the
Class A-6 Principal Balance is reduced to zero;

(v) interest accrued during the related Interest Period on the Class
B-1 Principal Balance to the Class B-1 Certificateholders, together
with any previously undistributed shortfalls in interest due on the
Class B-1 Certificates in respect of prior Remittance Dates;

(vi) the Class B Percentage of the Formula Principal Distribution
Amount to the Class B-1 Certificates until the Class B-1 Principal
Balance is reduced to zero;

(vii) interest accrued during the related Interest Period on the
Class B-2 Principal Balance to the Class B-2 Certificateholders,
together with any previously undistributed shortfalls in interest due
on the Class B-2 Certificates in respect of prior Remittance Dates;

(viii) the remainder of the Formula Principal Distribution Amount to
the Class B-2 Certificates until the Class B-2 Principal Balance is
reduced to zero;

(ix) the remainder up to the Monthly Servicing Fee to the Servicer
so long as the Company is the Servicer;

(x) the amount of any reimbursement to CHI for Enhancement Payments
with respect to the Class B-2 Certificates as provided in the
Agreement; and

(xi) any remainder to the holder of the Class R Certificate.

The Class B-2 Certificateholders will be entitled to receive
Enhancement Payments as described under "Limited Guarantee of CHI" or
under "Alternate Credit Enhancement."

The "Class B Principal Distribution Test" is met in respect of a
Remittance Date on which each of the following requirements is satisfied:

(i) such Remittance Date is on or after the November 2001 Remittance
Date;

(ii) the Class B Percentage for such Remittance Date is equal to at
least 16.625% (which is 1.75 times the original Class B Percentage);

(iii) the Performance Tests are satisfied; and

(iv) the Class B-2 Principal Balance is not less than $2,484,420
(which represents approximately 2% of the Total Original Contract
Pool Principal Balance).

The "Performance Tests" are satisfied in respect of a Remittance Date
if all of the following conditions are met:

(i) the Average Sixty-Day Delinquency Ratio (as defined in the
Agreement) as of such Remittance Date does not exceed 5%;

(ii) the Average Thirty-Day Delinquency Ratio (as defined in the
Agreement) as of such Remittance Date does not exceed 7%;

(iii) the Cumulative Realized Losses (as defined in the Agreement)
as of such Remittance Date do not exceed a certain specified
percentage of the Total Original Contract Pool Principal Balance,
depending on the year in which such Remittance Date occurs; and

(iv) the Current Realized Loss Ratio (as defined in the Agreement)
as of such Remittance Date does not exceed 2.75%.

The "Total Original Contract Pool Principal Balance" is equal to the
aggregate principal balance of the Contracts as of the Cut-off Date.

The Principal Balance of each Class of Certificates is its original
Principal Balance reduced by all distributions on such Class in reduction
of its Principal Balance. The Class A Principal Balance is the sum of the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6
Principal Balances. The Class B Principal Balance is the sum of the Class
B-1 Principal Balance and the Class B-2 Principal Balance.

The Class A Percentage for a Remittance Date is the percentage
derived from the fraction (which shall not be greater than 1), the
numerator of which is the Principal Balance of the Class A Certificates
immediately prior to such Remittance Date and the denominator of which is
the Pool Scheduled Principal Balance. The Class B Percentage is 100% less
the Class A Percentage.

The Average Sixty-Day Delinquency Ratio and the Average Thirty-Day
Delinquency Ratio are, in general, the ratios of the average of the
aggregate principal balances of Contracts delinquent 60 days or more and
30 days or more, respectively, for the preceding three Due Periods
(determined as of the last day of each such Due Period) to the average
Pool Scheduled Principal Balance for such periods. Cumulative Realized
Losses are, in general, the aggregate
net liquidation losses (calculated as specified in the Agreement) in
respect of Liquidated Contracts since the Cut-off Date. The Current
Realized Loss Ratio is, in general, the ratio of the aggregate net
liquidation losses in respect of Liquidated Contracts for the periods
specified in the Agreement to an average Pool Scheduled Principal Balance
specified in the Agreement.

The "Formula Principal Distribution Amount" in respect of a
Remittance Date is the sum of (i) all scheduled payments of principal due
on each outstanding Contract during the Due Period preceding the month in
which the Remittance Date occurs, (ii) the Scheduled Principal Balance (as
defined below) of each Contract which, during the Due Period preceding the
month of such Remittance Date, was purchased by the Company pursuant to
the Agreement on account of certain breaches of its representation and
warranties, (iii) all Partial Prepayments received during such preceding
Due Period, (iv) the Scheduled Principal Balance of each Contract that was
prepaid in full during such preceding Due Period; (v) the Scheduled
Principal Balance of each Contract that became a Liquidated Contract (as
defined below) during such preceding Due Period and (vi) any previously
undistributed shortfalls in the amounts in clauses (i) through (v) in
respect of prior Remittance Dates (other than any such shortfall with
respect to which an Enhancement Payment has been made to the Class B-2
Certificateholders).

The "Scheduled Principal Balance" of a Contract as of any Remittance
Date is its principal balance (before any adjustment by reason of
bankruptcy, moratorium or similar waiver or grace period) as of the Due
Date (or latest occurring Due Date, in the case of a Bi-weekly Contract)
in the Due Period next preceding such Remittance Date, after giving effect
to any previous Partial Prepayments and after giving effect to all
previous scheduled principal payments and to the scheduled payment of
principal due on such Due Date (whether or not paid and before any
adjustment by reason of bankruptcy, moratorium or similar waiver or grace
period).

The "Pool Scheduled Principal Balance" for any Remittance Date is
equal to (i) the Total Original Contract Pool Principal Balance less (ii)
the aggregate of the Formula Principal Distribution Amounts (exclusive of
the amounts in clause (vi) of the definition thereof) for all prior
Remittance Dates.

A "Liquidated Contract" is a defaulted Contract as to which all
amounts that the Servicer expects to recover through the date of
disposition of the Manufactured Home have been received.

In no event will the aggregate distributions of principal to the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class
B-1 or Class B-2 Certificateholders (including, in the case of the Class
B-2 Certificateholders, any principal amounts included in any Enhancement
Payments) exceed the Original Class A-1 Principal Balance, the Original
Class A-2 Principal Balance, the Original Class A-3 Principal Balance, the
Original Class A-4 Principal Balance, the Original Class A-5 Principal
Balance, the Original Class A-6 Principal Balance, the Original Class B-1
Principal Balance or the Original Class B-2 Principal Balance,
respectively.

The Class A-1 Remittance Rate for a Remittance Date will equal the
lesser of (a) the sum of (i) the London Interbank offered rate for one-
month United States dollar deposits ("LIBOR") appearing on the Telerate
Screen Page 3750 as of the second LIBOR Business Day prior to the first
day of such Interest Period (or as of two LIBOR Business Days of the
Closing Date in the case of the first Interest Period) and (ii) 0.110% and
(b) the Weighted Average Net Contract Rate. The Class A-2 Remittance Rate
for a Remittance Date is the lesser of (i) 6.400% per annum, computed on
the basis of a 360-day year of twelve 30-day months, or (ii) the Weighted
Average Net Contract Rate for such Remittance Date. The Class A-3
Remittance Rate for a Remittance Date is the lesser of (i) 6.700% per
annum, computed on the basis of a 360-day year of twelve 30-day months, or
(ii) the Weighted Average Net Contract Rate for such Remittance Date. The
Class A-4 Remittance Rate for a Remittance Date is the lesser of
(i) 6.975% per annum, computed on the basis of a 360-day year of twelve
30-day months, or (ii) the Weighted Average Net Contract Rate for such
Remittance Date. The Class A-5 Remittance Rate for a Remittance Date is
the lesser of (i) 7.235% per annum, computed on the basis of a 360-day
year of twelve 30-day months, or (ii) the Weighted Average Net Contract
Rate for such Remittance Date. The Class A-6 Remittance Rate for a
Remittance Date is the lesser of (i) 7.525% per annum, computed on the
basis of a 360-day year of twelve 30-day months, or (ii) the Weighted
Average Net Contract Rate for such Remittance Date. The Class B-1
Remittance Rate for a Remittance Date is the lesser of (i) 7.450% per
annum, computed on the basis of a 360-day year of twelve 30-day months, or
(ii) the Weighted Average Net Contract Rate for such Remittance Date. The
Class B-2 Remittance Rate for a Remittance Date is the lesser of (i)
8.000% per annum, computed on the basis of a 360-day year of twelve 30-day
months, or (ii) the Weighted Average Net Contract Rate for such Remittance
Date. The "Weighted Average Net Contract Rate" for a Remittance Date is
equal to (i) the weighted average of the Contract Rates applicable to the
scheduled payments due on the outstanding Contracts in the Due Period
preceding such Remittance Date less (ii) 1.25%. Any undistributed
interest shortfalls which are carried forward will, to the extent legally
permissible, bear interest at the Remittance Rate applicable to the
affected Class or Classes of Certificates. As used in this section,
"LIBOR Business Day" means a day on which banks are open for dealing in
foreign currency and exchange in London and New York City; "Telerate 3750"
means the display page currently so designated on the Dow Jones Telerate
Service (or such other page as may replace that page on that service for
the purpose of displaying comparable rates or prices). With respect to
the Class A-1 Certificates and any Remittance Date, the "Interest Period"
shall be the period from the Remittance Date preceding such Remittance
Date (or in the case of the first Remittance Date, from the Closing Date)
through the day preceding such Remittance Date. With respect to each
Class of Offered Certificates (other than the Class A-1 Certificates) and
any Remittance Date, the "Interest Period" shall be the period from the
first day of the calendar month preceding the month of such Remittance
Date through the last day of such calendar month on the basis of a 360-day
year consisting of twelve 30-day months.

SUBORDINATION OF THE CLASS A-6 CERTIFICATES

The rights of the holders of the Class A-6 Certificates to receive
distributions of amounts collected on the Contracts in the Trust Fund will
be subordinated, to the extent described herein, to such rights of the
Senior Certificates. This subordination is intended to enhance the
likelihood of receipt by the holders of the Senior Certificates of the
full amount of their scheduled monthly payments of interest and the
ultimate receipt by such holders of principal equal to the applicable
Original Certificate Principal Balance.

The protection afforded to the Senior Certificates by means of the
subordination of the Class A-6 Certificates will be accomplished by the
application of the Available Distribution Amount in the order specified
under "--Distributions" above. In addition, if the Available Distribution
Amount on any Remittance Date is not sufficient to permit the distribution
of the entire specified portion of the Formula Principal Distribution
Amount, as applicable, to the Senior Certificateholders, the subordination
feature will protect the Senior Certificateholders, by the right of such
Certificateholders to receive, until, if ever, any such shortfall is
distributed, a portion of the future distributions of Available
Distribution Amounts that would otherwise have been distributable to the
holders of the Class A-6 Certificates, Class B Certificates or the Class R
Certificate.

SUBORDINATION OF THE CLASS B AND CLASS R CERTIFICATES

The rights of holders of the Class B and Class R Certificates to
receive distributions of amounts collected on the Contracts will be
subordinated, to the extent described herein, to such rights of the
holders of the Class A Certificates. This subordination is intended to
enhance the likelihood of receipt by the holders of the Class A and Class
B-1 Certificates of the full amount of their scheduled monthly payments of
interest and the ultimate receipt by such holders of principal equal to
the applicable Original Certificate Principal Balance.

The protection afforded to the holders of Class A Certificates by
means of the subordination, to the extent provided herein, of the Class B
and Class R Certificates will be accomplished (i) by the application of
the Available Distribution Amount in the order specified under
"/__/Distributions" above and (ii) if the Available Distribution Amount on
such Remittance Date is not sufficient to permit the distribution of the
entire specified portion of the Formula Principal Distribution Amount, as
applicable, to the Class of Class A Certificateholders then entitled to
such distribution, by the right of such Class A Certificateholders to
receive, until, if ever, any such shortfall is distributed, a portion of
future Available Distribution Amounts that would otherwise have been
payable to the holders of the Class B Certificates or the Class R
Certificate. On each Remittance Date before the Class A Principal Balance
is reduced to zero, the holders of the Class B Certificates will receive
the amounts specified under "--Distributions" above.

SUBORDINATION OF THE CLASS B-2 CERTIFICATES

The rights of the holders of the Class B-2 Certificates to receive
distributions of amounts collected on the Contracts in the Trust Fund will
be subordinated, to the extent described herein, to such rights of the
Class B-1 Certificates. This subordination is intended to enhance the
likelihood of receipt by the holders of the Class A and Class B-1
Certificates of the full amount of their scheduled monthly payments of
interest and the ultimate receipt by such holders of principal equal to
the applicable Original Certificate Principal Balance.

The protection afforded to the Class B-1 Certificates by means of the
subordination of the Class B-2 Certificates will be accomplished by the
application of the Available Distribution Amount in the order specified
under "--Distributions" above. In addition, if the Available Distribution
Amount on any Remittance Date is not sufficient to permit the distribution
of the entire specified portion of the Formula Principal Distribution
Amount, as applicable, to the Class B-1 Certificateholders and the
subordination provided by the Class B-2 Certificates has not been
exhausted, the subordination feature will protect the Class B-1
Certificateholders by the right of the Class B-1 Certificateholders to
receive, until, if ever, any such shortfall is distributed, a portion of
the future distributions of Available Distribution Amounts that would
otherwise have been distributable to the holders of the Class B-2
Certificates or the Class R Certificate.

However, the Class B-2 Certificates will have the benefit of the
Limited Guarantee from CHI or the Alternate Credit Enhancement. Neither
the Limited Guarantee nor the Alternate Credit Enhancement will benefit or
result in any payments on any other Offered Certificates.

LOSSES ON LIQUIDATED CONTRACTS

As described above, the distribution of principal to the Senior
Certificateholders is intended to include the Scheduled Principal Balance
of each Contract that became a Liquidated Contract during the Due Period
preceding the month of such distribution. If the Liquidation Proceeds,
net of related Liquidation Expenses, from such Liquidated Contract are
less than the principal balance of such Liquidated Contract, then to the
extent such deficiency is not covered by any excess interest collections,
the deficiency may, in effect, be absorbed by the Class A-6 or Class B
Certificateholders since a portion of future Available Distribution
Amounts funded by future principal collections on the Contracts, up to the
aggregate amount of such deficiencies, that would otherwise have been
distributed to the Class A-6 or Class B Certificateholders, may be paid to
the Senior Certificateholders.

On each Remittance Date, if any, on or after the date on which the
sum of the Principal Balances of the Senior Certificates equals or becomes
greater than the Pool Scheduled Principal Balance, the Senior
Certificateholders will receive only their respective percentage interests
of Liquidation Proceeds (net of Liquidation Expenses) realized in respect
of Liquidated Contracts, rather than the Scheduled Principal Balances
thereof, and will therefore bear all losses on Liquidated Contracts (with
no ability to recover the amount of any liquidation loss from future
principal collections on the Contracts) and incur a loss on their
investment in the Senior Certificates.

But for the subordination of the Class B-2 Certificates, the Class
B-1 Certificateholders would absorb (i) all losses on each Liquidated
Contract (to the extent such loss is not covered by excess interest
collections) and (ii) other shortfalls in the Available Distribution
Amount. If, on any Remittance Date, the sum of the Class A Principal
Balance and the Class B-1 Principal Balance becomes equal to or greater
than the Pool Scheduled Principal Balance, then the Class B-1
Certificateholders will bear all losses on Liquidated Contracts (with no
ability to recover the amount of any Liquidation Loss from future
principal collections on the Contracts) and incur a loss on their invest-
ment in the Class B-1 Certificates.

LIMITED GUARANTEE OF CHI

In order to mitigate the effect of the subordination of the Class B-2
Certificates and liquidation losses and delinquencies on the Contracts
borne by the Class B-2 Certificates, CHI will initially provide a
guarantee (the "Limited Guarantee") against losses that would otherwise be
absorbed by the Class B-2 Certificates. Such Limited Guarantee may be
replaced by an Alternate Credit Enhancement. See "Alternate Credit
Enhancement" herein. Each payment required to be made under the Limited
Guarantee is referred to as an "Enhancement Payment." Prior to the
Remittance Date (the "Initial Class B-2 Principal Remittance Date") on
which the Class B-1 Principal Balance is reduced to zero, the Enhancement
Payment will equal the amount, if any, by which (a) the sum of (i) the
Class B-2 Formula Distribution Amount (which will be equal to interest
accrued during the related Interest Period on the Class B-2 Principal
Balance) for such Remittance Date and (ii) the Class B-2 Principal
Liquidation Loss Amount, if any, exceeds (b) the amount (other than the
Enhancement Payment) that will otherwise be distributed on the Class B-2
Certificates on such Remittance Date (the "Class B-2 Distribution
Amount"). On each Remittance Date on or after the Initial Class B-2
Principal Remittance Date, the Enhancement Payment will equal the amount,
if any, by which the Class B-2 Formula Distribution Amount (which will
include both interest and principal) exceeds the Class B-2 Distribution
Amount for such Remittance Date.

The "Class B-2 Principal Liquidation Loss Amount" for any Remittance
Date will equal the amount, if any, by which (a) the Formula Principal
Distribution Amount (exclusive of the portion thereof specified in clause
(vi) of the definition of Formula Principal Distribution Amount) for such
Remittance Date exceeds (b) the amount (exclusive of the Guarantee
Payment) distributed on the Certificates on account of principal on such
Remittance Date. The Class B-2 Principal Liquidation Loss Amount
represents future principal payments on the Contracts that, because of the
subordination of the Class B-2 Certificates and liquidation losses on the
Contracts, will not be paid to the Class B-2 Certificateholders from the
assets of the Trust Fund but may be paid in the form of an Enhancement
Payment.

In the event that, on a particular Remittance Date, the Class B-2
Distribution Amount in the Certificate Account plus any amounts actually
paid under the Limited Guarantee are not sufficient to make a full
distribution of interest to the Class B-2 Certificateholder the amount of
the deficiency will be carried forward as an amount that the Class B-2
Certificateholders are entitled to receive on the next Remittance Date.

The Limited Guarantee will be an unsecured general obligation of CHI
and will not be supported by any letter of credit or other enhancement
arrangement.

The Limited Guarantee is for the benefit of the Class B-2
Certificates only and will not result in any payments on the Offered
Certificates.

As reimbursement to CHI for Enhancement Payments made by CHI pursuant
to the Limited Guarantee, CHI will be entitled to receive on each
Remittance Date an amount equal to the lesser of (a) the Available
Distribution Amount, less the portion of the Available Distribution Amount
distributed on the Certificates (other than the Class R Certificate), and
(b) the aggregate amount of Enhancement Payments outstanding which remain
unreimbursed as of such Remittance Date.

ALTERNATE CREDIT ENHANCEMENT

In the event that, at CHI's option, Alternate Credit Enhancement (as
defined herein) is provided and, upon prior written notice to Moody's,
Moody's shall have notified CHI, the Company, the Servicer and the Trustee
in writing that substitution of such Alternate Credit Enhancement for the
Limited Guarantee will not result in the downgrade or withdrawal of the
then current rating of any class of the Certificates, and upon the
delivery by CHI to the Trustee of an opinion of counsel, acceptable to the
Trustee, that such action would not cause the Trust to fail to qualify as
a REMIC, the Limited Guarantee shall be released and shall terminate. The
Alternate Credit Enhancement may consist of cash or securities deposited
by CHI or any other person in a segregated escrow, trust or collateral
account or a letter of credit, certificate insurance policy or surety bond
provided by a third party (an "Alternate Credit Enhancement"). On each
Remittance Date after delivery of the Alternate Credit Enhancement, an
amount, equal to the lesser of the amount which would have been payable
under the Limited Guarantee and the amount available under such Alternate
Credit Enhancement, shall be transferred from such account to the
Certificate Account to make payments to the Class B-2 Certificateholders
(the "Enhancement Payment"). CHI shall have no obligation to replace
such enhancement once it has been exhausted.

ADVANCES

On or prior to each Determination Date, the Servicer will either (i)
deposit from its own funds the Monthly Advance into the Certificate
Account, (ii) cause appropriate entries to be made in the records of the
Certificate Account that funds in the Certificate Account that are not
part of the Available Distribution Amount for the related Remittance Date
have been used to make the Monthly Advance or (iii) make the Monthly
Advance through any combination of clauses (i) and (ii). Any funds held
for future distribution and used in accordance with clause (ii) must be
restored by the Servicer from its own funds or advance payments on the
Contracts when they become part of a future Available Distribution Amount.
The Monthly Advance is the sum of delinquent scheduled payments due in the
related Due Period, exclusive of all Nonrecoverable Advances, except that
the Monthly Advance will not exceed the amount necessary to bring the
Available Distribution Amount up to the sum of the amounts specified in
clauses A(i)-(viii) or B(i)-(viii), as the case may be, under
"/__/Distributions" above. A Nonrecoverable Advance is any advance made
or proposed to be made that the Servicer believes is not, or if made would
not be, ultimately recoverable from related Liquidation Proceeds or
otherwise.

Monthly Advances are intended to maintain a regular flow of scheduled
interest and principal payments to Certificateholders rather than to
guarantee or insure against losses. The Servicer will reimburse itself
for Monthly Advances out of collections of the late scheduled payments.
In addition, upon the determination that a Nonrecoverable Advance has been
made in respect of a Contract or upon a Contract becoming a Liquidated
Contract, the Servicer will reimburse itself out of funds in the
Certificate Account for the delinquent scheduled payments on such Contract
(exclusive of any scheduled payment (i) for which no advance was made
because the Servicer determined that such an advance would be a
Nonrecoverable Advance if an advance were made or (ii) that was recovered
out of Net Liquidation Proceeds for the related Contract).

The Servicer will also be obligated to make advances, to the extent
recoverable out of Liquidation Proceeds or otherwise, in respect of
certain taxes and insurance premiums not paid by an Obligor on a timely
basis. Funds so advanced are reimbursable to the Servicer as provided in
the Agreement.

REPORTS TO CERTIFICATEHOLDERS

The Trustee will include with each distribution to each
Certificateholder a statement as of such Remittance Date setting forth,
among other things:

(a) the aggregate amount distributed on the Class A-1 Certificates
on such Remittance Date;
(b) the amount of such distribution which constitutes principal;
(c) the amount of such distribution which constitutes interest;
(d) the remaining Class A-1 Principal Balance;
(e) the aggregate amount distributed on the Class A-2 Certificates
on such Remittance Date;
(f) the amount of such distribution which constitutes principal;
(g) the amount of such distribution which constitutes interest;
(h) the remaining Class A-2 Principal Balance;
(i) the aggregate amount distributed on the Class A-3 Certificates
on such Remittance Date;
(j) the amount of such distribution which constitutes principal;
(k) the amount of such distribution which constitutes interest;
(l) the remaining Class A-3 Principal Balance;
(m) the aggregate amount distributed on the Class A-4 Certificates
on such Remittance Date;
(n) the amount of such distribution which constitutes principal;
(o) the amount of such distribution which constitutes interest;
(p) the remaining Class A-4 Principal Balance;
(q) the aggregate amount distributed on the Class A-5 Certificates
on such Remittance Date;
(r) the amount of such distribution which constitutes principal;
(s) the amount of such distribution which constitutes interest;
(t) the remaining Class A-5 Principal Balance;
(u) the aggregate amount distributed on the Class A-6 Certificates
on such Remittance Date;
(v) the amount of such distribution which constitutes principal;
(w) the amount of such distribution which constitutes interest;
(x) the remaining Class A-6 Principal Balance;
(y) the aggregate amount distributed on the Class B-1 Certificates
on such Remittance Date;
(z) the amount of such distribution which constitutes principal;
(aa) the amount of such distribution which constitutes interest;
(bb) the remaining Class B-1 Principal Balance;
(cc) the aggregate amount distributed on the Class B-2 Certificates
on such Remittance Date;
(dd) the amount of such distribution which constitutes principal;
(ee) the amount of such distribution which constitutes interest;
(ff) the amount, if any, by which the Class B-2 Formula Distribution
Amount exceeds the Class B-2 Remaining Amount Available for such
Remittance Date;
(gg) the Class B-2 Liquidation Loss Amount, if any, for such
Remittance Date;
(hh) the Enhancement Payment, if any, for such Remittance Date;
(ii) the remaining Class B-2 Principal Balance;
(jj) the number of and aggregate unpaid principal balance of
Contracts with payments delinquent 31 to 59, 60 to 89 and 90 or
more days, respectively; and
(kk) the amount of fees payable out of the Trust Fund.

In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will furnish a report to each Certificateholder
of record at any time during such calendar

year as to the aggregate of amounts reported pursuant to (b) and (c), (f)
and (g), (j) and (k), (n) and (o), (r) and (s), (v) and (w), (z) and (aa)
or (dd) and (ee), as the case may be, for such calendar year.

OPTIONAL TERMINATION

The Agreement provides that on any Remittance Date after the first
Remittance Date on which the Pool Scheduled Principal Balance is less than
10% of the Total Original Contract Pool Principal Balance, the Company (if
it is no longer the Servicer) and the Servicer will each have the option
to repurchase, upon the Company or the Servicer giving notice mailed no
later than the first day of the month next preceding the month of the
exercise of such option, all outstanding Contracts at a price equal to the
greater of (a) the sum of (x) 100% of the outstanding principal balance of
each Contract (other than any Contract as to which the related
Manufactured Home has been acquired in realizing thereon and whose fair
market value is included pursuant to clause (y) below) as of the final
Remittance Date, and (y) the fair market value of such acquired property
(as determined by the Company or the Servicer, as the case may be) and (b)
the aggregate fair market value (as determined by the Company or the
Servicer, as the case may be) of all of the assets of the Trust Fund,
plus, in each case, any unpaid interest on the Certificates due on prior
Remittance Dates as well as one month's interest at the Net Contract Rate
on the Scheduled Principal Balance of each Contract (including any
Contract as to which the related Manufactured Homes has been repossessed
and not yet disposed of). Notwithstanding the foregoing, the option
referred to in this paragraph shall not be exercisable unless there will
be distributed to the Certificateholders an amount equal to 100% of the
outstanding principal balance of each Certificate plus one month's
interest thereon at the related Remittance Rate, and any previously
undistributed shortfalls in interest due thereon.

THE TRUSTEE

The Chase Manhattan Bank, has its corporate trust offices at 450 West
33rd Street, 15th Floor, New York, New York 10001. The Company and its
affiliates may have commercial transactions with the Trustee from time to
time.

The Trustee may resign at any time, in which event the Company will
be obligated to appoint a successor Trustee. The Company may also remove
the Trustee if the Trustee ceases to be eligible to continue as such under
the Agreement or if the Trustee becomes insolvent. In such circumstances,
the Company will also be obligated to appoint a successor Trustee. Any
resignation or removal of the Trustee and appointment of a successor
Trustee will not become effective until acceptance of the appointment by
the successor Trustee.

REGISTRATION OF THE OFFERED CERTIFICATES

The Offered Certificates will be book-entry Certificates (the
"Book-Entry Certificates"). Persons acquiring beneficial ownership
interests in the Offered Certificates ("Certificate Owners") will hold
their Offered Certificates through the DTC in the United States, or Cedel
or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations which are participants in such systems.
The Book-Entry Certificates will be issued
in one or more certificates which equal the aggregate principal balance of
the Offered Certificates and will initially be registered in the name of
Cede & Co., the nominee of DTC. Cedel and Euroclear will hold omnibus
positions on behalf of their participants through customers' securities
accounts in Cedel's and Euroclear's names on the books of their respective
depositaries which in turn will hold such positions in customers'
securities accounts in the depositaries' names on the books of DTC.
Citibank will act as depositary for Cedel and The Chase Manhattan Bank
will act as depositary for Euroclear (in such capacities, individually the
"Relevant Depositary" and collectively the "European Depositaries").
Investors may hold such beneficial interests in the Book-Entry
Certificates in minimum denominations of $50,000. Except as described
below, no person acquiring a Book-Entry Certificate (each, a "beneficial
owner") will be entitled to receive a physical certificate representing
such Certificate (a "Definitive Certificate"). Unless and until Definitive
Certificates are issued, it is anticipated that the only
"Certificateholder" of the Offered Certificates will be Cede & Co., as
nominee of DTC. Certificate Owners will not be Certificateholders as that
term is used in the Agreement. Certificate Owners are only permitted to
exercise their rights indirectly through Participants and DTC.

The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or
other financial intermediary (each, a "Financial Intermediary") that
maintains the beneficial owner's account for such purpose. In turn, the
Financial Intermediary's ownership of such Book-Entry Certificate will be
recorded on the records of DTC (or of a participating firm that acts as
agent for the Financial Intermediary, whose interest will in turn be
recorded on the records of DTC, if the beneficial owner's Financial
Intermediary is not a DTC participant and on the records of Cedel or
Euroclear, as appropriate).

Certificate Owners will receive all distributions of principal of and
interest on the Offered Certificates from the Trustee through DTC and DTC
participants. While the Offered Certificates are outstanding (except under
the circumstances described below), under the rules, regulations and
procedures creating and affecting DTC and its operations (the "Rules"),
DTC is required to make book-entry transfers among Participants on whose
behalf it acts with respect to the Offered Certificates and is required to
receive and transmit distributions of principal of, and interest on, the
Offered Certificates. Participants and indirect participants with whom
Certificate Owners have accounts with respect to Offered Certificates are
similarly required to make book-entry transfers and receive and transmit
such distributions on behalf of their respective Certificate Owners.
Accordingly, although Certificate Owners will not possess certificates
representing their respective interests in the Offered Certificates, the
Rules provide a mechanism by which Certificate Owners will receive
distributions and will be able to transfer their interest.

Certificateholders will not receive or be entitled to receive
certificates representing their respective interests in the Offered
Certificates, except under the limited circumstances described below.
Unless and until Definitive Certificates are issued, Certificateholders
who are not Participants may transfer ownership of Offered Certificates
only through Participants and indirect participants by instructing such
Participants and indirect participants to transfer Offered Certificates,
by book-entry transfer, through DTC for the account of the purchasers of
such Offered Certificates, which account is maintained with their
respective Participants. Under the
Rules and in accordance with DTC's normal procedures, transfers of
ownership of Offered Certificates will be executed through DTC and the
accounts of the respective Participants at DTC will be debited and
credited. Similarly, the Participants and indirect participants will make
debits or credits, as the case may be, on their records on behalf of the
selling and purchasing Certificateholders.

Because of time zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a Participant will be
made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Euroclear or Cedel Participants on such business
day. Cash received in Cedel or Euroclear as a result of sales of
securities by or through a Cedel Participant (as defined below) or
Euroclear Participant (as defined below) to a DTC Participant will be
received with value on the DTC settlement date but will be available in
the relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain
Federal Income Tax Consequences--REMIC Series--Taxation of Certain Foreign
Investors" and "--Backup Withholding" in the Prospectus and "Global
Clearance, Settlement and Tax Documentation Procedures--Certain U.S.
Federal Income Tax Documentation Requirements" in Annex I hereto.

Transfers between Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants
will occur in accordance with their respective rules and operating
procedures.

Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the Relevant Depositary; however, such
cross market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in
such system in accordance with its rules and procedures and within its
established deadlines (European time). The relevant European international
clearing system will, if the transaction meets its settlement
requirements, deliver instructions to the Relevant Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with
normal procedures for same day funds settlement applicable to DTC. Cedel
Participants and Euroclear Participants may not deliver instructions
directly to the European Depositaries.

DTC which is a New York-chartered limited purpose trust company,
performs services for its participants, some of which (and/or their
representatives) own DTC. In accordance with its normal procedures, DTC is
expected to record the positions held by each DTC participant in the
Book-Entry Certificates, whether held for its own account or as a nominee
for another person. In general, beneficial ownership of Book-Entry
Certificates will be subject to the Rules, as in effect from time to time.

Cedel Bank, soci t anonyme, 67 Bd Grande-Duchesse Charlotte, L-1331
Luxembourg, was incorporated in 1970 as a limited company under Luxembourg
law. Cedel is owned by banks, securities dealers and financial institutions,
and currently has about 100 shareholders, including U.S. financial
institutions or their subsidiaries. No single entity may own more than
five percent of Cedel's stock.

Cedel is registered as a bank in Luxembourg, and as such is subject
to regulation by the Institut Monetaire Luxembourgeois, "IML", the
Luxembourg Monetary Authority, which supervises Luxembourg banks.

Cedel holds securities for its customers ("Cedel Participants") and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides
various services, including safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedel also deals with domestic securities markets in several
countries through established depository and custodial relationships.
Cedel has established an electronic bridge with Morgan Guaranty Trust as
the Euroclear Operator in Brussels to facilitate settlement of trades
between systems. Cedel currently accepts over 70,000 securities issues on
its books.

Cedel's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's United States customers are limited to
securities brokers and dealers and banks. Currently, Cedel has
approximately 3,000 customers located in over 60 countries, including all
major European countries, Canada, and the United States. Indirect access
to Cedel is available to other institutions which clear through or
maintain a custodial relationship with an account holder of Cedel.

Euroclear was created in 1968 to hold securities for its participants
("Euroclear Participants") and to clear and settle transactions between
Euroclear Participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may be settled in any of 29 currencies,
including United States dollars. Euroclear includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above.
Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty
Trust Company of New York (the "Euroclear Operator"), under contract with
Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator,
and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative.
The Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries. Indirect access to Euroclear is also available to other
firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.

The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.

Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "Terms and Conditions"). The
Terms and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts
of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants, and has no record of or relationship with persons holding
through Euroclear Participants.

Distributions on the Book-Entry Certificates will be made on each
Distribution Date by the Trustee to DTC. DTC will be responsible for
crediting the amount of such payments to the accounts of the applicable
DTC participants in accordance with DTC's normal procedures. Each DTC
participant will be responsible for disbursing such payments to the
beneficial owners of the Book-Entry Certificates that it represents and to
each Financial Intermediary for which it acts as agent. Each such
Financial Intermediary will be responsible for disbursing funds to the
beneficial owners of the Book-Entry Certificates that it represents.

Under a book-entry format, beneficial owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since
such payments will be forwarded by the Trustee to Cede. Distributions with
respect to Certificates held through Cedel or Euroclear will be credited
to the cash accounts of Cedel Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Consequences--REMIC Series--
Taxation of Certain Foreign Investors" and "--Backup Withholding" in the
Prospectus. Because DTC can only act on behalf of Financial
Intermediaries, the ability of a beneficial owner to pledge Book-Entry
Certificates to persons or entities that do not participate in the
Depository system, or otherwise take actions in respect of such Book-Entry
Certificates, may be limited due to the lack of physical certificates for
such Book-Entry Certificates. In addition, issuance of the Book-Entry
Certificates in book-entry form may reduce the liquidity of such
Certificates in the secondary market since certain potential investors may
be unwilling to purchase Certificates for which they cannot obtain
physical certificates.

Monthly and annual reports on the Trust will be provided to Cede, as
nominee of DTC, and may be made available by Cede to beneficial owners
upon request, in accordance with the rules, regulations and procedures
creating and affecting the Depository, and to the Financial Intermediaries
to whose DTC accounts the Book-Entry Certificates of such beneficial
owners are credited.

DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by
the holders of the Book-Entry Certificates
under the Agreement only at the direction of one or more Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates are
credited, to the extent that such actions are taken on behalf of Financial
Intermediaries whose holdings include such Book-Entry Certificates. Cedel
or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Certificateholder under the Agreement on behalf
of a Cedel Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to the ability of the
Relevant Depositary to effect such actions on its behalf through DTC. DTC
may take actions, at the direction of the related Participants, with
respect to some Offered Certificates which conflict with actions taken
with respect to other Offered Certificates.

Definitive Certificates will be issued to beneficial owners of the
Book-Entry Certificates, or their nominees, rather than to DTC, only if
(a) DTC or the Company advises the Trustee in writing that DTC is no
longer willing, qualified or able to discharge properly its
responsibilities as nominee and depository with respect to the Book-Entry
Certificates and the Company or the Trustee is unable to locate a
qualified successor, (b) the Company, at its sole option, with the consent
of the Trustee, elects to terminate a book-entry system through DTC or (c)
after the occurrence of an Event of Default, beneficial owners having
Percentage Interests aggregating not less than 51% of the Book-Entry
Certificates advise the Trustee and DTC through the Financial
Intermediaries and the DTC participants in writing that the continuation
of a book-entry system through DTC (or a successor thereto) is no longer
in the best interests of beneficial owners.

Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate
or certificates representing the Book-Entry Certificates and instructions
for re-registration, the Trustee will issue Definitive Certificates, and
thereafter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Agreement.

Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Certificates among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.

Neither the Company, the Servicer nor the Trustee will have any
responsibility for any aspect of the records relating to or payments made
on account of beneficial ownership interests of the Book-Entry
Certificates held by Cede & Co., as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

USE OF PROCEEDS

Substantially all of the net proceeds to be received from the sale of
the Offered Certificates will be added to the general funds of the
Company.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

An election will be made to treat the Trust Fund as a "real estate
mortgage investment conduit" (a "REMIC") for federal income tax purposes.
The Class A and Class B Certificates will constitute "regular interests"
in the REMIC, and the Class R Certificate will constitute the sole class
of "residual interest" in the REMIC.

ORIGINAL ISSUE DISCOUNT

The Offered Certificates may be issued with original issue discount
for federal income tax purposes. For purposes of determining the amount
and the rate of accrual of original issue discount and market discount,
the Company intends to assume that there will be prepayments on the
Contracts at a rate equal to 175% of the Prepayment Model as defined
herein. No representation is made as to whether the Contracts will prepay
at that rate or any other rate. See "Yield and Prepayment Considerations"
herein and "Certain Federal Income Tax Consequences" in the Prospectus.

EFFECT OF LOSSES AND DELINQUENCIES

As described above under "Description of the Certificates," the Class
A-6, Class B-1 and Class B-2 Certificates are subordinated to the Senior
Certificates. In the event there are losses or delinquencies on the
Contracts, amounts that otherwise would be distributed on the Class A-6 or
Class B Certificates may instead be distributed on the Senior
Certificates. Holders of the Class A-6 and Class B Certificates
nevertheless will be required to report interest with respect to such
Class A-6 or Class B Certificates under an accrual method without giving
effect to delays and reductions in distributions on such Certificates
attributable to losses and delinquencies on the Contracts in the Contract
Pool, except to the extent it can be established, for tax purposes, that
such amounts are uncollectible. As a result, the amount of income
reported by holders of the Class A-6 or Class B Certificates in any period
could significantly exceed the amount of cash distributed to such holders
in that period. The holders of Class A-6 or Class B Certificates will
eventually be allowed a loss (or will be allowed to report a lesser amount
of income) to the extent that the aggregate amount of distributions on
such Certificates is reduced as a result of losses and delinquencies on
the Contracts in the Contract Pool. However, the timing and character of
such losses or reductions in income are uncertain. Although not entirely
clear, it appears that holders of the Class A-6 or Class B Certificates
that are corporations should in general be allowed to deduct as an
ordinary loss any loss sustained during the taxable year on account of any
such Certificates becoming wholly or partially worthless, and that, in
general, holders of Certificates that are not corporations should be
allowed to deduct as short-term capital loss any loss sustained during the
taxable year on account of any such Certificates becoming wholly
worthless. Although the matter is unclear, non-corporate holders of
Certificates may be allowed a bad debt deduction at such time that the
principal balance of any such Certificate is reduced to reflect realized
losses resulting from any liquidated Contracts. The Internal Revenue
Service, however, could take the position that non-corporate holders will
be allowed a bad debt deduction to reflect realized losses only after all
Contracts remaining in the related Trust Fund have been liquidated or the
Certificates have been otherwise retired. Potential investors and Holders
of the Certificates are urged to consult their own tax advisors regarding
the appropriate timing, amount and character of any loss sustained with
respect to such Certificates, including any loss resulting from the
failure to recover previously accrued interest or discount income. Special
loss rules are applicable to banks and thrift institutions, including rules
regarding reserves for bad debts. Such taxpayers are advised to consult
their tax advisors regarding the treatment of losses on Certificates.

For further information regarding the federal income tax consequences
of investing in the Certificates, see "Certain Federal Income Tax
Consequences" in the Prospectus.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain restrictions on employee benefit plans that are
subject to ERISA ("Plans") and on persons who are fiduciaries with respect
to such Plans. See "ERISA Considerations" in the Prospectus.

CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4 AND CLASS A-5 CERTIFICATES

As discussed in the Prospectus under "ERISA Considerations" and
subject to the limitations discussed thereunder, the Company believes that
the Exemption (as defined in the Prospectus) granted to Prudential
Securities Incorporated, will apply to the acquisition and holding by
Plans of Senior Certificates sold by the Underwriters and that all
conditions of the Exemption other than those within the control of the
investors have been met. See "ERISA Considerations" in the Prospectus.
In addition, as of the date hereof, no obligor with respect to Contracts
included in the Trust Fund constitutes more than five percent of the
aggregate unamortized principal balance of the assets of the Trust Fund.

Employee benefit plans that are governmental plans (as defined in
section 3(32) of ERISA) and church plans (as defined in section 3(33) of
ERISA) are not subject to ERISA requirements. Accordingly, assets of such
plans may be invested in the Senior Certificates without regard to the
ERISA restrictions described above, subject to applicable provisions of
other federal and state laws.

Any Plan fiduciary who proposes to cause a Plan to purchase Senior
Certificates should consult with its own counsel with respect to the
potential consequences under ERISA and the Internal Revenue Code of 1986,
as amended (the "Code") of the Plan's acquisition and ownership of Senior
Certificates. Assets of a Plan or individual retirement account should
not be invested in the Senior Certificates unless it is clear that the
assets of the Trust Fund will not be plan assets or unless it is clear
that the Exemption or a prohibited transaction class exemption will apply
and exempt all potential prohibited transactions.

CLASS A-6 AND CLASS B CERTIFICATES

As discussed in the Prospectus, because Subordinated Certificates
such as the Class A-6 and Class B Certificates are subordinated to the
Senior Certificates, the Exemption will not apply to the Class A-6 and
Class B Certificates. See "ERISA Considerations--Subordinated Certificates"
in the Prospectus.

As such, no transfer of a Class A-6 or B Certificate shall be
registered unless the prospective transferee provides the Trustee and the
Company with (a) a certification to the effect that (1) such transferee is
neither an employee benefit plan subject to section 406 or section 407 of
ERISA, or section 4975 of the Code, the trustee of any such plan nor a
person acting on behalf of any such plan nor a person using the assets of
any such plan and (2) if such transferee is an insurance company, it is
purchasing such certificates with funds contained in an "insurance company
general account" (as such term is defined in section v(e) of the
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
purchase and holding of such certificates are covered under PTCE 95-60; or
(b) an opinion of counsel (a "benefit plan opinion") satisfactory to the
Trustee and the Company, and upon which the Trustee and the Company shall
be entitled to rely, to the effect that the purchase or holding of such
Class A-6 or Class B Certificate by the prospective transferee will not
result in the assets of the Trust Fund being deemed to be plan assets and
subject to the prohibited transaction provisions of ERISA or the Code and
will not subject the Trustee or the Company to any obligation in addition
to those undertaken by such entities in the agreement, which opinion of
counsel shall not be an expense of the Trustee or the Company. Unless
such certification or opinion is delivered, Certificate Owners of the
Class A-6 and Class B Certificates will be deemed to make the
representations in clause (a)(1). See "ERISA Considerations" in the
Prospectus.

LEGAL INVESTMENT CONSIDERATIONS

The Class A Certificates will constitute "mortgage related
securities" under the Secondary Mortgage Market Enhancement Act of 1984
and, as such, will be "legal investments" for certain types of
institutional investors to the extent provided in that Act.

The Class B Certificates will not constitute "mortgage related
securities" under the Secondary Mortgage Market Enhancement Act of 1984.
The appropriate characterization of the Class B Certificates under various
legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase Class B Certificates, may be subject to
significant interpretive uncertainties. All investors whose investment
authority is subject to legal restrictions should consult their own legal
advisors to determine whether, and to what extent, the Class B
Certificates will constitute legal investments for them.

The Company makes no representation as to the proper characterization
of the Class B Certificates for legal investment or financial institution
regulatory purposes, or as to the ability of particular investors to
purchase Class B Certificates under applicable legal investment
restrictions. The uncertainties described above (and any unfavorable
future determinations concerning legal investment or financial institution
regulatory characteristics of the Class B Certificates) may adversely
affect the liquidity of the Class B Certificates.

See "Legal Investment Considerations" in the Prospectus.

UNDERWRITING

Each of the Underwriters has severally agreed, subject to the terms
and conditions of the Underwriting Agreement, to purchase from the Company
the respective principal amounts of the Offered Certificates set forth
opposite its name below.

<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4
UNDERWRITER CERTIFICATE CERTIFICATE CERTIFICATE CERTIFICATES
S S S
<S> <C> <C> <C> <C>
Prudential Securities $14,400,000 $13,650,000 $ 9,550,000 $ 5,900,000
Incorporated . . . . . . .
J.P. Morgan Securities Inc. $14,400,000 $13,650,000 $ 9,550,000 $ 5,900,000
Total . . . . . . . . $28,800,000 $27,300,000 $19,100,000 $11,800,000

</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A-5 CLASS A-6 CLASS B-1 CLASS B-2
UNDERWRITER CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
<S> <C> <C> <C> <C>
Prudential Securities $ 7,740,500 $4,969,000 $3,416,500 $2,484,500
Incorporated
J.P. Morgan Securities Inc. . $ 7,740,500 $4,969,000 $3,416,500 $2,484,500
Total . . . . . . . . . $15,481,000 $9,938,000 $6,833,000 $4,969,000

</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the
Offered Certificates offered hereby if any Offered Certificates are
purchased. In the event of default by an Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the Underwriting
Agreement may be terminated.

The Company has been advised by the Underwriters that they propose
initially to offer the Offered Certificates to the public at the price set
forth herein, and to certain dealers at such price less the initial
concession not in excess of .225% of the Class A-1 Principal Balance,
.225% of the Class A-2 Principal Balance, .225% of the Class A-3 Principal
Balance, .225% of the Class A-4 Principal Balance, .225% of the Class A-5
Principal Balance, .225% of the Class A-6 Principal Balance, .325% of the
Class B-1 Principal Balance and .325% of the Class B-2 Principal Balance.
The Underwriters may allow and such dealers may reallow a concession not
in excess of .125% of the Class A-1 Principal Balance, .125% of the Class
A-2 Principal Balance, .125% of the Class A-3 Principal Balance, .125% of
the Class A-4 Principal Balance, .125% of the Class A-5 Principal Balance,
.125% of the Class A-6 Principal Balance, .175% of the Class B-1 Principal
Balance and .175% of the Class B-2 Principal Balance to certain other
dealers. After the initial public offering of the Offered Certificates,
the public offering price and such concessions may be changed.

The Underwriting Agreement provides that the Company will indemnify
the Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, or contribute to payments the Underwriters may
be required to make in respect thereof.

The Company has agreed that for a period of 30 days from the date of
this Prospectus Supplement it will not offer or sell publicly any other
manufactured housing contract pass-through certificates without the
Underwriters' consent.

LEGAL MATTERS

The validity of the Offered Certificates will be passed upon for the
Company by Boult, Cummings, Conners & Berry, PLC. Certain legal matters
will be passed upon for the Underwriters by Brown & Wood LLP, New York,
New York. The material federal income tax consequences of the Offered
Certificates will be passed upon for the Company by Brown & Wood LLP.

ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

Except in certain limited circumstances, the globally offered
Manufactured Housing Contract Senior/Subordinate Pass-Through 1996C (the
"Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of
The Depository Trust Company ("DTC"), Cedel or Euroclear. The Global
Securities will be tradeable as home market instruments in both the
European and U.S. domestic markets. Initial settlement and all secondary
trades will settle in same-day funds.

Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).

Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.

Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of
Cedel and Euroclear (in such capacity) and as DTC Participants.

Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.

INITIAL SETTLEMENT

All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on
their behalf as direct and indirect Participants in DTC. As a result,
Cedel and Euroclear will hold positions on behalf of their participants
through their respective Depositaries, which in turn will hold such
positions in accounts as DTC Participants.

Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to conventional eurobonds,
except that there will be no temporary global security and no "lock-up" or
restricted period. Investor securities custody accounts will be credited
with their holdings against payment in same-day funds on the settlement
date.

Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no 'lock-up' or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.

SECONDARY MARKET TRADING

Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and
seller's accounts are located to ensure that settlement can be made on the
desired value date.

Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to prior
manufactured housing contract pass-through certificates issues in same-day
funds.

Trading between Cedel and/or Euroclear Participants. Secondary
market trading between Cedel Participants or Euroclear Participants will
be settled using the procedures applicable to conventional eurobonds in
same-day funds.

Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC
Participant to the account of a Cedel Participant or a Euroclear
Participant, the purchaser will send instructions to Cedel or Euroclear
through a Cedel Participant or Euroclear Participant at least one business
day prior to settlement. Cedel or Euroclear will instruct the respective
Depositary, as the case may be, to receive the Global Securities against
payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment date to and excluding the
settlement date, on the basis of the actual number of days in such accrual
period and a year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued
to and excluding the first day of the following month. Payment will then
be made by the respective Depositary of the DTC Participant's account
against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be system and by the clearing
system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit
will appear the next day (European time) and the cash debt will be
back-valued to, and the interest on the Global Securities will accrue
from, the value date (which would be the preceding day when settlement
occurred in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the Cedel or Euroclear cash debt will
be valued instead as of the actual settlement date.

Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to
process same-day funds settlement. The most direct means of doing so is to
preposition funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within Cedel
or Euroclear. Under this approach, they may take on credit exposure to
Cedel or Euroclear until the Global Securities are credited to their
accounts one day later.

As an alternative, if Cedel or Euroclear has extended a line of
credit to them, Cedel Participants or Euroclear Participants can elect not
to preposition funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedel Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges
for one day, assuming they cleared the overdraft when the Global
Securities were credited to their accounts. However, interest on the
Global Securities would accrue from the value date. Therefore, in many
cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such
overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.

Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Securities to the respective European Depositary for the benefit of Cedel
Participants or Euroclear Participants. The sale proceeds will be
available to the DTC seller on the settlement date. Thus, to the DTC
Participants a cross-market transaction will settle no differently than a
trade between two DTC Participants.

Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in
which Global Securities are to be transferred by the respective clearing
system, through the respective Depositary, to a DTC Participant. The
seller will send instructions to Cedel or Euroclear through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. In these cases Cedel or Euroclear will instruct the respective
Depositary, as appropriate, to deliver the Global Securities to the DTC
Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon
payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360
days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following
month. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the
cash proceeds in the Cedel Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the Cedel
Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debt in anticipation of
receipt of the sale proceeds in its account, the back-valuation will
extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails),
receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would instead be valued as of the actual settlement
date.

Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants
or Euroclear Participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken.
At least three techniques should be readily available to eliminate this
potential problem:

(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or
Euroclear accounts) in accordance with the clearing system's
customary procedures;

(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
Cedel or Euroclear account in order to settle the sale side of the
trade; or

(c) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale
to the Cedel Participant or Euroclear Participant.

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

A beneficial owner of Global Securities holding securities through
Cedel or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless (i) each clearing system,
bank or other financial institution that holds customers' securities in
the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required
to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:

Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.

Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain
an exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).

Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If
the treaty provides only for a reduced rate, withholding tax will be
imposed at that rate unless the filer alternatively files Form W-8. Form
1001 may be filed by the Certificate Owners or his agent.

Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).

U.S. Federal Income Tax Reporting Procedure. The Certificate Owner
of a Global Security or, in the case of a Form 1001 or a Form 4224 filer,
his agent, files by submitting the appropriate form to the person through
whom it holds (the clearing agency, in the case of persons holding
directly on the books of the clearing agency). Form W-8 and Form 1001 are
effective for three calendar years and Form 4224 is effective for one
calendar year.

The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws
of the United States or any political subdivision thereof or (iii) an
estate or trust the income of which is includible in gross income for
United States tax purposes, regardless of its source. This summary does
not deal with all aspects of U.S. Federal income tax withholding that may
be relevant to foreign holders of the Global Securities. Investors are
advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.

PROSPECTUS
----------
VANDERBILT MORTGAGE AND FINANCE, INC.,
SELLER AND SERVICER
MANUFACTURED HOUSING CONTRACT PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)

Manufactured Housing Contract Pass-Through Certificates
("Certificates") of one or more series (each, a "Series") may be offered
and sold from time to time under this Prospectus and a Prospectus
Supplement for each such Series. The Certificates of each Series may be
issued in one or more classes or subclasses (each, a "Class"), as further
described herein. If the Certificates of a Series are issued in more than
one Class, all or less than all of such Classes may be offered and sold
under this Prospectus, and there may be separate Prospectus Supplements
for one or more of such Classes so offered and sold (the "Offered
Certificates"). Any reference herein to the Prospectus Supplement
relating to a Series comprised of more than one Class should be understood
to refer to each of the Prospectus Supplements relating to the Classes
sold hereunder.

The Certificates evidence specified interests in separate pools of
manufactured housing installment sales contracts, installment loan
agreements and mortgage loans (the "Contracts"), as more particularly
described herein, and in certain other property conveyed by Vanderbilt
Mortgage and Finance, Inc. (the "Company"). The Contracts included in any
Contract Pool will be described in the related Prospectus Supplement. The
Contracts will have been originated or purchased in the ordinary course of
business by the Company. Specific information, to the extent available,
regarding the size and composition of the pool of Contracts relating to
each Series of Certificates will be set forth in the related Prospectus
Supplement. In addition, if so specified in the related Prospectus
Supplement, the property of the Trust Fund will include monies on deposit
in a trust account (the "Pre-Funding Account") to be established with the
Trustee, which will be used to purchase additional manufactured housing
installment sales contracts and installment loan agreements (the
"Subsequent Contracts") from the Company from time to time during the
Funding Period specified in the related Prospectus Supplement. A pool
insurance policy, letter of credit, limited guarantee of Clayton Homes,
Inc., surety bond, cash reserve fund, or other form of credit enhancement,
or any combination thereof, may be provided with respect to a Series of
Certificates, or one or more Classes of such Series, evidencing interests
in the Contracts. The Company will act as Servicer (in such capacity
referred to herein as the "Servicer") of the Contracts.

Each Series of Certificates will consist of one or more Classes of
Certificates, which may include one or more senior classes of Certificates
(the "Senior Certificates") and one or more Classes or sub-classes
representing interests in specified percentages (which may be 0%) of
principal or interest, or both, in distributions on the pool of Contracts
relating to such Series, as specified in the related Prospectus
Supplement. Each Prospectus Supplement will describe the Series and Class
or Classes of Certificates offered hereby.

The Prospectus Supplement will set forth the Remittance Rate that
will be paid to Certificateholders of each Class or sub-class of such
Series. Such Remittance Rate may be fixed, variable or adjustable, as
specified in the related Prospectus Supplement.

The related Prospectus Supplement will describe the limited
representations and warranties of the Company in the Pooling and Servicing
Agreement applicable to each class or series of Certificates. Except for
certain representations and warranties relating to the Contracts and
certain other exceptions, the Servicer's obligations with respect to the
Certificates evidencing interests in a pool of Contracts are limited to
its contractual servicing obligations. If so specified in the related
Prospectus Supplement, the Servicer may be obligated, under certain terms
and conditions, to advance the amount of any delinquent payments of
principal and interest during the immediately preceding Due Period (as
defined herein), but only to the extent the Servicer determines such
advances are recoverable from future payments and collections on the
Contracts or otherwise. See "Description of the Certificates -- Advances"
and "-- Distributions on Certificates."

There will have been no public market for any Certificates sold
hereunder prior to the offering thereof and there is no assurance that any
such market will develop. The Underwriters named in the Prospectus
Supplement relating to a Series may from time to time buy and sell
Certificates of such Series, but there can be no assurance that an active
secondary market therefor will develop, and there is no assurance that any
such market, if established, will continue.

The Company may elect to cause the Trust Fund relating to a Series of
Certificates to be treated as a "Real Estate Mortgage Investment Conduit"
(a "REMIC") for federal income tax purposes. See "Certain Federal Income
Tax Consequences" herein.

Capitalized terms used herein and not defined shall have the
respective meanings assigned to such terms in the Glossary.

CERTAIN FACTORS SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
CERTIFICATES. SEE "RISK FACTORS" HEREIN AND IN THE RELATED PROSPECTUS
SUPPLEMENT.

THE CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
THE COMPANY OR, UNLESS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS
SUPPLEMENT, ANY OF ITS AFFILIATES. THE CERTIFICATES WILL NOT BE INSURED
OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF A SERIES OF
CERTIFICATES, UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_______________
The date of this Prospectus is October 18, 1996.

REPORTS TO CERTIFICATEHOLDERS

The Company will cause to be provided to the holders of the
Certificates of each Class or Series certain monthly and annual reports
concerning such Certificates and the related Trust Funds as further
described in the related Prospectus Supplement under "Description of the
Certificates -- Reports to Certificateholders."

AVAILABLE INFORMATION

This Prospectus contains, and the Prospectus Supplement for each
Class or Series of Certificates will contain, a summary of certain
material terms of certain of the documents referred to herein and therein,
but neither contains nor will contain all of the information set forth in
the Registration Statement of which this Prospectus is a part (the
"Registration Statement"). For further information, reference is made to
such Registration Statement and the exhibits thereto which the Company has
filed with the Securities and Exchange Commission (the "Commission"),
under the Securities Act of 1933, as amended. Statements contained in
this Prospectus and any Prospectus Supplement describing a provision of
any contract or other document referred to are summaries, and if this
Prospectus or such Prospectus Supplement indicates that such contract or
other document has been filed as an exhibit to the Registration Statement,
reference is made to the copy of the contract or other document filed as
an exhibit, each such statement being qualified in all respects by
reference to the actual provision being described. Copies of the Regis-
tration Statement can be inspected and, upon payment of the Commission's
prescribed charges, copied at the public reference facilities maintained
by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at certain of its Regional Offices located as follows:
Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048, and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. In addition, the
Commission maintains a Web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission.

INCORPORATION OF CERTAIN DOCUMENTS OF THE COMPANY BY REFERENCE

All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent
to the date of this Prospectus and prior to the termination of the
offering of the Certificates shall be deemed to be incorporated by
reference into this Prospectus and the Prospectus Supplement and to be a
part thereof from the respective dates of filing of such documents, except
that reports relating to the operation of a specific Trust Fund shall not
be incorporated by reference hereinto or made part hereof. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. The
Company is subject to informational requirements of the Securities
Exchange Act of 1934 Act, as amended, and in accordance therewith files
reports and other information with the Commission.

The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person,
a copy of any or all of the foregoing documents incorporated herein by
reference (other than certain exhibits to such documents). Requests for
such copies should be directed to David Jordan, Controller, 4726 Airport
Highway, Louisville, Tennessee 37777, telephone number (423) 970-7200, the
above mailing address and telephone number being that of the Company's
principal executive office.

INCORPORATION OF CERTAIN DOCUMENTS OF CHI BY REFERENCE

With respect to any Class of Offered Certificates that is supported
by a guarantee of CHI, CHI's Annual Report on Form 10-K for the year ended
June 30, 1996, as amended by Form 10-K/A, which have been filed with the
Commission, are hereby incorporated by reference in this Prospectus and
the related Prospectus Supplement. CHI is subject to informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith files reports and other information with the
Commission.

With respect to any Class of Offered Certificates that is supported
by a guarantee of CHI, all documents filed by CHI pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of this Prospectus and prior to the
termination of the offering of the Certificates shall be deemed to be
incorporated by reference into this Prospectus and the related Prospectus
Supplement and to be a part thereof from the respective dates of filing of
such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.

CHI will provide without charge to any person to whom this Prospectus
is delivered, upon the written or oral request of such person, a copy of
any or all of the foregoing documents incorporated herein by reference
(other than certain exhibits to such documents). Requests for such copies
should be directed to Joseph H. Stegmayer, President, 623 Market Street,
Knoxville, Tennessee 37902, telephone number (423) 595-4700, the above
mailing address and telephone number being that of CHI's principal
executive office.

SUMMARY OF TERMS

This summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and in the
accompanying Prospectus Supplement. Capitalized terms used herein shall
have the respective meanings assigned them in the "Glossary."

Securities Manufactured Housing Contract Pass-Through
Certificates evidencing interests in pools of
Contracts (defined below) issuable in series pursuant
to separate Pooling and Servicing Agreements (each, an
"Agreement") among Vanderbilt Mortgage and Finance,
Inc. (the "Company"), as servicer (in such capacity,
together with any successor servicer, the "Servicer")
and the Trustee (the "Trustee") specified in the
related Prospectus Supplement for such Series of
Certificates (the "Certificates").

Seller Vanderbilt Mortgage and Finance, Inc. (in such capacity
referred to herein as the "Company"), a wholly-owned sub-
sidiary of Clayton Homes, Inc. ("CHI").

Servicer Vanderbilt Mortgage and Finance, Inc. (in such capacity
referred to herein as the "Servicer").

Risk Factors Certain factors are particularly relevant to a
decision to invest in any Certificates sold hereunder.
See "Risk Factors" herein.

The Contracts The Contracts evidenced by a Series of Certificates
(the "Contract Pool") will be fixed or variable rate
Contracts. Such Contracts, as specified in the
related Prospectus Supplement, will consist of
manufactured housing installment sales contracts and
installment loan agreements and may include modular
home installment sales contracts and installment loan
agreements. The Contracts will be conventional
contracts or contracts insured by the Federal Housing
Administration ("FHA") or partially guaranteed by the
Veterans Administration ("VA"). Each Contract will be
secured by a new or used Manufactured Home (as defined
herein) or Modular Home (as defined herein). Each
Contract secured by a Modular Home, and some of the
Contracts secured by Manufactured Homes, will be
further secured by a mortgage or deed of trust on the
real estate to which the Modular Home or the
Manufactured Home is affixed (a "Land-and-Home
Contract").

The Prospectus Supplement for each Series will provide information
with respect to (i) the aggregate principal balance of the Contracts
comprising the Contract Pool, as of the date specified in the
Prospectus Supplement (the "Cut-off Date"); (ii) the weighted average
contractual rate of interest (the "Contract Rate") on the Contracts;
(iii) the weighted average term to scheduled maturity as of origina-
tion; (iv) the weighted average term to scheduled maturity as of the
Cut-off Date and the range of terms to maturity; (v) the
percentage amount of Contracts secured by new or used Manufactured
Homes; (vi) the average outstanding principal balance of the
Contracts as of the Cut-off Date; (vii) the range of Loan-to-Value
Ratios; and (viii) the geographic location of Manufactured Homes
securing the Contracts.
The Contracts will have been originated or purchased by the Company
in the ordinary course of its business.

Description of
Certificates Each Class of Certificates within a Series will
evidence the interest specified in the related
Prospectus Supplement in the Contract Pool and
certain other property held in trust for the
benefit of the Certificateholders (the "Trust
Fund").

Each Series of Certificates may consist of one or more Classes, one
or more of which may be Senior Certificates ("Senior Certificates")
and one or more of which may be Subordinated Certificates
("Subordinated Certificates"). A Class of Certificates of a Series
may be divided into two or more sub-classes, as and on the terms
specified in the related Prospectus Supplement. Each Class or sub-
class of a Series may evidence the right to receive a specified
portion (which may be 0%) of each distribution of principal or
interest or both, on the Contracts. Each Class or sub-class of a
Series may be assigned a principal balance (the "Stated Balance")
based on the cash flow from the assets in the Trust Fund, and a
fixed, variable or adjustable stated annual interest rate, and may be
entitled to receive distributions in reduction of Stated Balance to
the extent available therefor in the manner, priority and amounts
specified in the related Prospectus Supplement. A Class or sub-class
of Certificates may be Compound Interest Certificates on which
interest will accrue, but not be paid for the period set forth in the
related Prospectus Supplement. The Certificates will be issuable in
fully registered form in the authorized denominations specified in
the related Prospectus Supplement. See "Description of the
Certificates." The Subordinated Certificates of a Series will be
subordinated in certain respects to the Senior Certificates of the
same Series. If a Series of Certificates contains more than one
Class of Subordinated Certificates, distributions and losses will be
allocated among such Classes in the manner specified in the related
Prospectus Supplement. The Certificates will not be guaranteed or
insured by any government agency or instrumentality.

Subordinated Certificates
and Reserve Fund One or more Classes of any Series may be
Subordinated Certificates, as specified in the
related Prospectus Supplement. The rights of the
Subordinated Certificateholders to receive any or
a specified portion of distributions with respect
to the Contracts will be subordinated to the
rights of Senior Certificateholders to the extent
and in the manner specified in the related Prospectus
Supplement. If a Series of Certificates contains more than one
Class of Subordinated Certificates, distributions and losses
will be allocated among such classes in the manner specified in
the related Prospectus Supplement. The rights of the
Subordinated Certificateholders, to the extent not subordinated,
may be on a parity with those Senior Certificateholders. This
subordination is intended to enhance the likelihood of regular
receipt by Senior Certificateholders of the full amount of
scheduled monthly payments of principal and interest due them
and to protect the Senior Certificateholders against losses.
The Available Subordination Amount, if any, for each Class of
Subordinated Certificates of a Series will be dependent upon
certain Contract Pool characteristics which will be set forth in
the related Prospectus Supplement.

The protection afforded to the Senior Certificateholders by the
subordination feature described above may be effected both by the
preferential right of the Senior Certificateholders to receive
current distributions from the Contract Pool and, to the extent
specified in the related Prospectus Supplement, by the establishment
of a reserve fund (the "Reserve Fund"). The Reserve Fund may be
funded, to the extent specified in the related Prospectus Supplement,
by one or more of an initial cash deposit, the retention of specified
periodic distributions of principal or interest or both otherwise
payable to Subordinated Certificateholders, or the provision of a
letter of credit, limited guarantee of CHI, insurance policy or other
form of credit enhancement or any combination thereof. Unless
otherwise specified in the related Prospectus Supplement, the Reserve
Fund will be part of the Trust Fund.

The subordination features and the Reserve Fund described above are
intended to enhance the likelihood of timely payment of principal and
interest and to protect the Senior Certificateholders and, to the
extent specified in the related Prospectus Supplement, Subordinated
Certificateholders against loss. However, in certain circumstances
the Reserve Fund could be depleted and shortfalls could result. If,
on a particular date when a distribution is due such
Certificateholders, the aggregate amount of payments received from
the obligors on the Contracts and Advances by the Servicer (as
described below), if any, and from the Reserve Fund of a Series, if
any, do not provide sufficient funds to make full distributions to
such Certificateholders of a Series, the amount of the shortfall may
be added to the amount such Certificateholders are entitled to
receive on the next Remittance Date. In the event the Reserve Fund,
if any, is depleted, such Senior Certificateholders and, to the
extent specified in the related Prospectus Supplement, Subordinated
Certificateholders nevertheless will have a preferential right to
receive current distributions from the Contract Pool. Such
Certificateholders will bear their proportionate share of losses
realized on Contracts to the extent such Reserve Fund and subordina-
tion feature are exhausted.

Credit Enhancement As an alternative, or in addition, to the credit
enhancement afforded by subordination of the
Subordinated Certificates, credit enhancement
with respect to a Series of Certificates may be
provided by pool insurance, letters of credit,
surety bonds, a limited guarantee of CHI, cash
reserve funds or other forms of enhancement
acceptable to each nationally recognized rating
agency rating a Series of Certificates, in each
case as described in the related Prospectus
Supplement.

Advances If the amount eligible for distribution to the Certificate-
holders of a Series of Certificates (or to Senior Certifi-
cateholders only if so specified in the case of a Series of
Certificates having a Class of Subordinated Certificates)
on any Remittance Date is less than the amount which is due
such Certificateholders on such Remittance Date, the
related Agreement will provide that the Servicer is obli-
gated to make advances of cash (the "Advances") to such
Certificateholders subject to the limitations described in
the applicable Prospectus Supplement, to the extent that
such deficiency is due to delinquent payments of principal
and interest during the immediately preceding Due Period
(as defined herein) and only to the extent the Servicer
determines such Advances are recoverable from future pay-
ments and collections on the Contracts or otherwise. See
"Description of the Certificates."

Interest Interest on the Certificates will be paid on the dates
specified in the related Prospectus Supplement (each a
"Remittance Date"), commencing on the date specified in the
related Prospectus Supplement. The related Prospectus
Supplement will set forth for each Class or sub-class of
Certificates the interest rate, if any, for each such Class
or sub-class or the method of determining such interest
rate. See "Yield Considerations" and "Description of the
Certificates." As specified in the related Prospectus
Supplement, Classes of a Series of Certificates or sub-
classes within a Class may be entitled to receive no inter-
est or interest which is not proportionate to the principal
allocable to such Certificates.

Principal (Including
Prepayments) Principal collected on each Contract, including any
principal prepayments, will be passed through on each
Remittance Date, unless such principal has previously
been passed through. See "Maturity and Prepayment
Considerations" and "Description of the Certificates."
With respect to a Class or sub-class of a Series
having a Stated Balance, such distributions may be
made in the reduction of the Stated Balance, or in an
amount equal to the Certificate Remittance Amount or
such other amounts as are specified in the related
Prospectus Supplement. See "Maturity and Prepayment
Considerations" and "Description of the Certificates --
Distributions on Certificates" and "-- Payments on Contracts."

Optional Termination The Company or the Servicer may at its
option repurchase all Contracts relating to
a series of Certificates remaining
outstanding at such time and under the
circumstances specified in such Prospectus
Supplement. See "Description of the
Certificates -- Termination of the
Agreement."

Global Certificates If so specified in the related Prospectus
Supplement, the Certificates of a Series, or of
one or more Classes within a Series, will be
issuable in the form of one or more global
certificates (each, a "Global Certificate") to be
held by a depositary (each, a "Depositary") on
behalf of the beneficial owner of the
Certificates, as described herein under
"Description of the Certificates -- Global
Certificates." The description of the
Certificates in this Prospectus assumes that the
Certificates of a Series will not be issued in
the form of Global Certificates. If some or all
of the Certificates of a Series are issued in the
form of one or more Global Certificates, the term
"Global Certificateholder," as used herein, will
refer to such beneficial owners of such
Certificates, and the rights of such Certificate-
holders will be limited as described herein under
"Description of the Certificates -- Global
Certificates."

Representations and Warranties
of the Company As a condition to the Company's conveyance of any
Contract Pool to the Trust Fund, the Company will be
required to make certain representations and
warranties in the related Agreement regarding the
Contracts. Under the terms of the Agreement, if the
Company becomes aware of a breach of any such
representation or warranty that materially adversely
affects the Trust Fund's interest in any Contract or
receives written notice of such a breach from the
Trustee or the Servicer, then the Company will be
obligated either to cure such breach or to repurchase
or substitute for the affected Contract, in each case
under the conditions further described herein. See
"Description of the Certificates -- Conveyance of
Contracts" herein.

Federal Income Tax
Considerations If an election (a "REMIC Election") is made to the
Trust Fund represented by a series of Certificates or
a segregated portion thereof as a "real estate
mortgage investment conduit" (a "REMIC") under the
Internal Revenue code of 1986, as amended (the
"Code"), each class of Certificates which are offered
hereby may constitute "regular interests" or "residual
interests" in such REMIC under the Code, with the tax
consequences under the Code described herein and in
such Prospectus Supplement. Generally, holders of
Certificates that are REMIC regular interests will be
treated as if they hold a debt obligation for federal
income tax purposes.

A Class of Certificates offered hereby may represent interests
in a "two-tier" REMIC, but all interests in the first and second
tier REMIC will be created under the same Agreement. See
"Certain Federal Income Tax Consequences -- REMIC Series."

If a REMIC Election is not made with respect to a Series of
Certificates, the Trust Fund represented by such Certificates will be
treated as a grantor trust for federal income tax purposes and will
not be classified as an association taxable as a corporation. In
such event, each Certificateholder will be treated as the owner of an
undivided pro rata interest in income and corpus attributable to the
related Contract Pool and any other assets held by the Trust Fund and
will be considered the equitable owner of an undivided interest in
the Contracts included in such Contract Pool. See "Certain Federal
Income Tax Consequences -- Non-REMIC Series."

ERISA Considerations A fiduciary of any employee benefit plan
subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),
or the Code, should review carefully with
its legal advisors whether the purchase or
holding of Certificates could give rise to a
transaction prohibited or otherwise
impermissible under ERISA or the Code. See
"ERISA Considerations" herein.

Legal Investment Unless otherwise indicated in the applicable
Prospectus Supplement, any Certificates offered
hereby that are rated by at least one nationally
recognized statistical rating organization in one
of its two highest rating categories will
constitute "mortgage related securities" under
the Secondary Mortgage Market Enhancement Act of
1984, as amended, and as such (unless otherwise
indicated in the applicable Prospectus
Supplement) will be "legal investments" for
certain types of institutional investors to the
extent provided in that Act, subject, in any
case, to any other regulations that may govern
investments by such institutional investors. See
"Legal Investment Considerations" herein.

Ratings It is a condition precedent to the issuance of any Class of
Certificates sold under this Prospectus that they be rated
in one of the four highest rating categories (within which
there may be sub-categories or gradations indicating
relative standing) of at least one nationally recognized
statistical rating organization. A security rating is not
a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the
assigning rating agency.

Ratings of the Certificates address the likelihood of the
receipt of all distributions on the contracts by the related
certificateholders under the agreements pursuant to which such
certificates are issued. The ratings take into consideration
the credit quality of the related contract pool, including any
credit support providers, structural and
legal aspects associated with such certificates, and the extent
to which payment stream on such contract pool is adequate to
make payments required by such certificates. The ratings on
such certificates do not, however, constitute a statement
regarding frequency of prepayments on the related contracts.
See "Ratings" herein.

RISK FACTORS

Prospective investors in the Certificates should consider, among
other things, the following risk factors in connection with the purchase
of the Certificates:

1. General. An investment in the Certificates may be affected by,
among other things, a downturn in regional or local economic conditions.
These regional or local economic conditions are often volatile, and
historically have affected the delinquency, loan loss and repossession
experience of the Contracts. Moreover, regardless of its location,
manufactured housing generally depreciates in value. Consequently, the
market value of certain Manufactured Homes could be or become lower than
the outstanding principal balances of the Contracts that they secure. To
the extent that losses on the Contracts are not covered by the
subordination of other Classes of Certificates, if any, or by any other
form of credit enhancement, holders of the Certificates of a Series
evidencing interests in such Contracts will bear all risk of loss
resulting from default by obligors and will have to look primarily to the
value of the Manufactured Homes for recovery of the outstanding principal
and unpaid interest on the defaulted Contracts. See "The Trust Fund --
The Contract Pools."

2. Prepayment Considerations. The prepayment experience on the
Contracts will affect the average life of each Class of Certificates.
Prepayments on the Contracts (which include both voluntary prepayments and
liquidations following default) may be influenced by a variety of
economic, geographic, social and other factors, including repossessions,
aging, seasonality, market interest rates, changes in housing needs, job
transfers and unemployment. In the event a Contract is prepaid in full,
interest on such Contract will accrue only to the date of prepayment. If
the Certificates of any Series are purchased at a discount and the
purchaser calculates its anticipated yield to maturity based on an assumed
rate of payment of principal on such Certificates that is faster than the
rate actually realized, such purchaser's actual yield to maturity will be
lower than the yield so calculated by such purchaser.

3. Limited Obligations. The Certificates will not represent an
interest in or obligation of the Company. The Certificates will not be
insured or guaranteed by any governmental agency or instrumentality, the
Underwriter or any of its affiliates, or by the Company or (except as
otherwise specified in the related Prospectus Supplement) any of its
affiliates, and will be payable only from amounts collected on the
Contracts.

4. Limited Liquidity. There can be no assurance that a secondary
market will develop for the Certificates of any Series, or, if it does
develop, that it will provide the holders of any of the Certificates with
liquidity of investment or that it will remain for the term of any Series
of Certificates. Liquidity of investment in the Certificates would be
adversely affected by, among other factors, the failure of a Trust Fund
that has made a REMIC election to continue to qualify as a REMIC and may
be adversely affected by, among other things, the absence of Certificates
in physical form.

5. Security Interests and Mortgages on the Manufactured Homes.
Substantially all Contracts are secured by a separately evidenced security
interest in a Manufactured Home. Perfection of such security interests in
the Manufactured Homes and enforcement of rights to realize upon the value
of the Manufactured Homes as collateral for the Contracts are subject to a
number of federal and state laws, including the Uniform Commercial Code
(the "UCC") as adopted in each state and each state's certificate of title
statutes, but generally not its real estate laws. The steps necessary to
perfect the security interest in a Manufactured Home will vary from state
to state. Because of the expense and administrative inconvenience
involved, the Company will not amend any certificates of title to change
the lienholder specified therein from the Company (or the applicable
originator in the case of an Acquired Contract) to the Trustee or file any
UCC-3 assignments and will not deliver any certificate of title to the
Trustee or note thereon the Trustee's interest. Consequently, in some
states, in the absence of such an amendment, the assignment to the Trustee
of the security interest in the Manufactured Home may not be effective or
such security interest may not be perfected and, in the absence of
such notation or delivery to the Trustee, the assignment of the security
interest in the Manufactured Home may not be effective against creditors
of the Company (or the applicable originator in the case of an Acquired
Contract) or a trustee in bankruptcy of the Company (or the applicable
originator in the case of an Acquired Contract). Certain Contracts (as
specified herein and in the related Prospectus Supplement) may be
secured by a mortgage or deed of trust on the property on which a
Manufactured Home or Modular Home is placed. Because of the expense
and administrative inconvenience involved, the Company will not deliver
to the Trustee assignments in recordable form of the mortgage or deed of
trust (each, a "Mortgage") securing each Land-and-Home Contract. The
Company will, however, deliver to the Trustee a power of attorney enabling
the Trustee to effect such assignments. In some states in the absence
of the recordation of such an assignment to the Trustee of the Mortgage
securing a Land-and-Home Contract, the assignment of the Mortgage to the
Trustee may not be effective against creditors of or purchasers from the
Company (or the applicable originator in the case of an Acquired Contract)
or a trustee in bankruptcy of the Company (or the applicable originator in
the case of an Acquired Contract).

6. Consumer Protection Laws and Other Limitations on Lenders.
Numerous federal and state consumer protection laws impose requirements on
lending under installment sales contracts and installment loan agreements
such as the Contracts, and the failure by the lender or seller of goods to
comply with such requirements could give rise to liabilities of assignees
for amounts due under such agreements and the right of set-off against
claims by such assignees. From time to time the Company is involved in
litigation under consumer protection laws. These laws would apply to the
Trust Fund as assignee of the Contracts. Pursuant to the Agreement, the
Company will represent and warrant that each Contract complies with all
requirements of law and will provide certain warranties relating to the
validity, perfection and priority of the security interest in each
Manufactured Home securing a Contract. A breach of any such warranty that
materially adversely affects any Contract may, subject to certain
conditions described under "Description of Certificates -- Conveyance of
Contracts," create an obligation by the Company to repurchase, or at its
option substitute another contract for, such Contract unless such breach
is cured within 90 days after notice thereof. If the Company does not
honor its repurchase obligation in respect of a Contract and such Contract
were to become defaulted, recovery of amounts due on such Contract would
be dependent on repossession and resale of the Manufactured Home securing
such Contract. Certain other factors, such as the bankruptcy of an
obligor or the application of equitable principles by a court, may limit
the ability of the Certificateholders to receive payments on the Contracts
or to realize upon the Manufactured Homes or may limit the amount realized
to less than the amount due. See "Certain Legal Aspects of the Contracts"
herein.

In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993),
-----------------------------------
the court's decision included language to the effect that accounts sold by
an entity which subsequently became bankrupt remained property of the
debtor's bankruptcy estate. Although the Contracts constitute chattel
paper rather than accounts under the UCC, sales of chattel paper, like
sales of accounts, are governed by Article 9 of the UCC. If the Company
(or the dealer that sold the related Manufactured Home) were to become a
debtor under the federal bankruptcy code and a court were to follow the
reasoning of the Tenth Circuit and apply such reasoning to chattel paper,
Certificateholders could experience a delay in or reduction of
distributions (in the case of the dealer, only with respect to the
Contracts in respect of which it sold the related Manufactured Home).

7. Certain Matters Relating to Insolvency. The Company intends that
each transfer of Contracts to the related Trust Fund constitutes a sale,
rather than a pledge of the Contracts to secure indebtedness of the
Company. However, if the Company were to become a debtor under the
federal bankruptcy code, it is possible that a creditor or trustee in
bankruptcy of the Company or the Company as debtor-in-possession may argue
that the sale of the Contracts by the Company was a pledge of the
Contracts rather than a sale. This position, if presented to or accepted
by a court, could result in a delay in or reduction of distributions
to the Certificateholders.

8. Priority of Possible Tennessee Tax Lien. Under Tennessee law, a
tax is due in connection with the public recordation of instruments
evidencing indebtedness. The Company will treat the transfers of the
Contracts to the Trustee as sales rather than secured financings, and
therefore will not pay any tax in respect of the recordation of
instruments evidencing such transfers. See "Certain Legal Aspects of the
Contracts -- Certain Matters Relating to Insolvency". Nonpayment or
underpayment of the Tennessee indebtedness tax does not affect or impair
the effectiveness, validity, priority or enforceability of the security
interest created or evidenced by the instrument, but (a) subjects the
holder of the indebtedness to a penalty, in addition to the tax, in the
amount of the greater of $250 or double the unpaid tax due, (b) results in
the imposition of a tax lien in favor of the Tennessee Department of
Revenue, in the amount of any tax and penalties unpaid and owing that
attaches to the collateral until the lien or security interest is released
and thereafter attaches to the proceeds, and (c) precludes the holder of
the indebtedness from maintaining an action on the indebtedness (other
than an action limited to the enforcement of the security interests or
lien) against the debtor until the nonpayment is cured. In such event,
and in addition to the statutory disability described above, collections
on the Contracts could be applied to pay such tax and penalty prior to
being applied to make distributions to Certificateholders and the
Tennessee Department of Revenue would have a lien on the Contracts prior
to the security interests and liens of the Trustee.

9. Louisiana Law. Any Contract secured by a Manufactured Home
located in the State of Louisiana will be governed by Louisiana law in
addition to Article 9 of the UCC. Louisiana law provides special
mechanisms for the enforcement of security interests in manufactured
housing used as collateral for an installment sales contract or
installment loan agreement. Under Louisiana law, so long as a
manufactured home remains subject to the Louisiana motor vehicle laws,
repossession can be accomplished by voluntary consent of the obligor,
executory process (repossession proceedings which must be initiated
through the courts but which involve minimal court supervision) or a civil
suit for possession. In connection with a voluntary surrender, the
obligor must be given a full release from liability for all amounts due
under the contract. In executory process repossessions, a sheriff's sale
(with court supervision) is permitted, unless the owner brings suit to
enjoin the sale, and the lender is prohibited from seeking a deficiency
judgment against the obligor unless the lender obtained an appraisal of
the manufactured home prior to the sale and the property was sold for at
least two-thirds of its appraised value.

10. Limitations on Subordination. With respect to Certificates of a
Series having a Class of Subordinated Certificates, while the
subordination feature is intended to enhance the likelihood of timely
payment of principal and interest to the Senior Certificateholders, the
Available Subordination Amount may be limited, as specified in the
Prospectus Supplement, and the Reserve Fund, if any, could be depleted in
certain circumstances. In either case, shortfalls could result for both
the Senior Certificates and the Subordinated Certificates. Prospective
purchasers of a Class of Certificates should carefully review the credit
risks to be absorbed by such Class of Certificates on account of its
subordination or the timing of the distributions intended to be made on
such Class of Certificates.

11. Limited Guarantee of CHI. If the related Prospectus Supplement
so specifies, the Certificates may be entitled to the benefits of a
limited guarantee of CHI which would be an unsecured general obligation of
CHI and would not be supported by any letter of credit or other
enhancement arrangement.

THE TRUST FUND

GENERAL

Each Trust Fund will include (i) a Contract Pool, (ii) the amounts
held from time to time in a trust account (the "Certificate Account")
maintained by the Trustee pursuant to the Agreement, and (iii) proceeds
from certain hazard insurance on individual Manufactured Homes and
Manufactured Homes acquired by repossession, and may include a letter of
credit, limited guarantee of CHI, surety bond, insurance policy, cash
reserve fund or other credit enhancement security payment of all or part
of a series of Certificates or other property. If so specified in the
related prospectus supplement, a limited guarantee of CHI may exist and
may not be a part of the Trust Fund.

Each Certificate will evidence the interest specified in the related
Prospectus Supplement in one Trust Fund, containing one Contract Pool
comprised of Contracts having the aggregate principal balance as of the
specified day of the month of the creation of the pool (the "Cut-off
Date") specified in the related Prospectus Supplement. Holders of
Certificates of a Series will have interests only in such Contract Pool
and will have no interest in the Contract Pool created with respect to any
other Series of Certificates.

All of the Contracts will have been purchased by the Company or an
affiliate of the Company in the open market or in privately negotiated
transactions, including transactions with affiliates of the Company. The
following is a brief description of the Contracts expected to be included
in the Trust Fund. Specific information respecting the Contracts will be
provided in the Prospectus Supplement or in a report on Form 8-K to be
filed with the Securities and Exchange Commission after the initial issu-
ance of such Certificates. A copy of the Agreement with respect to each
Series of Certificates will be attached to the Form 8-K and will be
available for inspection at the corporate trust office of the Trustee
specified in the related Prospectus Supplement. A schedule of the
Contracts relating to such Series will be attached to the Agreement
delivered to the Trustee upon delivery of the Certificates.

Whenever in this Prospectus terms such as "Contract Pool," "Trust
Fund," "Agreement" or "Remittance Rate" are used, those terms respectively
apply, unless the context otherwise indicates, to one specific Contract
Pool, Trust Fund, each Agreement and the Remittance Rate applicable to the
related Series of Certificates.

THE CONTRACT POOLS

Each pool of Contracts with respect to a Series of Certificates (the
"Contract Pool") will consist of manufactured housing installment sales
contracts and installment loan agreements and may include modular home
installment sales contracts and installment loan agreements (collectively,
the "Contracts") originated by a manufactured housing dealer or a lender
in the ordinary course of business and purchased by the Company. The
Contracts will be conventional manufactured housing contracts or contracts
insured by the FHA or partially guaranteed by the VA. Each Contract will
be secured by a new or used Manufactured Home or Modular Home. Each
Contract secured by a Modular Home will, and some of the Contracts secured
by Manufactured Homes may, be further secured by a mortgage or deed of
trust on the real estate to which the Modular Home or the Manufactured
Home is affixed (a "Land-and-Home Contract"). Except as otherwise
specified in the related Prospectus Supplement, the Contracts will be
fully amortizing and will bear interest at a fixed or variable annual
percentage rate (the "Contract Rate") or at a Contract Rate which steps up
on a particular date (a "step-up rate").

The Company, as seller of the Contracts, will represent that the
Manufactured Homes securing the Contracts consist of manufactured homes
within the meaning of 42 United States Code, Section 5402(6), which
defines a "manufactured home" as "a structure, transportable in one or
more sections, which in the traveling mode, is eight body feet or more in
width or forty body feet or more in length, or, when erected on site, is
three hundred twenty or more square feet, and which is built on a
permanent chassis designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and
includes the plumbing, heating, air-conditioning, and electrical systems
contained therein; except that such term shall include any structure which
meets all the requirements of (this) paragraph except the size
requirements and with respect to which the manufacturer voluntarily files
a certification required by the Secretary of Housing and Urban Development
and complies with the standards established under (this) chapter."

For each Series of Certificates, the Company will assign the
Contracts constituting the Contract Pool to the trustee named in the
related Prospectus Supplement (the "Trustee"). The Company, as Servicer
(in such capacity referred to herein as the "Servicer"), will service the
Contracts pursuant to the Agreement. See "Description of the Certificates
-- Servicing." Unless otherwise specified in the related Prospectus
Supplement, the contract documents (including the documents relating to
Land-and-Home Contracts) will be held for the benefit of the Trustee by
the Servicer.

Each Contract Pool will be composed of Contracts bearing interest at
the annual fixed or variable Contract Rates or step-up rates specified in
the Prospectus Supplement. The Monthly Payments for Contracts bearing
interest at a step-up rate (sometimes referred to herein as "step-up rate
Contracts") will increase on the dates on which the Contract Rates are
stepped up. Each registered holder of a Certificate will be entitled to
receive periodic distributions, which will typically be monthly, of all or
a portion of principal on the underlying Contracts or interest on the
principal balance of such Certificate at the Remittance Rate, or both.

The related Prospectus Supplement will disclose in summary form for
the Contracts contained in the related Contract Pool, among other things,
the year of origination of the contracts; the range of Contract Rates on
the Contracts; the range of Loan-to-Value Ratios; the minimum and maximum
outstanding principal balances as of the Cut-off Date and the average
outstanding principal balance; the range of outstanding principal balances
of the Contracts included in the Contract Pool; and the original
maturities of the Contracts and the last maturity date of any Contract.
The Trust Fund may include a Pre-Funding Account which would be used to
purchase additional Contracts ("Subsequent Contracts") from the Company
during the Funding Period specified in the related Prospectus Supplement.
The related Prospectus Supplement will specify the conditions that must be
satisfied prior to any transfer of Subsequent Contracts, including the
requisite characteristics of the Subsequent Contracts.

The Company will make representations and warranties as to the types
and geographical distribution of the Contracts included in a Contract Pool
and as to the accuracy in all material respects of certain information
furnished to the Trustee in respect of each such Contract. Upon a breach
of any representation that materially and adversely affects the interests
of the Certificateholders in a Contract, the Company will be obligated
either to cure the breach in all material respects, to purchase the
Contract or to substitute another Contract as described below. This
repurchase or substitution obligation constitutes the sole remedy
available to the Certificateholders or the Trustee for a breach of
representation by the Company. See "Description of the Certificates --
Conveyance of Contracts."

USE OF PROCEEDS

Substantially all of the net proceeds to be received from the sale of
each Series of Certificates will be used by the Company for general
corporate purposes, including the purchase of the Contracts, cost of
carrying the Contracts until sale of the related Certificates and to pay
other expenses connected with pooling the Contracts and issuing the
Certificates.

VANDERBILT MORTGAGE AND FINANCE, INC.

Vanderbilt Mortgage and Finance, Inc. (the "Company") was
incorporated in 1977 in the State of Tennessee. As of June 30, 1996, the
Company had total assets of approximately $461 million and stockholder's
equity of approximately $157 million. The Company, a wholly-owned
subsidiary of Clayton Homes, Inc. ("CHI"), is engaged in the business of,
among other things, purchasing, originating, selling and servicing
installment sales contracts and installment loan agreements for
manufactured housing and modular housing (hereinafter referred to as
"contracts" or "manufactured housing contracts"). CHI manufacturers and
sells manufactured homes and modular homes, and owns, manages and markets
manufactured housing communities. The Company's principal office is
located at 4726 Airport Highway, Louisville, Tennessee 37777 (telephone
423-970-7200). An affiliate of CHI acts as an insurance broker for
certain types of insurance, including hazard and credit life insurance
policies, some of which may cover certain of the Contracts. Other
affiliates of CHI reinsure hazard and credit life insurance policies,
including policies that may cover certain of the Contracts. Two separate
wholly-owned subsidiaries of CHI, Vanderbilt Life and Casualty Insurance
Co., Ltd. and Vanderbilt Property and Casualty Insurance Co., Ltd. may
act as reinsurer of insurance coverage relating to the Contracts.

The Company purchases and originates manufactured housing contracts
on an individual basis from its principal office. The Company arranges to
purchase manufactured housing installment sales contracts originated by
manufactured housing dealers located in approximately 21 states, primarily
southern and midwestern. Most of these purchases are from dealers owned
by CHI. Dealers which are not owned by CHI must make an application to
the Company for dealer approval. Upon satisfactory results of the
Company's investigation of the dealer's creditworthiness and general
business reputation, the Company and the dealer enter into a dealer
agreement.

In addition to purchasing manufactured housing contracts from dealers
on an individual basis, the Company makes bulk purchases of manufactured
housing contracts and services on behalf of other owners manufactured
housing contracts that were not originally purchased or originated by the
Company. These purchases may be from, and these servicing arrangements
may be made with respect to, the portfolios of other lenders or finance
companies, the portfolios of governmental agencies or instrumentalities or
the portfolios of other entities that purchase and hold manufactured
housing contracts.

The Company is actively seeking arrangements by which it would
service manufactured housing contracts originated by other lenders. The
Company's management currently anticipates it will only seek servicing
responsibilities which relate to manufactured housing contracts.

UNDERWRITING POLICIES

GENERAL

Customers desiring to obtain financing from the Company complete a
credit application form. In the case of those dealers owned by CHI, the
manager initially evaluates the application and then forwards it to the
Company for consideration. In the case of dealers that are not owned by
CHI, the application is transmitted to the Company for consideration.

Credit applications are then evaluated by the Company's credit
officers. With respect to those customers determined to be creditworthy,
the Company requires a down payment in the form of cash, the trade-in
value of a previously owned manufactured home, and/or the estimated value
of equity in real property pledged as additional collateral. For
previously owned homes, the trade-in allowance accepted by the dealer must
be consistent with the value of such home determined by the Company in
light of current market conditions. The value of real property pledged as
additional collateral is estimated by personnel of the dealer, who are not
appraisers but are familiar with the area in which the property is
located. The minimum amount of the down payment is typically 5% of the
purchase price. The purchase price includes the stated cash sale price of
the manufactured home, sales or other taxes and certain fees and set-up
costs. The balance of the purchase price and certain insurance premiums
(including up to five years of premiums on required hazard insurance) are
financed by an installment sales contract providing for a purchase money
security interest in the manufactured home and a mortgage on real
property, if any, pledged as additional collateral. Normally, the
contracts provide for equal monthly payments, generally over a period of
five to twenty years at fixed rates of interest. The Company believes the
typical manufactured home purchaser is primarily sensitive to the amount
of the monthly payment, and not to the interest rate.

The Company's underwriting guidelines generally require that each
applicant's credit history, residence history, employment history and
income to debt payment ratios be examined. There are no requirements on
the basis of which, if met, credit is routinely approved; or if they are
not met, credit is routinely denied. If in the judgment of the Company's
credit manager an applicant does not meet minimum underwriting criteria,
there generally must be compensating higher ratings with respect to other
criteria in order for an applicant to be approved. Credit managers must
confirm that the credit investigation gave a complete and up-to-date
accounting of the applicant's creditworthiness. Credit managers are
encouraged to obtain second opinions on loans for relatively larger dollar
amounts or those which, in their judgment, tend to rank lower in terms of
underwriting criteria. Generally, the sum of the monthly obligation for
installment obligations, including the manufactured home loan payment and
monthly site costs, should not exceed 45% of the applicant's gross monthly
income. Since January 1989 the Company has, in addition to the above
considerations, used a credit scoring system to evaluate credit
applicants. The credit score of an applicant is used as a further guide
in determining whether to extend credit to the applicant.

In the case of a Contract Pool containing Contracts originated by
other originators and acquired by the Company ("Acquired Contracts"), the
related Prospectus Supplement will describe such Contracts.

BULK TRANSACTIONS

In fiscal 1990, the Company purchased a portfolio of manufactured
home contracts originated by an unaffiliated entity. This portfolio,
originally consisting of approximately 4,000 installment sales contracts,
was purchased at a discount from its outstanding principal balance. The
Company services the contracts acquired. The Company intends to consider,
from time to time, the selective acquisition of additional portfolios of
installment sales contracts consistent with the Company's views of
appropriate pricing in return for certain portfolios and servicing
capacity.

In fiscal 1991, the Company became the servicer for approximately
$100 million of installment sales contracts for manufactured homes
acquired by a REMIC trust. The trust issued approximately $70 million of
senior certificates which received the highest rating from both Standard &
Poor's Corporation and Moody's Investors Service, Inc. and are guaranteed
as to principal and interest by a financial guarantee policy issued by
Financial Security Assurance, Inc. ("FSA"). CHI purchased the junior
certificates representing the residual interest in the REMIC by
establishing a $12.5 million reserve fund for the senior certificates and
by agreeing to pay the premium on the FSA policy. Most of the homes
financed by these contracts are located in Texas and were originated by
savings institutions which were subsequently placed into receivership.

In fiscal 1992, the Company became the servicer for 15,409
installment sales contracts for manufactured homes with an approximate
current principal balance of $148 million acquired by a REMIC trust from
the Resolution Trust Corporation. The Company did not acquire these
contracts and is acting solely as servicer with respect to these
contracts.

In fiscal 1994, the Company acquired a portfolio of manufactured home
contracts originated by an unaffiliated entity. This portfolio originally
consisted of approximately 3,300 installment sales contracts and was
purchased at a discount from its outstanding principal balance of
approximately $56 million. Also in fiscal 1994, the Company became
servicer for approximately 16,500 contracts for manufactured homes with an
approximate aggregate principal balance of $222 million owned by three
REMIC trusts. The Company is acting solely as servicer with respect to
these contracts.

VARIOUS FINANCING TERMS

The Company has developed financing options such as contracts with a
7 year term (compared to the industry norm of 15 to 20 years), which
provides financing to its customers at a relatively low cost. In
January 1990, the Company introduced a bi-weekly payment contract which
provides for 26 payments a year, which are made by electronically drafting
the purchaser's checking account. In 1996, the Company introduced
contracts (the "Escalating Principal Payment Contracts") which provide for
an annual increase in monthly payments over the first five years of the
term of the Contract. Under an Escalating Principal Payment Contract, the
original term of the contract is 36 years, providing initially for lower
monthly payments than if the contract were of a shorter term. Each year
for a period of five years, the term of the Escalating Principal Payment
Contract automatically converts to a shorter term, and the monthly payment
increases accordingly. At year six, the monthly payment increases to a
level monthly payment which fully amortizes the remaining principal over a
twelve year term. There is no period in which the Escalating Principal
Payment Contracts have negative amortization.

During the last six fiscal years, the Company has become the most
important source of financing for purchasers of CHI's homes. In fiscal
1988, the Company originated 5,692 contracts, in fiscal 1993, the Company
originated 10,880 contracts, in fiscal 1994, the Company originated 12,401
contracts and in fiscal 1995, the Company originated 13,857 Contracts.
For fiscal year 1996, the Company originated 16,910 Contracts. At June
30, 1996, the Company was servicing approximately 92,597 contracts and an
aggregate dollar amount of $1,638 million, of which the Company purchased
from dealers or acquired from other institutions approximately 74,154
contracts with an aggregate dollar amount of approximately $1,456 million.
The Company expects it will continue to originate a significant portion of
the financing for purchasers of homes sold by CHI owned retail centers,
consistent with the overall level of CHI's retail sales.

YIELD CONSIDERATIONS

The Remittance Rates and the weighted average Contract Rate of the
Contracts relating to each Series of Certificates will be set forth in the
related Prospectus Supplement.

Unless otherwise specified in the related Prospectus Supplement, each
monthly accrual of interest on a Contract is calculated at one-twelfth of
the product of the Contract Rate and the principal balance outstanding on
the scheduled payment date for such Contract in the preceding month.
The Remittance Rate with respect to each Certificate will be calculated
similarly.

The Prospectus Supplement for each Series will indicate that a lower
rate of principal prepayments than anticipated would negatively affect the
total return to investors of any Class or such sub-class of Certificates
that is offered at a discount to its principal amount, and a higher rate
of principal prepayments than anticipated would negatively affect the
total return to investors of any such Class or sub-class of Certificates
that is offered at a premium to its principal amount or without any
principal amount.

If a Series of Certificates contains Classes or sub-classes of
Certificates entitled to receive distributions of principal or interest or
both, in a specified order other than as a specified percentage of each
distribution of principal or interest or both, the Prospectus Supplement
will set forth information, measured relative to a prepayment standard or
model specified in such Prospectus Supplement, with respect to the
projected weighted average life of each such Class or sub-class and the
percentage of the original Stated Balance of each such Class or sub-class
that would be outstanding on specified Remittance Dates for such Series
based on the assumptions stated in such Prospectus Supplement, including
assumptions that prepayments on the Contracts in the related Trust Fund
are made at rates corresponding to the various percentage of such
prepayment standard or model.

MATURITY AND PREPAYMENT CONSIDERATIONS

MATURITY

The Contracts will have maturities at origination of not more than
30 years.

PREPAYMENT CONSIDERATIONS

Contracts generally may be prepaid in full or in part without
penalty. Based on the Company's experience with the portfolio of
manufactured housing contracts serviced by it, the Company anticipates
that a number of the contracts will be prepaid prior to their maturity. A
number of factors, including homeowner mobility, general and regional
economic conditions and prevailing interest rates, may influence
prepayments. In addition, repurchase of Contracts on account of certain
breaches of representations and warranties have the effect of prepaying
such Contracts and therefore would affect the average life of the
Certificates. Most of the Contracts contain a "due-on-sale" clause that
would permit the Servicer to accelerate the maturity of a Contract upon
the sale of the related Manufactured Home. In the case of those Contracts
that do contain due-on-sale clauses, the Servicer will permit assumptions
of such Contracts if the purchaser of the related Manufactured Home
satisfies the Company's then-current underwriting standards.

Information regarding the Prepayment Model or any other rate of
assumed prepayment, as applicable, will be set forth in the Prospectus
Supplement with respect to a Series of Certificates.

See "Description of the Certificates -- Termination of the Agreement"
for a description of the Company's or Servicer's option to repurchase the
Contracts comprising part of a Trust Fund when the aggregate outstanding
principal balance of such Contracts is less than a specified percentage of
the initial aggregate outstanding principal balance of such Contracts as
of the related Cut-off Date. See also "The Trust Fund -- The Contract
Pools" for a description of the obligations of the Company to repurchase a
Contract in case of a breach of a representation or warranty relative to
such Contract.

DESCRIPTION OF THE CERTIFICATES

Each Series of Certificates will be issued pursuant to a separate
pooling and servicing agreement (each, an "Agreement") to be entered into
among the Company, as Seller and Servicer, and the trustee named in the
related Prospectus Supplement (the "Trustee"), and such other parties, if
any, as are described in the applicable Prospectus Supplement. The
following summaries describe certain provisions expected to be common to
each Agreement and the related Certificates, but do not purport to be
complete and are subject to, and are qualified in their entirety by
reference to, the provisions of the related Agreement and the description
set forth in the related Prospectus Supplement. Section references, if
any, contained herein refer to sections of the form of Agreement filed as
an exhibit to the Registration Statement of which this Prospectus is a
part (the "Registration Statement"). The portions of such sections
described herein may be contained in different numbered sections in the
actual Agreement pursuant to which any Series of Certificates is issued.
The provisions of the form of Agreement filed as an exhibit to the
Registration Statement that are not described herein may differ from the
provisions of any actual Agreement. The material differences will be
described in the related Prospectus Supplement. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned
to them in the form of Agreement filed as an exhibit to the Registration
Statement.

GENERAL

The Certificates may be issued in one or more Classes or sub-classes
(each referred to in this Prospectus as a "Class"). If the Certificates
of a Series are issued in more than one Class, the Certificates of all or
less than all of such Classes may be sold pursuant to this Prospectus, and
there may be separate Prospectus Supplements relating to one or more of
such Classes so sold. Any reference herein to the Prospectus Supplement
relating to a Series comprised of more than one Class should be understood
as a reference to each of the Prospectus Supplements relating to the
Classes sold hereunder. Any reference herein to the Certificates of a
Class should be understood to refer to the Certificates of a Class within
a Series, the Certificates of a sub-class within a Series or all of the
Certificates of a single-Class Series, as the context may require.

The Certificates of each Series will be issued in fully registered
form only and will represent the interest specified in the related
Prospectus Supplement in a separate trust fund (the "Trust Fund") created
pursuant to the related Agreement. The Trust Fund will be held by the
Trustee for the benefit of the Certificateholders. Each Trust Fund will
generally include (i) Contracts (the "Contract Pool") which are subject to
the Agreement from time to time, (ii) the amounts held in the Certificate
Account from time to time and (iii) proceeds from certain hazard insurance
on individual Manufactured Homes or Modular Homes and Manufactured Homes
or Modular Homes (or the related real estate, in the case of Land-and-Home
Contracts) acquired by repossession, and may include a letter of credit, a
limited guarantee of CHI, surety bond, insurance policy, cash reserve fund
or other credit enhancement security payment of all or part of a Series of
Certificates or other property. Except as otherwise specified in the
related Prospectus Supplement, the Certificates will be freely
transferable and exchangeable at the corporate trust office of the Trustee
at the address set forth in the related Prospectus Supplement. No service
charge will be made for any registration of exchange or transfer of
Certificates, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge.

Ownership of each Contract Pool may be evidenced by one or more
classes of Certificates, each representing the interest in the Contract
Pool specified in the related Prospectus Supplement. One or more Classes
of Certificates evidencing interests in Contracts may be Subordinated
Certificates, evidencing the right of the holders thereof to receive any
or a portion of distributions of principal or interest or both on the
Contracts subordinate to the rights of the holders of other Classes of
Certificates ("Senior Certificates") as provided in the related Prospectus
Supplement. If a Series of Certificates contains more than one Class of
Subordinated Certificates, losses will be allocated among such Classes in
the manner described in the Prospectus Supplement.

A Series of Certificates may consist of Classes of Certificates
evidencing the right to receive distributions of principal or interest or
both in the order specified in the related Prospectus Supplement. A Class
of Certificates of a Series may be divided into two or more sub-classes.
The related Prospectus Supplement will specify whether a Class has been so
divided and the terms of each sub-class. The holders of each sub-class of
a Class of Certificates will be entitled to the percentages (which may be
0%) of principal or interest payments or both on the related Contracts as
specified in the related Prospectus Supplement. The related Prospectus
Supplement will specify the minimum denomination or initial principal
amount of Contracts evidenced by a single Certificate of each Class of
Certificates of a Series (a "Single Certificate").

Distributions of principal and interest on the Certificates will be
made on the payment dates set forth in the related Prospectus Supplement
(each, a "Remittance Date") to the persons in whose names the Certificates
are registered at the close of business on the related record date
specified in the related Prospectus Supplement (the "Record Date").
Distributions will be made by check mailed to the address of the person
entitled thereto as it appears on the Certificate Register, or, to the
extent described in the related Agreement, by wire transfer, except that
the final distribution in retirement of Certificates will be made only
upon presentation and surrender of the Certificates at the office or
agency of the Trustee specified in the final distribution notice to
Certificateholders.

GLOBAL CERTIFICATES

The Certificates of a Class may be issued in whole or in part in the
form of one or more global certificates (each, a "Global Certificate")
that will be deposited with, or on behalf of, and registered in the name
of a nominee for, a depositary (the "Depositary") identified in the
related Prospectus Supplement. The description of the Certificates
contained in this Prospectus assumes that the Certificates will be issued
in definitive form. If the Certificates of a Class are issued in the form
of one or more Global Certificates, the term "Certificateholder" should be
understood to refer to the beneficial owners of the Global Certificates,
and the rights of such Certificateholders will be limited as described
under this subheading.

Global Certificates will be issued in registered form. Unless and
until it is exchanged in whole or in part for Certificates in definitive
form, a Global Certificate may not be transferred except as a whole by the
Depositary for such Global Certificate to a nominee of such Depositary or
by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by such Depositary or any such nominee to a successor
of such Depositary or a nominee of such successor.

The specific terms of the depositary arrangement with respect to any
Certificates of a Class will be described in the related Prospectus
Supplement. It is anticipated that the following provisions will apply to
all depositary arrangements:

Upon the issuance of a Global Certificate, the Depositary for such
Global Certificate will credit, on its book-entry registration and
transfer system, the respective denominations of the Certificates
represented by such Global Certificate to the accounts of institutions
that have accounts with such Depositary ("participants"). Ownership of
beneficial interests in a Global Certificate will be limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Certificate will be shown
on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary for such Global Certificate or by
participants or persons that hold through participants. The laws of some
states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws
may impair the ability to transfer beneficial interests in a Global
Certificate.

So long as the Depositary for a Global Certificate, or its nominee,
is the owner of such Global Certificate, such Depositary or such nominee,
as the case may be, will be considered the sole owner or holder of the
Certificates represented by such Global Certificate for all purposes under
the Agreement relating to such Certificates. Except as set forth below,
owners of beneficial interests in a Global Certificate will not be
entitled to have Certificates of the Series represented by such Global
Certificate registered in their names, will not receive or be entitled to
receive physical delivery of Certificates of such Series in definitive
form and will not be considered the owners or holders thereof under the
Agreement governing such Certificates.

Distributions or payments on Certificates registered in the name of
or held by a Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the registered owner for the holder of
the Global Certificate representing such Certificates. In addition, all
reports required under the applicable Agreement to be made to
Certificateholders (as described below under "Reports to
Certificateholders") will be delivered to the Depositary or its nominee,
as the case may be. None of the Company, Servicer, Trustee, or any agent
thereof (including any applicable Certificate Registrar or Paying Agent),
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interest
in a Global Certificate or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for providing
reports to the related beneficial owners.

The Company expects that the Depositary for Certificates of a Class,
upon receipt of any distribution or payment in respect of a Global
Certificate, will credit immediately participants' accounts with payments
in amounts proportionate to their respective beneficial interest in such
Global Certificate as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
interests in such Global Certificate held through such participants will
be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in
"street name," and will be the responsibility of such participants.

If a Depositary for Certificates of a Class is at any time unwilling
or unable to continue as Depositary and a successor depositary is not
appointed by or on behalf of the Company within the time period specified
in the Agreement, the Company will cause to be issued Certificates of such
Class in definitive form in exchange for the related Global Certificate or
Certificates. In addition, the Company may at any time and in its sole
discretion determine not to have any Certificates of a Class represented
by one or more Global Certificates and, in such event, will cause to be
issued Certificates of such Class in definitive form in exchange for the
related Global Certificate or Certificates. Further, if the Company so
specifies with respect to the Certificates of a Class, an owner of a
beneficial interest in a Global Certificate representing Certificates of
such Class may, on terms acceptable to the Company and the Depositary for
such Global Certificate, receive Certificates of such Class in definitive
form. In any such instance, an owner of a beneficial interest in a Global
Certificate will be entitled to physical delivery in definitive form of
Certificates of the Class represented by such Global Certificate equal in
denominations to such beneficial interest and to have such Certificates
registered in its name.

CONVEYANCE OF CONTRACTS

The Company will transfer, assign, set over and otherwise convey to
the Trustee all right, title and interest of the Company in the Contracts,
including all security interests created thereby and any related mortgages
or deeds of trust, all principal and interest received on or with respect
to the Contracts (other than receipts of principal and interest due on the
Contracts before the Cut-off Date), all rights under certain hazard
insurance policies on the related Manufactured Homes or Modular Homes,
all documents contained in the Contract files and all proceeds derived
from any of the foregoing. On behalf of the Trust Fund, as the
issuer of the related Series of Certificates, the Trustee,
concurrently with such conveyance, will execute and deliver the Certificates
to the order of the Company. The Contracts will be as described on a
list attached to the Agreement. Such list will include the current amount
of monthly payments due on each Contract as of the date of issuance of the
Certificates and the Contract Rate on each Contract. Such list will
be available for inspection by any Certificateholder at the
principal executive office of the Servicer. Prior to the conveyance of
the Contracts to the Trustee, the Company's operations department will
complete a review of all of the Contract files, including the certificates of
title to, or other evidence of a perfected security interest in, the
Manufactured Homes, confirming the accuracy of the list of Contracts
delivered to the Trustee. Any Contract discovered not to agree with such
list in a manner that is materially adverse to the interests of the
Certificateholders will be repurchased by the Company or replaced with
another Contract, or, if the discrepancy relates to the unpaid principal
balance of a Contract, the Company may deposit cash in the separate
account maintained at an Eligible Institution in the name of the Trustee
(the "Certificate Account") in an amount sufficient to offset such
discrepancy.

The Agreement will designate the Servicer as custodian to maintain
possession, as the Trustee's agent, of the Contracts and any other
documents related to the Manufactured Homes or Modular Homes. To
facilitate servicing and save administrative costs, the documents will not
be physically segregated from other similar documents that are in the
Company's possession. In order to give notice of the right, title and
interest of the Certificateholders to the Contracts, the Company will
cause a UCC-1 financing statement to be executed by the Company
identifying the Company as the seller and the Trustee as the buyer of the
Contracts, and the Company's accounting records and computer systems will
also reflect such sale and assignment. In addition, within one week after
the initial delivery of the Certificates, the Contracts will be stamped to
reflect their assignment to the Trustee. However, if through fraud,
negligence or otherwise, a subsequent purchaser were able to take physical
possession of the Contracts without knowledge of the assignment, the
Trustee's interest in the Contracts could be defeated. See "Risk Factors-
- Security Interests and Mortgages on the Manufactured Homes" and "--
Consumer Protection Laws and Other Limitations on Lenders."

In general, and except as otherwise specified in the related
Prospectus Supplement, the Company will make certain warranties in the
Agreement with respect to each Contract as of the Closing Date, including
that: (a) as of the Cut-off Date, or the date of origination, if later,
the most recent scheduled payment was made or was not delinquent more than
59 days (or such other number of days specified in the related Prospectus
Supplement); (b) no provision of a Contract has been waived, altered or
modified in any respect, except by instruments or documents contained in
the Contract file or the Land-and-Home Contract file; (c) each Contract is
a legal, valid and binding obligation of the Obligor and is enforceable in
accordance with its terms (except as may be limited by laws affecting
creditors' rights generally); (d) no Contract is subject to any right of
rescission, set-off, counterclaim or defense; (e) each Contract is covered
by hazard insurance described under "-- Servicing -- Hazard Insurance";
(f) each Contract has been originated by a manufactured housing dealer or
the Company in the ordinary course of such dealer's or the Company's
business and, if originated by a manufactured housing dealer, was
purchased by the Company in the ordinary course of business; (g) no
Contract was originated in or is subject to the laws of any jurisdiction
whose laws would make the transfer of the Contract or an interest therein
to the Trustee pursuant to the Agreement or pursuant to the Certificates
unlawful; (h) each Contract complies with all requirements of law; (i) no
Contract has been satisfied, subordinated in whole or in part or rescinded
and the Manufactured Home securing the Contract has not been released from
the lien of the Contract in whole or in part; (j) each Contract creates a
valid and enforceable first priority security interest in favor of the
Company in the Manufactured Home covered thereby and, with respect to each
Land-and-Home Contract, the lien created thereby has been recorded or will
be recorded within six months, and such security interest or lien has
been assigned by the Company to the Trustee; (k) all parties to each
Contract had capacity to execute such Contract; (l) no Contract has been
sold, assigned or pledged to any other person and prior to the transfer
of the Contracts by the Company to the Trustee, the Company had good and
marketable title to each Contract free and clear of any encumbrance,
equity, loan, pledge, charge, claim or security interest, and was the sole
owner and had full right to transfer such Contract to the Trustee; (m) as
of the Cut-off Date, or the date of origination, if later, there was no
default, breach, violation or event permitting acceleration under any
Contract (except for payment delinquencies permitted by clause (a) above),
no event which with notice and the expiration of any grace or cure period
would constitute a default, breach, violation or event permitting
acceleration under such Contract, and the Company has not waived any of the
foregoing; (n) as of the Closing Date there were, to the best of the
Company's knowledge, no liens or claims which have been filed for work,
labor or materials affecting a Manufactured Home or any related Mortgaged
Property securing a Contract, which are or may be liens prior or equal
to the lien of the Contract; (o) each Contract other than a step-up rate
Contract and an Escalating Payment Contract is a fully-amortizing loan
with a fixed Contract Rate and provides for level payments over the term
of such Contract; (p) each Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the
benefits of the security; (q) the description of each Contract set
forth in the list delivered to the Trustee is true and correct; (r)
there is only one original of each Contract; (s) none of the
Contracts had a Loan-to-Value Ratio at origination greater than 100%
(or such other percentage amount specified in the related Prospectus
Supplement); (t) at the time of origination of each Contract the Obligor
was the primary resident of the related Manufactured Home; (u) other
than the Land-and-Home Contracts, the related Manufactured Home is not
considered or classified as part of the real estate on which it is
located under the laws of the jurisdiction in which it is located as would
render unperfected or impair the priority of the security interest in such
Manufactured Home, and as of the Closing Date such Manufactured Home was,
to the best of the Company's knowledge, free of damage and in good
repair; (v) the related Manufactured Home is a "manufactured home" within
the meaning of 42 United States Code, Section 5402(6); and (w) each
Contract is a "qualified mortgage" under Section 860G(a)(3) of the
Code and each Manufactured Home is "manufactured housing" within the
meaning of Section 25(e)(10) of the Code.

Under the terms of the Agreement, and subject to the conditions
specified in the preceding paragraph and to the Company's option to effect
a substitution as described in the next paragraph, the Company will be
obligated to repurchase for the Repurchase Price (as defined below) any
Contract on the first business day after the first Determination Date
which is more than 90 days after the Company becomes aware, or should have
become aware, or the Company's receipt of written notice from the Trustee
or the Servicer, of a breach of any representation or warranty of the
Company in the Agreement that materially adversely affects the Trust
Fund's interest in any Contract if such breach has not been cured. The
Repurchase Price for any Contract will be the remaining principal amount
outstanding on such Contract on the date of repurchase plus accrued and
unpaid interest thereon at its Contract Rate to the date of such
repurchase. This repurchase obligation constitutes the sole remedy
available to the Trust Fund and the Certificateholders for a breach of a
warranty under the Agreement with respect to the Contracts (but not with
respect to any other breach by the Company of its obligations under the
Agreement). If a prohibited transaction tax under the REMIC provisions of
the Code is incurred in connection with such repurchase, distributions
otherwise payable to Residual Certificateholders will be applied to pay
such tax. The Company will be required to pay the amount of such tax that
is not funded out of such distributions.

In lieu of purchasing a Contract as specified in the preceding
paragraph, during the two-year period following the Closing Date, the
Company may, at its option, substitute an Eligible Substitute Contract (as
defined below) for the Contract that it is otherwise obligated to
repurchase (referred to herein as the "Replaced Contract"). An Eligible
Substitute Contract is a Contract that satisfies, as of the date of its
substitution, the representations and warranties specified the Agreement,
has a Scheduled Principal Balance that is not greater

than the Scheduled Principal Balance of the Replaced Contract, has a
Contract Rate that is at least equal to the Contract Rate of the Replaced
Contract, and has a remaining term to scheduled maturity that is not
greater than the remaining term to scheduled maturity of the Replaced
Contract. In the event that more than one Contract is substituted, the
above requirements with respect to Scheduled Principal Balance, APR and
remaining term to scheduled maturity may be satisfied on an aggregate or
weighted average basis, as applicable. The Company will be required to
deposit in the Certificate Account cash in the amount, if any, by which
the Scheduled Principal Balance of the Replaced Contract exceeds the
Scheduled Principal Balance of the Contract being substituted. Such
deposit will be deemed to be a Partial Principal Prepayment.

PAYMENTS ON CONTRACTS

Each Certificate Account will be a trust account established by the
Servicer as to each Series of Certificates in the name of the Trustee
(i) with a depository institution, the long-term unsecured debt
obligations of which at the time of any deposit therein are rated within
the two highest rating categories or such other rating category as will
not adversely affect the rating assigned to the Certificates by each
rating agency rating the Certificates of such Series, (ii) with the trust
department of a depositary institution, (iii) in an account or accounts
the deposits in which are fully insured by the Federal Deposit Insurance
Corporation ("FDIC"), (iv) in an account or accounts the deposits in which
are insured by the FDIC (to the limits established by the FDIC), the
uninsured deposits in which are otherwise secured such that, as evidenced
by an opinion of counsel, the Certificateholders have a claim with respect
to the funds in the Certificate Account or a perfected first priority
security interest against any collateral securing such funds that is
superior to the claims of any other depositors or general creditors of the
depository institution with which the Certificate Account is maintained or
(v) otherwise acceptable to the rating agency without reduction or
withdrawal of the rating assigned to the relevant Certificates. The
collateral eligible to secure amounts in the Certificate Account is
limited to United States government securities and other high-quality
investments ("Eligible Investments"). A Certificate Account may be
maintained as an interest bearing account, or the funds held therein may
be invested pending each succeeding Remittance Date in Eligible
Investments.

As described in the Prospectus Supplement, the Servicer will deposit
in the Certificate Account the following payments and collections received
or made by it subsequent to the Cut-off Date:

(i) all Obligor payments on account of principal, including
principal prepayments, on the Contracts;

(ii) all Obligor payments on account of interest on the Contracts;

(iii) all amounts received and retained in connection with the
liquidation of defaulted Contracts, net of liquidation expenses ("Net
Liquidation Proceeds");

(iv) all proceeds received under any hazard or other insurance policy
covering any Contract, other than proceeds to be applied to the
restoration or repair of the Manufactured Home or released to Obligor;

(v) any Advances made as described under "Advances" and certain
other amounts required under the Agreement to be deposited in the
Certificate Account;

(vi) all amounts received from any credit enhancement provided with
respect to a Series of Certificates;

(vii) all proceeds of any Contract or property acquired in
respect thereof repurchased by the Servicer, or the Company, or otherwise
as described above or under "Termination" below; and

(viii) all amounts, if any, required to be transferred to the
Certificate Account from a Reserve Fund pursuant to the Agreement.

DISTRIBUTIONS ON CERTIFICATES

As described in the related Prospectus Supplement, on each Remittance
Date, the Trustee will withdraw from the applicable Certificate Account
and distribute to the Certificateholders of each Class (other than a
Series having a Class of Subordinated Certificates, as described below),
either the specified interest of such Class in the Contract Pool times the
aggregate of all amounts on deposit in the Certificate Account as of the
third Business Day preceding the Remittance Date or such other date as may
be specified in the related Prospectus Supplement (the "Determination
Date"), or, in the case of a Series of Certificates comprised of Classes
which have been assigned a Stated Balance, payments of interest and pay-
ments in reduction of the Stated Balance from all amounts on deposit in
the Certificate Account on the Determination Date, in the priority and
calculated in the manner set forth in the related Prospectus Supplement,
except, in each case: (i) all payments or collections due after the Due
Period preceding the month in which the Remittance Date occurs; (ii) all
scheduled payments of principal and interest due on a date or dates
subsequent to the Due Period preceding the Determination Date;
(iii) amounts representing reimbursement for Advances, such reimbursement
being limited, as described in the related Prospectus Supplement, to
amounts received on particular Contracts as late collections of principal
or interest as to which the Servicer has made an unreimbursed Advance; and
(iv) amounts representing reimbursement for any unpaid Servicing Fee and
expenses from Liquidation Proceeds, condemnation proceeds and proceeds of
insurance policies with respect to the related Contracts. The amount of
principal and interest specified in the related Prospectus Supplement to
be distributed to Certificateholders is referred to herein as the
"Certificate Distribution Amount." The amounts on deposit in the
Certificate Account on a Determination Date, less the amounts specified in
(i) through (iv) above, with respect to a Series of Certificates having a
Class of Subordinated Certificates, are referred to herein as the
"Available Distribution Amount."

On each Remittance Date, the Trustee will withdraw the Available
Distribution Amount from the applicable Certificate Account and distribute
such amount to the Certificateholders of each Class or other specified
persons in the amounts and order of priority specified in the related
Prospectus Supplement.

Within the time specified in the Agreement and described in the
related Prospectus Supplement, the Servicer will furnish a statement to
the Trustee setting forth the amount to be distributed on the related
Remittance Date on account of principal and interest, stated separately,
and a statement setting forth certain information with respect to the
Contracts.

If there are not sufficient funds in the Certificate Account to make
the full distribution to Certificateholders described above on any
Remittance Date, the Servicer will distribute the funds available for
distribution to the Certificateholders of each Class in accordance with
the respective interests therein, except that Subordinated
Certificateholders, if any, will not, subject to the limitations described
in the related Prospectus Supplement, receive any distributions until
Senior Certificateholders receive the Senior Distribution Amount plus the
Outstanding Senior Shortfall. Unless otherwise provided in the related
Prospectus Supplement, the difference between the amount which the
Certificateholders would have received if there had been sufficient
eligible funds in the Certificate Account and the amount actually
distributed, will be added to the amount which the Certificateholders are
entitled to receive on the next Remittance Date.

Special Distributions. To the extent specified in the Prospectus
Supplement relating to a Series of Certificates, one or more Classes or
subclasses of which have been assigned a Stated Balance and having less
frequent than monthly Remittance Dates, such Classes or sub-classes may
receive Special Distributions in reduction of Stated Balance ("Special
Distributions") in any month, other than a month in which a Remittance
Date occurs, if, as a result of principal prepayments on the Contracts in
the related Contract Pool or low reinvestment yields, the Trustee
determines, based on assumptions specified in the related Agreement, that
the amount of cash anticipated to be on deposit in the Certificate Account
on the next Remittance Date for such Series and available to be
distributed to the Holders of the Certificates of such Classes or sub-
classes may be less than the sum of (i) the interest scheduled to be
distributed to holders of the Certificates of such Classes or sub-classes
and (ii) the amount to be distributed in reduction of Stated Balance of
such Certificates on such Remittance Date. Any such Special Distributions
will be made in the same priority and manner as distributions in reduction
of Stated Balance would be made on the next Remittance Date.

Subordinated Certificates. The rights of a Class of
Certificateholders of a Series to receive any or a specified portion of
distributions of principal or interest or both with respect to the
Contracts, to the extent specified in the related Agreement and described
in the related Prospectus Supplement, may be subordinated to such rights
of other Certificateholders. The Prospectus Supplement with respect to a
Series of Certificates having a Class of Subordinated Certificates will
set forth, among other things, the extent to which such Class is
subordinated (which may include a formula for determining the subordinated
amount or for determining the allocation of the Available Distribution
Amount among Senior Certificates and Subordinated Certificates), the
allocation of losses among the Classes of Subordinated Certificates (which
may include a reduction of the principal balance of the Classes of
Subordinated Certificates in the event of such losses), the period or
periods of such subordination, the minimum subordinated amount, if any,
and any distributions or payments which will not be affected by such
subordination. The protection afforded to the Senior Certificateholders
from the subordination feature described above will be effected by the
preferential right of such Certificateholders to receive current
distributions from the Contract Pool.

ADVANCES

To the extent provided in the related Prospectus Supplement, the
Servicer is obligated to make periodic Advances of cash from its own funds
or from excess funds in the Certificate Account not then required to be
distributed to Certificateholders, for distribution to the
Certificateholders (other than Subordinated Certificateholders) in an
amount equal to the difference between the amount due to them and the
amount in the Certificate Account, eligible for distribution to them
pursuant to the Agreement, but only to the extent such difference is due
to delinquent payments of principal and interest for the preceding Due
Period and only to the extent the Servicer determines such advances are
recoverable from future payments and collections on the Contracts. The
Servicer's obligation to make Advances, if any, may, be limited in amount
and the Servicer may not be obligated to make Advances until all or a
specified portion of the Reserve Fund, if any, is depleted. Advances are
intended to maintain a regular flow of scheduled interest and principal
payments to the Senior Certificateholders, not to guarantee or insure
against losses. Accordingly, any funds so advanced are recoverable by the
Servicer out of amounts received on particular Contracts which represent
late recoveries of principal or interest respecting which any such
Advances was made or from other funds in the Certificate Account.

EXAMPLE OF DISTRIBUTIONS

The following chart sets forth an example of the flow of funds on the
Certificates for the Remittance Date occurring in November, 1996.

September 26, 1996. . . . . . . (A) Cut-off Date.

September 26 to October 25. . . (B) Due Period. Servicer
receives scheduled payments
on the Contracts and any
Principal Prepayments made by
Obligors and applicable
interest thereon.

October 31. . . . . . . . . . . (C) Record Date.

November 2. . . . . . . . . . . (D) Determination Date.
Distribution amounts determined.

November 7. . . . . . . . . . . (E) Remittance Date. (Each
Remittance Date is the
7th day of each month or, if
the 7th day is not a business
day, the next business day.)

Succeeding months generally follow the pattern of (B) through (E), but
with respect to any Remittance Date (other than the first Remittance Date)
is the period beginning on the 26th day of the second month preceding the
month of such Remittance Date and ending on the 25th day of the month
preceding the month of such Remittance Date.

(A) The Original Contract Pool Principal Balance will be the aggregate
Scheduled Principal Balance of the Contracts on September 25, 1996
after deducting principal payments received before such date.
Principal payments received before September 25, and the accompanying
interest payments, are not part of the Trust Fund and will not be
passed through to Certificateholders.

(B) Scheduled payments, Principal Prepayments and Net Liquidation
Proceeds may be received at any time during this period and will be
distributed to Certificateholders on November 7. When a Contract is
prepaid in full, interest on the amount prepaid is collected from the
Obligor only to the date of payment. The Available Distribution
Amount for the distribution on November 7 is described under "/___/
Payments on Contracts" and "/___/ Distributions on the Certificates"
above.

(D) On November 2 (three business days prior to the Remittance Date), the
Servicer will determine the amounts of principal and interest which
will be passed through on November 7 to Certificateholders.

(E) On November 7, the amounts determined on November 2 will be
distributed to Certificateholders. If a payment due in the Due
Period ending October 25 is received in the Due Period ending in
November, such late payment will be taken into account in determining
the Available Distribution Amount for December 7.

INDEMNIFICATION

The Agreement requires the Servicer to defend and indemnify the Trust
Fund, the Trustee (including any agent of the Trustee) and the
Certificateholders (which indemnification will survive any removal of the
Servicer as servicer of the Contracts) against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation (a) arising out of
or resulting from the use or ownership by the Servicer or any affiliate
thereof of any Manufactured Home and

(b) for any taxes which may at any time be asserted with respect to, and
as of the date of, the conveyance of the Contracts to the Trust Fund (but
not including any federal, state or other tax arising out of the creation
of the Trust Fund and the issuance of the Certificates).

The Agreement also requires the Servicer, in connection with its
duties as servicer of the Contracts, to defend and indemnify the Trust
Fund, the Trustee and the Certificateholders (which indemnification will
survive any removal of the Servicer as servicer of the Contracts) against
any and all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel and expenses of
litigation, in respect of any action taken by the Servicer with respect to
any Contract while it was the Servicer.

SERVICING

Pursuant to the Agreement, the Servicer will service and administer
the Contracts assigned to the Trustee as more fully set forth below. The
Servicer will perform diligently all services and duties specified in each
Agreement, in the same manner as prudent lending institutions of
manufactured housing installment sales contracts of the same type as the
contracts in those jurisdictions where the related Manufactured Homes are
located or as otherwise specified in the Agreement. The duties to be
performed by the Servicer will include collection and remittance of
principal and interest payments, collection of insurance claims and, if
necessary, repossession. The Agreement provides that the Servicer may
delegate its duties under that agreement to one or more entities (each a
"Subservicer") that agrees to conduct such duties in accordance with the
Agreement. Notwithstanding any such delegation, the Servicer will
continue to be liable for all of its obligations under the Agreement.

The Servicer will make reasonable efforts to collect all payments
called for under the Contracts and, consistent with the Agreement and any
FHA insurance and VA guaranty, will follow such collection procedures as
it follows with respect to mortgage loans or contracts serviced by it that
are comparable to the Contracts.

Hazard Insurance. The terms of the Agreement will generally require
the Servicer to cause to be maintained with respect to each Contract one
or more Hazard Insurance Policies which provide, at a minimum, the same
coverage as a standard form fire and extended coverage insurance policy
that is customary for manufactured housing, issued by a company authorized
to issue such policies in the state in which the Manufactured Home or
Modular Home is located, and in an amount which is not less than the
maximum insurable value of such Manufactured Home or Modular Home or the
principal balance due from the Obligor on the related Contract, whichever
is less; provided, however, that the amount of coverage provided by each
Hazard Insurance Policy shall be sufficient to avoid the application of
any coinsurance clause contained therein. When a Manufactured Home or
Modular Home's location was, at the time of origination of the related
Contract, within a federally-designated special flood hazard area, the
Servicer shall also cause such flood insurance to be maintained, which
coverage shall be at least equal to the minimum amount specified in the
preceding sentence or such lesser amount as may be available under the
federal flood insurance program. Each Hazard Insurance Policy caused to
be maintained by the Servicer shall contain a standard loss payee clause
in favor of the Servicer and its successors and assigns. If any Obligor
is in default in the payment of premiums on its Hazard Insurance Policy or
Policies, the Servicer shall pay such premiums out of its own funds, and
may add separately such premium to the Obligor's obligation as provided by
the Contract, but may not add such premium to the remaining principal
balance of the Contract.

The Servicer may maintain, in lieu of causing individual Hazard
Insurance Policies to be maintained with respect to each Manufactured Home
or Modular Home, and shall maintain, to the extent that the related
Contract does not require the Obligor to maintain a Hazard Insurance
Policy with respect to the related Manufactured Home or Modular Home, one
or more blanket insurance policies covering losses on the Obligor's
interest in the Contracts resulting from the absence or insufficiency of
individual Hazard Insurance Policies. Any such blanket policy shall be
substantially in the form and in the amount carried by the Servicer as of
the date of this Agreement. The Servicer shall pay the premium for such
policy on the basis described therein and shall pay any deductible amount
with respect to claims under such policy relating to the Contracts. If
the insurer thereunder shall cease to be acceptable to the Servicer, the
Servicer shall exercise its best reasonable efforts to obtain from another
insurer a placement policy comparable to such policy.

If the Servicer shall have repossessed a Manufactured Home on behalf
of the Trustee, the Servicer shall either (i) maintain at its expense
hazard insurance with respect to such Manufactured Home, or (ii) indemnify
the Trustee against any damage to such Manufactured Home prior to resale
or other disposition.

Evidence as to Compliance. Each Agreement will require the Servicer
to deliver to the Trustee a monthly report prior to each Remittance Date,
setting forth certain information regarding the Contract Pool and
Certificates of such Series as is specified in the related Prospectus
Supplement. Each such report to the Trustee will be accompanied by a
statement from an appropriate officer of the Servicer certifying the
accuracy of such report and stating that the Servicer has not defaulted in
the performance of its obligations under the Agreement. The Servicer will
deliver to the Trustee an annual report of a nationally recognized
accounting firm stating that such firm has examined certain documents and
records relating to the servicing of manufactured housing contracts
serviced by the Servicer under pooling and servicing agreements similar to
the Agreement and stating that, on the basis of such procedures, such
servicing has been conducted in compliance with the Agreement, except for
any exceptions set forth in such report.

Certain Matters Regarding the Servicer. The Servicer may not resign
from its obligations and duties under an Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. No such resignation will become effective until the
Trustee or a successor servicer has assumed the Servicer's obligations and
duties under such Agreement. The Servicer can only be removed as servicer
pursuant to an Event of Termination as discussed below. Any person with
which the Servicer is merged or consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer is a
party, or any person succeeding to the business of the Servicer, will be
the successor to the Servicer under the Agreement so long as such
successor services at least $100 million of manufactured housing
contracts.

Each Agreement will also generally provide that neither the Servicer,
nor any director, officer, employee or agent of the Servicer, will be
under any liability to the Trust Fund or the Certificateholders for any
action taken or for restraining from the taking of any action in good
faith pursuant to the Agreement, or for errors in judgment; provided,
however, that neither the Servicer nor any such person will be protected
against any liability which would otherwise be imposed by reason of the
failure to perform its obligations in strict compliance with the standards
of care set forth in the Agreement. The Servicer may, in its discretion,
undertake any such action which it may deem necessary or desirable with
respect to the Agreement and the rights and duties of the parties thereto
and the interests of the Certificateholders thereunder. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Trust Fund and
the Servicer will be entitled to be reimbursed therefor out of the
Certificate Account.

The Servicer shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and
omissions for failure to maintain insurance as required by this Agreement,
and (ii) a fidelity bond. Such policy or policies and such fidelity bond
shall be in such form and amount as is generally customary among persons
which service a portfolio of manufactured housing contracts having an
aggregate principal amount of $100 million or more and which are generally
regarded as servicers acceptable to institutional investors.

The Servicer, to the extent practicable, shall cause the Obligors to
pay all taxes and similar governmental charges when and as due. To the
extent that nonpayment of any taxes or charges would result in the
creation of a lien upon any Manufactured Home having a priority equal or
senior to the lien of the related Contract, the Servicer shall advance any
such delinquent tax or charge.

Servicing Compensation and Payment of Expenses. For its servicing of
the Contracts, the Servicer will receive servicing fees ("Servicing Fees")
which include a Monthly Servicing Fee (which the Servicer may assign) for
each Due Period (paid on the next succeeding Remittance Date) which,
unless otherwise stated in the related Prospectus Supplement, will be
equal to 1/12th of the product of 1.25% and the Pool Scheduled Principal
Balance for such Remittance Date.

The Monthly Servicing Fee provides compensation for customary
manufactured housing contract third-party servicing activities to be
performed by the Servicer for the Trust Fund and for additional admin-
istrative services performed by the Servicer on behalf of the Trust Fund.
Customary servicing activities include collecting and recording payments,
communicating with obligors, investigating payment delinquencies,
providing billing and tax records to obligors and maintaining internal
records with respect to each Contract. Administrative services performed
by the Servicer on behalf of the Trust Fund include calculating
distributions of Certificateholders and providing related data processing
and reporting services for Certificateholders and on behalf of the
Trustee. Expenses incurred in connection with the servicing of the
Contracts and paid by the Servicer from its Servicing Fees include,
without limitation, payment of fees and expenses of accountants, payments
of all fees and expenses incurred in connection with the enforcement of
Contracts (except Liquidation Expenses) and payment of expenses incurred
in connection with distributions and reports to Certificateholders. The
Servicer will be reimbursed out of the Liquidation Proceeds of a
Liquidated Contract for all ordinary and necessary Liquidation Expenses
incurred by it in realization upon the related Manufactured Home.

So long as the Company is the Servicer, the Servicer, in its sole
discretion, may, but is not obligated to, liquidate a defaulted Contract
by depositing into the Certificate Account an amount equal to (i) the
outstanding principal balance of such Contract plus accrued and unpaid
interest thereon to the Due Date in the Due Period in which such deposit
is made less (ii) $2,000. The Company will not be reimbursed for any
Liquidation Expenses incurred in connection with any such Contract and
will retain any liquidation proceeds in respect thereof. The Company has
such option to liquidate defaulted Contracts in that manner because such
manner of liquidation is more compatible with its record keeping systems.

As part of its Servicing Fees the Servicer will also be entitled to
retain, as compensation for the additional services provided in connection
therewith, any fees for late payments made by Obligors, extension fees
paid by Obligors for the extension of scheduled payments and assumption
fees for permitted assumptions of Contracts by purchasers of the related
Manufactured Homes.

Any person with which the Servicer is merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to
which the Servicer is a party, or any person succeeding to the business of
the Servicer, will be the successor to the Servicer under the Agreement so
long as such successor has a net worth of at least $10 million and has
serviced at least $100 million of manufactured housing contracts for at
least one year. The Servicer may assign its rights and delegate its
duties under the Agreement (with the prior written consent of the Company
if the Company is not the Servicer), provided that any rating of the
Certificates then in effect will not be reduced because of such assignment
and delegation. Upon any such assignment and delegation, the assigning
Servicer will not be liable for obligations of the Servicer after such
assignment.

Events of Termination. Events of Termination under each Agreement
will include (i) any failure by the Servicer to distribute to the
Certificateholders any required payment which continues unremedied for 5
days (or such other period specified in the related Prospectus Supplement)
after the giving of written notice; (ii) any failure by the Servicer duly
to observe or perform in any material respect any other of its covenants
or agreements in the Agreement that materially and adversely affects the
interests of Certificateholders, which, in either case, continues
unremedied for 30 days after the giving of written notice of such failure
of breach; (iii) any assignment or delegation by the Servicer of its
duties or rights under the Agreement, except as specifically permitted
under the Agreement, or any attempt to make such an assignment or
delegation; and (iv) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings regarding the
Servicer. Notice as used herein shall mean notice to the Servicer by the
Trustee or the Company, or to the Company, the Servicer, if any, and the
Trustee by the Holders of Certificates representing interests aggregating
not less than 25% of the Trust Fund.

Rights Upon Event of Termination. So long as an Event of Termination
remains unremedied, the Trustee may, and at the written direction of the
Certificateholders of a Series evidencing interests aggregating 25% or
more of the related Trust Fund, shall terminate all of the rights and
obligations of the Servicer under the related Agreement and in and to the
Contracts, and the proceeds thereof, whereupon (subject to applicable law
regarding the Trustee's ability to make advances) the Trustee or a
successor Servicer under the Agreement will succeed to all the
responsibilities, duties and liabilities of the Servicer under the
Agreement and will be entitled to similar compensation arrangements; pro-
vided, however, that neither the Trustee nor any successor servicer will
assume any obligation of the Company to repurchase Contracts for breaches
of representations or warranties, and the Trustee will not be liable for
any acts or omissions of the Servicer occurring prior to a transfer of the
Servicer's servicing and related functions or for any breach by the
Servicer of any of its obligations contained in the Agreement.
Notwithstanding such termination, the Servicer shall be entitled to
payment of certain amounts payable to it prior to such termination, for
services rendered prior to such termination. No such termination will
affect in any manner the Company's obligation to repurchase certain
Contracts for breaches of representations or warranties under the
Agreement. In the event that the Trustee would be obligated to succeed
the Servicer but is unwilling or unable so to act, it may appoint, or
petition to a court of competent jurisdiction for the appointment of a
Servicer. Pending such appointment, the Trustee is obligated to act in
such capacity. The Trustee and such successor may agree upon the
servicing compensation to be paid, which in no event may be greater than
the compensation to the Servicer under the Agreement. If the trustee in
bankruptcy or similar official is appointed for the Servicer, and no Event
of Termination other than the Servicer's insolvency has occurred, such
trustee or other official may have the power to prevent the Trustee from
effecting a transfer of servicing.

No Certificateholder will have any right under an Agreement to
institute any proceeding with respect to such Agreement unless such Holder
previously has given to the Trustee written notice of default and unless
the Holders of Certificates evidencing interests aggregating not less than
25% of the related Trust Fund requested the Trustee in writing to
institute such proceeding in its own name as Trustee and have offered to
the Trustee reasonable indemnity and the Trustee for 60 days has neglected
or refused to institute any such proceeding. The Trustee will be under no
obligation to take any action or institute, conduct or defend any
litigation under the Agreement at the request, order or direction of any
of the Holders of Certificates, unless such Certificateholders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which the Trustee may incur.

REPORTS TO CERTIFICATEHOLDERS

The Servicer or the Trustee, as applicable, will forward to each
Certificateholder on each Remittance Date, or as soon thereafter as is
practicable, as specified in the related Prospectus Supplement, a
statement setting forth, among other things:

(i) the amount of such distribution allocable to principal on
the Certificates;

(ii) the amount of such distribution allocable to interest on
the Certificates;

(iii) if the distribution to the Certificateholders is less than
the full amount that would be distributable to such
Certificateholders if there were sufficient eligible funds in the
Certificate Account, the difference between the aggregate amounts of
principal and interest which Certificateholders would have received
if there were sufficient eligible funds in the Certificate Account
and the amounts actually distributed;

(iv) the aggregate amount of Advances, if any, by the Servicer
included in the amounts actually distributed to the
Certificateholders;

(v) the outstanding principal balance of the Contracts; and

(vi) the approximate weighted average Remittance Rate of the
Contracts during the Due Period immediately preceding such Remittance
Date.

In addition, not more than 90 days after the end of each calendar
year, the Servicer will furnish a report to each Certificateholder of
record at any time during such calendar year (a) as to the aggregate of
amounts reported pursuant to (i) and (ii) above for such calendar year or,
in the event such person was a Certificateholder of record during a
portion of such calendar year, for the applicable portion of such year,
and (b) such information as the Servicer deems necessary or desirable for
Certificateholders to prepare their tax returns. Information in the
monthly and annual reports provided to the Certificateholders will not
have been examined and reported upon by an independent public accountant.
However, the Servicer will provide to the Trustee annually a report by
independent public accountants with respect to the servicing of the
Contracts as described under "Evidence as to Compliance" above.

AMENDMENT

The Agreement may be amended by the Company and the Trustee without
the consent of the Certificateholders, (i) to cure any ambiguity, (ii) to
correct or supplement any provision therein that may be inconsistent with
any other provision therein, (iii) if an election has been made with
respect to a particular Series of Certificates to treat the Trust Fund as
a real estate mortgage investment conduit ("REMIC") within the meaning of
Section 860D(a) of the Internal Revenue Code of 1986, as amended, to
maintain the REMIC status of the Trust Fund and to avoid the imposition of
certain taxes on the REMIC or (iv) to make any other provisions with
respect to matters or questions arising under such Agreement that are not
inconsistent with the provisions thereof, provided that such action will
not adversely affect in any material respect the interests of the
Certificateholders of the related Series. The Agreement may also be
amended by the Company, the Servicer and the Trustee with the consent of
the Certificateholders (other than holders of Residual Certificates)
evidencing interests aggregating not less than 51% of the Trust Fund for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of such Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no
such amendment that reduces in any manner the amount of, or delay the
timing of, any payment received on or with respect to Contracts which are
required to be distributed on any Certificate may be effective without
the consent of the holders of each such Certificate.

TERMINATION OF THE AGREEMENT

The obligations created by each Agreement will terminate upon the
date calculated as specified in the Agreement, generally upon (i) the
later of the final payment or other liquidation of the last Contracts
subject thereto and the disposition of all property acquired upon
foreclosure of any Land-and-Home Contract or repossession of any
Manufactured Home and (ii) the payment to the Certificateholders of all
amounts held by the Servicer or the Trustee and required to be paid to it
pursuant to the Agreement. In addition, the Company or the Servicer may
at its option with respect to any Series of Certificates, repurchase all
Certificates or Contracts remaining outstanding at such time as the
aggregate unpaid principal balance of such Contracts is less than the
percentage of the aggregate unpaid principal balance of the Contracts on
the Cut-off Date specified with respect to such Series in the related
Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, the repurchase price will equal the principal
amount of such Contracts plus accrued interest from the first day of the
month of repurchase to the first day of the next succeeding month at the
Contract Rates borne by such Contracts.

THE TRUSTEE

The Prospectus Supplement for a Series of Certificates will specify
the Trustee under the related Agreement. The Trustee may have normal
banking relationships with the Company or its affiliates and the Servicer
or its affiliates.

The Trustee may resign at any time, in which event the Company will
be obligated to appoint a successor Trustee. The Company may also remove
the Trustee if the Trustee ceases to be eligible to continue as such under
the Agreement or if the Trustee becomes insolvent. The Trustee may also
be removed at any time by the holders of Certificates evidencing interests
aggregating over 50% of the related Trust Fund as specified in the
Agreement. Any resignation or removal of the Trustee and appointment of a
successor Trustee will not become effective until acceptance of the
appointment by the successor Trustee.

The Trustee will make no representation as to the validity or
sufficiency of the Agreement, the Certificates, any Contract, Contract
file or related documents, and will not be accountable for the use or
application by the Company of any funds paid to the Company, as Seller, in
consideration of the conveyance of the Contracts, or deposited into or
withdrawn from the Certificate Account by the Company, as Servicer. If no
Event of Termination has occurred, the Trustee will be required to perform
only those duties specifically required of it under the Agreement.
However, upon receipt of the various certificates, reports or other
instruments required to be furnished to it, the Trustee will be required
to examine them to determine whether they conform as to form to the
requirements of the Agreement. Whether or not an Event of Termination has
occurred, the Trustee is not required to expend or risk its own funds or
otherwise incur any financial liability in the performance of its duties
or the exercise of its powers if it has reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.

Under the Agreement, the Company, as Servicer, agrees to pay to the
Trustee on each Remittance Date (a) reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of any
express trust) and (b) reimbursement for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of the Agreement (including the reasonable compensation
and the expenses and disbursements of its agents and counsel), except
any such expense, disbursement or advance as may be attributable to the
Trustee's negligence or bad faith. The Company has agreed to indemnify
the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of the Trust
Fund and the Trustee's duties thereunder, including the costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of the Trustee's powers or duties thereunder.

DESCRIPTION OF FHA INSURANCE AND VA GUARANTEES

Certain of the Contracts, may be FHA-insured or VA-guaranteed, the
payments upon which, subject to the following discussion, are insured by
the FHA under Title I of the National Housing Act or partially guaranteed
by the VA.

The regulations governing FHA manufactured home insurance provide
that insurance benefits are payable upon the repossession and resale of
the collateral and assignment of the contract to the United States
Department of Housing and Urban Development ("HUD"). With respect to a
defaulted FHA contract, the servicer must follow applicable regulations
before initiating repossession procedures. These regulations include
requirements that the lender arrange a face-to-face meeting with the
borrower, initiate a modification or repayment plan, if feasible, and give
the borrower 30 days' notice of default prior to any repossession. The
insurance claim is paid in cash by HUD. For manufactured housing
contracts, the amount of insurance benefits generally paid by FHA is equal
to 90% of the sum of (i) the unpaid principal amount of the Contract at
the date of default and uncollected interest earned to the date of default
computed at the Contract Rate, after deducting the best price obtainable
for the collateral (based in part on a HUD-approved appraisal) and all
amounts retained or collected by the lender from other sources with
respect to the Contract, (ii) accrued and unpaid interest on the unpaid
amount of the Contract from the date of default to the date of submission
of the claim plus 15 calendar days (but in no event more than nine months)
computed at a rate of 7% annum, (iii) costs paid to a dealer or other
third party to repossess and preserve the Manufactured Home, (iv) the
amount of any sales commission paid to a dealer or other third party for
the resale of the property, (v) with respect to a Land-and-Home Contract,
property taxes, special assessments and other similar charges and hazard
insurance premiums, prorated to the date of disposition of the property,
(vi) uncollected court costs, (vii) legal fees, not to exceed $500, and
(viii) expenses for recording the assignment of the lien on the collateral
to the United States.

The insurance available to a lender under FHA Title I insurance is
subject to the limit of a reserve amount equal to ten percent of the
original principal balance of all Title I insured loans originated by the
lender, which amount is reduced by all claims paid to the lender and by an
annual reduction in the reserve amount of ten percent of the reserve
amount, and which is increased by an amount equal to ten percent of the
original principal balance of insured loans subsequently originated by the
lender. As of June 30, 1996, the Company's Title I reserve amount was
approximately $20,884,353, which amount was available to pay claims in
respect of approximately $236,505,785 of FHA-insured manufactured housing
contracts serviced by the Company. If the Company were replaced as
Servicer of the Contracts under the Agreement, it is not clear from the
FHA regulations what portion of this reserve amount would be available for
claims in respect of the FHA-insured Contracts. The obligation to pay
insurance premiums to FHA is the obligation of the Company, as servicer of
the FHA-insured Contracts.

The maximum guarantee that may be issued by the VA for a VA-
guaranteed contract is the lesser of (a) the lesser of $20,000 and 40% of
the principal amount of the contract and (b) the maximum amount of
guaranty entitlement available to the obligor veteran (which may range
from $20,000 to zero). The amount payable under the guarantee will be a
percentage of the VA contract originally guaranteed applied to
indebtedness outstanding as of the applicable date of computation
specified in the VA regulations, interest accrued on the unpaid balance
of the loan to the appropriate date of computation and limited expenses
of the contract holder, but in each case only to the extent that such
amounts have not been recovered through resale of the manufactured home.
The amount payable under the guarantee may in no event exceed the original
guarantee.

CERTAIN LEGAL ASPECTS OF THE CONTRACTS

The following discussion contains summaries of certain legal aspects
of manufactured housing contracts, including Land-and-Home Contracts,
which are general in nature. Because such legal aspects are governed by
applicable state law (which laws may differ substantially), the summaries
do not purport to be complete nor reflect the laws of any particular
state, nor to encompass the laws of all states in which the security for
the Contracts or Land-and-Home Contracts is situated. The summaries are
qualified in their entirety by reference to the applicable federal and
state laws governing the Contracts or Land-and-Home Contracts.

THE CONTRACTS (OTHER THAN LAND-AND-HOME CONTRACTS)

General. As a result of the assignment of the Contracts to the
Trustee, the Trust Fund will succeed collectively to all of the rights
(including the right to receive payment on the Contacts) and will assume
the obligations of the obligee under the Contracts. Each Contract
evidences both (a) the obligation of the Obligor to repay the loan
evidenced thereby, and (b) the grant of a security interest in the
Manufactured Home to secure repayment of such loan. Certain aspects of
both features of the Contracts are described more fully below.

The Contracts generally are "chattel paper" as defined in the Uniform
Commercial Code (the "UCC") in effect in the states in which the
Manufactured Homes initially were registered. Pursuant to the UCC, the
sale of chattel paper is treated in a manner similar to perfection of a
security interest in chattel paper. Under the Agreement, the Company will
retain possession of the Contracts as custodian for the Trustee, and will
make an appropriate filing of a UCC-1 financing statement in Tennessee to
give notice of the Trustee's ownership of the Contracts. The Contracts
will be stamped to reflect their assignment from the Company to the
Trustee. However, if through negligence, fraud, or otherwise, a subse-
quent purchaser were able to take physical possession of the Contracts
without notice of such assignment, the Trustee's interest in the Contracts
could be defeated.

Security Interests in the Manufactured Homes. The Manufactured Homes
securing the Contracts may be located in all 50 states and the District of
Columbia. Security interests in manufactured homes may be perfected
either by notation of the secured party's lien on the certificate of title
or by delivery of the required documents and payment of a fee to the state
motor vehicle authority, depending on state law. In some nontitle states,
perfection pursuant to the provisions of the UCC is required. The Company
effects such notation or delivery of the required documents and fees, and
obtains possession of the certificate of title, as appropriate under the
laws of the state in which a Manufactured Home is registered. In the
event the Company fails, due to clerical errors, to effect such notation
or delivery, or files the security interest under the wrong law (for
example, under a motor vehicle title statute rather than under the UCC, in
a few states), the Certificateholders may not have a first priority
security interest in the Manufactured Home securing a Contract. As
manufactured homes have become larger and have been attached to their
sites without any apparent intention to move them, courts in many states
have held that manufactured homes, under certain circumstances, may become
subject to real estate title and recording laws. As a result, a security
interest in a manufactured home could be rendered subordinate to the
interests of other parties claiming an interest in the home under
applicable state real estate law. In order to perfect a security
interest in a manufactured home under real estate laws, the holder of the
security interest must file either a "fixture filing" under the provision
of the UCC or a real estate mortgage under the real estate laws of the
state where the home is located. See "Land-and-Home Contracts" below.
These filings must be made in the real estate records office of the county
where the home is located. Substantially all of the Contracts contain
provisions prohibiting the borrower from attaching the Manufactured Home to
its site. So long as the borrower does not violate this agreement, a
security interest in the Manufactured Home will be governed by the
certificate of title laws or the UCC, and the notation of the security
interest on the certificate of title or the filing of the UCC financing
statement will be effective to maintain the priority of the security
interest in the Manufactured Home. If, however, a Manufactured Home
becomes attached to its site, other parties could obtain an interest in
the Manufactured Home which is prior to the security interest originally
retained by the seller of the Contracts and transferred to the Company.
The Company will represent that at the date of the initial issuance of
the related Certificates it has obtained a perfected first priority
security interest by proper notation or delivery of the required documents
and fees with respect to substantially all of the Manufactured Homes
securing the Contracts.

The Company will assign the security interest in the Manufactured
Homes to the Trustee on behalf of the Certificateholders. Neither the
Company nor the Trustee will amend the certificates of title to identify
the Trustee as the new secured party, and neither the Company nor the
Servicer will deliver the certificates of title to the Trustee or note
thereon the interest of the Trustee. Accordingly, the Company, or such
other originator of the Contracts as provided herein, will continue to be
named as the secured party on the certificates of title relating to the
Manufactured Homes. In some states, such assignment is an effective
conveyance of such security interest without amendment of any lien noted
on the related certificate of title and the new secured party succeeds to
the Company's rights as the secured party. However, in some states in the
absence of an amendment to the certificate of title, such assignment of
the security interest in the Manufactured Home may not be held effective
or such security interests may not be perfected and in the absence of such
notation or delivery to the Trustee, the assignment of the security
interest in the Manufactured Home may not be effective against creditors
of the Company or a trustee in bankruptcy of the Company.

In the absence of fraud, forgery or affixation of the Manufactured
Home to its site by the Manufactured Home owner, or administrative error
by state recording officials, the notation of the lien of the Company on
the certificate of title or delivery of the required documents and fees
will be sufficient to protect the Certificateholders against the rights of
subsequent purchasers of a Manufactured Home or subsequent lenders who
take a security interest in the Manufactured Home. If there are any
Manufactured Homes as to which the Company's security interest is not
perfected, such security interest would be subordinate to, among others,
subsequent purchasers for value of the Manufactured Homes and holders of
perfected security interests. There also exists a risk in not identifying
the Trustee as the new secured party on the certificate of title that,
through fraud or negligence, the security interest of the Trustee could be
released.

In the event that the owner of a Manufactured Home moves it to a
state other than the state in which such Manufactured Home initially is
registered, under the laws of most states the perfected security interest
in the Manufactured Home would continue for four months after such
relocation and thereafter only if and after the owner re-registers the
Manufactured Home in such state. If the owner were to relocate a
Manufactured Home to another state and not re-register the Manufactured
Home in such state, and if steps were not taken to re-perfect the
Trustee's security interest in such state, the security interest in the
Manufactured Home would cease to be perfected. A majority of states
generally require surrender of a certificate of title to re-register a
Manufactured Home; accordingly, the Company must surrender possession if
it holds certificate of title to such Manufactured Home or, in the case of
Manufactured Homes registered in states which provide for notation of
lien, the Company would receive notice of surrender if the security
interest in the Manufactured Home is noted on the certificate of title.
Accordingly, the Company would have the opportunity to re-perfect its
security interest in the Manufactured Home in the state of relocation. In
states which do not require a certificate of title for registration of a
Manufactured Home, re-registration could defeat perfection. In the
ordinary course of servicing the manufactured housing conditional sales
contracts, the Company takes steps to effect such re-perfection upon
receipt of notice of re-registration or information from the obligor as to
relocation. Similarly when an Obligor under a Contract sells a
Manufactured Home, the Company must surrender possession of the
certificate of title or will receive notice as a result of its lien noted
thereon and accordingly will have an opportunity to require satisfaction
of the related manufactured housing conditional sales contract before
release of the lien. Under the Agreement, the Company is obligated to
take such steps, at the Company's expense, as are necessary to maintain
perfection of security interests in the Manufactured Homes.

Under the laws of most states, liens for repairs performed on a
Manufactured Home and liens for personal property taxes take priority over
perfected security interests. The Company will represent in the Agreement
that it has no knowledge of any such liens with respect to any
Manufactured Home securing payment on any Contract. However, such liens
could arise at any time during the term of the Contract. No notice will
be given to the Trustee or Certificateholders in the event such a lien
arises.

Enforcement of Security Interests in Manufactured Homes. The
Servicer on behalf of the Trustee, to the extent required by the related
Agreement, may take action to enforce the Trustee's security interest with
respect to Contracts in default by repossession and resale of the
Manufactured Homes securing such Defaulted Contracts. So long as the
Manufactured Home has not become subject to real estate laws, a creditor
can repossess a Manufactured Home securing a Contract by voluntary
surrender, by "self-help" repossession that is "peaceful" (i.e., without
breach of the peace) or, in the absence of voluntary surrender and the
ability to repossess without breach of the peace, by judicial process.
The holder of a Contract must give the debtor a number of days' notice,
which varies from 10 to 30 days depending on the state, prior to
commencement of any repossession. The UCC and consumer protection laws in
most states place restrictions on repossession sales, including requiring
prior notice to the debtor and commercial reasonableness in effecting such
a sale. The law in most states also requires that the debtor be given
notice of any sale prior to resale of the unit so that the debtor may
redeem at or before such resale. In the event of such repossession and
resale of a Manufactured Home, the Trustee would be entitled to be paid
out of the sale proceeds before such proceeds could be applied to the
payment of the claims of unsecured creditors or the holders of
subsequently perfected security interests or, thereafter, to the debtor.

Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on
repossession and resale of the manufactured home securing such a debtor's
loan. However, some states impose prohibitions or limitations on
definitions or limitations on deficiency judgments, and in many cases the
defaulting borrower would have no assets with which to pay a judgment.

Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit
or delay the ability of a lender to repossess and resell collateral or
enforce a deficiency judgment.

Under the terms of the federal Soldiers' and Sailors' Civil Relief
Act of 1940, as amended (the "Relief Act"), an Obligor who enters military
service after the origination of such Obligor's Contract (including an
Obligor who is a member of the National Guard or is in reserve status at
the time of the origination of the Contract and is later called to active
duty) may not be charged interest above an annual rate of 6% during the
period of such Obligor's active duty status, unless a court orders
otherwise upon application of the lender. It is possible that such action
could have an effect, for an indeterminate period of time, on the ability
of the Servicer to collect full amounts of interest on certain of the
Contracts. Any shortfall in interest collections resulting from the
application of the Relief Act, to the extent not covered by the
subordination of a Class of Subordinated Certificates, could result in
losses to the holders of a Series of Certificates. In addition, the
Relief Act imposes limitations which would impair the ability of the
Servicer to foreclose on an affected Contract during the Obligor's period
of active duty status. Thus, in the event that such a Contract goes into
default, there may be delays and losses occasioned by the inability to
realize upon the Manufactured Home in a timely fashion.

LAND-AND-HOME CONTRACTS

General. The Land-and-Home Contracts will be secured by either first
mortgages or deeds of trust, depending upon the prevailing practice in the
state in which the underlying property is located. A mortgage creates a
lien upon the real property described in the mortgage. There are two
parties to a mortgage: the mortgagor, who is the borrower, and the
mortgagee, who is the lender. In a mortgage state, the mortgagor delivers
to the mortgagee a note or bond evidencing the loan and the mortgage.
Although a deed of trust is similar to a mortgage, a deed of trust has
three parties: the borrower, a lender as beneficiary, and a third-party
grantee called the trustee. Under the deed of trust, the borrower grants
the property, irrevocably until the debt is paid, in trust, generally with
a power of sale, to the trustee to secure payment of the loan. The
trustee's authority under a deed of trust and the mortgagee's authority
under a mortgage are governed by the express provisions of the deed of
trust or mortgage, applicable law, and, in some cases, with respect to the
deed of trust, the directions of the beneficiary.

Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. Generally, the action is initiated by service of legal
pleadings upon all parties having an interest of record in the real
property. Delays in completion of the foreclosure occasionally may result
from difficulties in locating necessary parties. When the mortgagee's
right to foreclosure is contested, the legal proceedings necessary to
resolve the issue can be time-consuming and expensive. After the
completion of a judicial foreclosure proceeding, the court may issue a
judgment of foreclosure and appoint a receiver or other officer to conduct
the sale of the property. In some states, mortgages may also be
foreclosed by advertisement, pursuant to a power of sale provided in the
mortgage. Foreclosure of mortgage by advertisement is essentially similar
to foreclosure of a deed of trust by non-judicial power of sale.

Foreclosure of a deed of trust is generally accomplished by a non-
judicial trustee's sale under a specific provision in the deed of trust
that authorizes the trustee to sell the property to a third party upon any
default by the borrower under the terms of the note or deed of trust. In
certain states, such foreclosure also may be accomplished by judicial
action in the manner provided for by foreclosure of mortgages. In some
states the trustee must record a notice of default and send a copy to the
borrower-trustor and to any person who has recorded a request for a copy
of a notice of sale. In addition, the trustee must provide notice in some
states to any other individual having an interest of record in the real
property, including any junior lienholders. If the deed of trust is not
reinstated within any applicable cure period, a notice of sale must be
posted in a public place and, in most states, published for a specified
period of time in one or more newspapers. In addition, some state laws
require that a copy of the notice of sale be posted on the property and
sent to all parties having an interest in the property.

In some states, the borrower-trustor has the right to reinstate the
loan at any time following default until shortly before the trustee's
sale. In general, the borrower, or any other person having a junior
encumbrance on the real estate, may, during a reinstatement period cure
the default by paying the entire amount in arrears plus the costs and
expenses incurred in enforcing the obligation. Certain state laws control
the amount of foreclosure expenses and costs, including attorneys' fees,
that may be recovered by a lender.

In the case of foreclosure under either a mortgage or a deed of
trust, the sale by the receiver or other designated officer, or by the
trustee, is a public sale. However, because of the difficulty of a
potential buyer at the sale would have in determining the exact status of
title and because the physical condition of the property may have
deteriorated during the foreclosure proceedings, it is not common for a
third party to purchase the property at the foreclosure sale. Rather, the
lender generally purchases the property from the trustee or receiver for
an amount equal to the unpaid principal amount of the note, accrued and
unpaid interest and the expenses of foreclosure. Thereafter, subject to
the right of the borrower in some states to remain in possession during
the redemption period, the lender will assume the burden of ownership,
including obtaining hazard insurance and making such repairs at its own
expense as are necessary to render the property suitable for sale. The
lender commonly will obtain the services of a real estate broker and pay
the broker a commission in connection with the sale of the property.
Depending upon market conditions, the ultimate proceeds of the sale of the
property may not equal the lender's investment in the property.

Rights of Redemption. In some states, after the sale pursuant to a
deed of trust or foreclosure of a mortgage, the borrower and certain
foreclosed junior lienors are given a statutory period in which to redeem
the property from the foreclosure sale. In certain other states, this
right of redemption applies only to sale following judicial foreclosure,
and not sale pursuant to a non-judicial power of sale. In most states
where the right of redemption is available, statutory redemption may occur
upon payment of the foreclosure purchase price, accrued interest and
taxes. In some states the right to redeem is an equitable right. The
effect of a right of redemption is to diminish the ability of the lender
to sell the foreclosed property. The exercise of a right of redemption
would defeat the title of any purchaser at a foreclosure sale, or of any
purchaser from the lender subsequent to judicial foreclosure or sale under
a deed of trust. Consequently, the practical effect of the redemption
right is to force the lender to maintain property and pay the expenses of
ownership until the redemption period has run.

Anti-Deficiency Legislation and Other Limitations on Lenders.
Certain states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgage under a mortgage
relating to a single family residence. In some states, statutes limit the
right of the beneficiary or mortgagee to obtain a deficiency judgment
against the borrower following foreclosure or sale under a deed of trust.
A deficiency judgment is a personal judgment against the borrower equal in
most cases to the difference between the amount due to the lender and the
net amount realized upon the foreclosure sale.

Some state statutes may require the beneficiary or mortgagee to
exhaust the security afforded under a deed of trust or mortgage by
foreclosure in an attempt to satisfy the full debt before bringing a
personal action against the borrower. In certain other states, the lender
has the option of bringing a personal action against the borrower on the
debt without first exhausting such security; however, in some of these
states, the lender, following judgment on such personal action, may be
deemed to have elected a remedy and may be precluded from exercising
remedies with respect to the security. Consequently, the practical effect
of the election requirement, when applicable, is that lenders will usually
proceed first against the security rather than bringing a personal action
against the borrower.

Other statutory provisions may limit any deficiency judgment against
a former borrower following a foreclosure sale to the excess of the
outstanding debt over the fair market value of the property at the time of
such sale. The purpose of these statutes is to prevent a beneficiary or a
mortgagee from obtaining a large deficiency judgment against the former
borrower as a result of low or no bids at the foreclosure sale.

In some states, exceptions to the anti-deficiency statutes are
provided for in certain instances where the value of the lender's security
has been impaired by acts or omissions of the borrower, for example, in
the event of waste of the property.

In addition to anti-deficiency and related legislation, numerous
other federal and state statutory provisions, including the federal
bankruptcy laws, the federal Soldier's and Sailor's Civil Relief Act of
1940 and state laws affording relief to debtors, may interfere with or
affect the ability of a secured mortgage lender to realize upon its
security. For example, with respect to a Land-and-Home Contract, in a
Chapter 13 proceeding under the federal bankruptcy code, when a court
determines that the value of a home is less than the principal balance of
the loan, the court may prevent a lender from foreclosing on the home,
and, as part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the value of the home as it exists at the time of the
proceeding, leaving the lender as a general unsecured creditor for the
difference between that value and the amount of outstanding indebtedness.
A bankruptcy court may grant the debtor a reasonable time to cure a
payment default, and in the case of a mortgage loan not secured by the
debtor's principal residence, also may reduce the monthly payments due
under such mortgage loan, change the rate of interest and alter the
mortgage loan repayment schedule. Certain court decisions have applied
such relief to claims secured by the debtor's principal residence.

The Code provides priority to certain tax liens over the lien of the
mortgage or the deed of trust. The laws of some states provide priority
to certain tax liens over the lien of the mortgage or the deed of trust.
Numerous federal and state consumer protection laws impose substantive
requirements upon mortgage lenders in connection with the origination,
servicing and the enforcement of mortgage loans. These laws include the
federal Truth in Lending Act, Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting
Act, and related statutes and regulations. These federal laws and state
laws impose specific statutory liabilities upon lenders who originate or
service mortgage loans and who fail to comply with the provisions of the
law. In some cases, this liability may affect assignees of the Contracts.

CERTAIN MATTERS RELATING TO INSOLVENCY

The Company intends that each transfer of the Contracts to a Trust
Fund will constitute a sale rather than a pledge of the Contracts to
secure indebtedness of the Company. However, if the Company (or one of
its affiliates) were to become a debtor under the federal bankruptcy code,
it is possible that a creditor, receiver, conservator or trustee in
bankruptcy of the Company (or one of its affiliates) or the Company as a
debtor-in-possession may argue the sale of the Contracts by the Company
(or one of its affiliates) was a pledge of the Contracts rather than a
sale. This position, if argued or accepted by a court, could result in a
delay or reduction of distributions to the related Certificateholders.

CONSUMER PROTECTION LAWS

The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission is intended to defeat the ability of the transferor of a
consumer credit contract which is the seller of goods which gave rise to
the transaction (and certain related lenders and assignees) to transfer
such contract free of notice of claims by the debtor thereunder. The
effect of this rule is to subject the assignee of such a Contract (such as
the Trust Fund) to all claims and defenses which the Obligor could assert
against the seller of the Manufactured Home. Liability under this rule is
limited to amounts paid under a Contract; however, the Obligor also may be
able to assert the rule to set off remaining amounts due as a defense
against a claim brought by the Trust Fund against the Obligor. Numerous
other federal and state consumer protection laws impose requirements
applicable to the origination and lending pursuant to the Contracts,
including the Truth in Lending Act, the Federal Trade Commission Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Fair Debt Collection Practices Act and the Uniform
Consumer Credit Code. In the case of some of these laws, the failure to
comply with their provisions may affect the enforceability of the related
Contract.

TRANSFERS OF MANUFACTURED HOMES; ENFORCEABILITY OF "DUE-ON-SALE" CLAUSES

The Contracts, in general, prohibit the sale or transfer of the
related Manufactured Homes or Modular Homes without the consent of the
Servicer and permit the acceleration of the maturity of the Contracts by
the Servicer upon any such sale or transfer that is not consented to. The
Servicer expects that it will permit most transfers of Manufactured Homes
or Modular Homes and not accelerate the maturity of the related Contracts.
In certain cases, the transfer may be made by a delinquent Obligor in
order to avoid a repossession proceeding with respect to a Manufactured
Home or Modular Home.

In the case of a transfer of a Manufactured Home or Modular Home
after which the Servicer desires to accelerate the maturity of the related
Contract, the Servicer's ability to do so will depend on the
enforceability under state law of the "due-on-sale" clause. The Garn-St.
Germain Depository Institutions Act of 1982 preempts, subject to certain
exceptions and conditions, state laws prohibiting enforcement of "due-on-
sale" clauses applicable to the Manufactured Homes or Modular Homes.
Consequently, in some states the Servicer may be prohibited from enforcing
a "due-on-sale" clause in respect of certain Manufactured Homes or Modular
Homes.

APPLICABILITY OF USURY LAWS

Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980, as amended ("Title V"), provides that, subject to the
following conditions, state usury limitations shall not apply to any loan
which is secured by a first lien on certain kinds of manufactured housing.
The Contracts would be covered if they satisfy certain conditions, among
other things, governing the terms of any prepayments, late charges and
deferral fees and requiring a 30-day notice period prior to instituting
any action leading to repossession of or foreclosure with respect to the
related unit.

Title V authorized any state to reimpose limitations on interest
rates and finance charges by adopting before April 1, 1983 a law or
constitutional provision which expressly rejects application of the
federal law. Fifteen states adopted such a law prior to the April 1, 1983
deadline. In addition, even where the Title V was not so rejected, any
state is authorized by law to adopt a provision limiting discount points
or other charges on loans covered by Title V. The Company will represent
in the applicable Agreement that all of the Contracts comply with
applicable usury laws.

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974, as amended
("ERISA") imposes certain requirements on employee benefit plans subject
to ERISA ("Plans") and on persons who are fiduciaries with respect to such
Plans. Generally, ERISA applies to investments made by such Plans. Among
other requirements, ERISA mandates that the assets of Plans be held in
trust and that the trustee, or other duly authorized fiduciary, have
exclusive authority and discretion to manage and control the assets of
such Plans. ERISA also imposes certain duties on persons who are
fiduciaries of such Plans. Under ERISA, any person who exercises any
authority or control with respect to the management or disposition of the
assets of a Plan is considered to be a fiduciary of such Plan, subject to
the standards of fiduciary conduct under ERISA. These standards include
the requirements that the assets of Plans be invested and managed for the
exclusive benefit of Plan participants and beneficiaries, a determination
by the Plan fiduciary that any such investment is permitted under the
governing Plan instruments and is prudent and appropriate for the Plan in
view of its overall investment policy and the composition and
diversification of its portfolio. Certain employee benefit plans, such as
governmental plans (as defined in ERISA Section 3(32)) and church plans (as
defined in ERISA Section 3(33)), are not subject to ERISA. Accordingly,
assets of such plans may be invested in Certificates without regard to
the ERISA considerations described above and below, subject to the
provisions of applicable state law. Any such plan which is qualified and
exempt from taxation under Sections 401(a) and 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), however, is subject to
the prohibited transaction rules set forth in Section 4975 of the Code.

Any Plan fiduciary considering the purchase of a Certificate should
consult with its counsel with respect to the potential applicability of
ERISA and the Code to such investment. Moreover, each Plan fiduciary
should determine whether, under the general fiduciary standards of
investment prudence and diversification, an investment in the Certificates
is appropriate for the Plan, taking into account the overall investment
policy of the Plan and composition of the Plan's investment portfolio.

In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA, and the corresponding
provisions of the Code, prohibit a broad range of transactions involving
Plan assets and persons having certain specified relationships to a Plan
("parties in interest" and "disqualified persons"). Such transactions are
treated as "prohibited transactions" under Sections 406 and 407 of ERISA
and excise taxes are imposed upon such persons by Section 4975 of the
Code. An investment in the Certificates by a Plan might constitute
prohibited transactions under the foregoing provisions unless an
administrative exemption applies. In addition, if any investing Plan's
assets were deemed to include an interest in the assets of the Contract
Pool and not merely an interest in the Certificates, transactions
occurring in the operation of the Contract Pool might constitute
prohibited transactions unless an administrative exemption applies.
Certain such exemptions which may be applicable to the acquisition and
holding of the Certificates or to the servicing and operation of the
Contract Pool are noted below.

The Department of Labor ("DOL") has issued a regulation (29 C.F.R.
Section 2510.3-101) (the "Regulation") concerning the definition of what
constitutes the assets of a Plan. This regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity" investment will be deemed for purposes of ERISA to be assets of
the investing plan unless certain exceptions apply. However, the
Regulation provides that, generally, the assets of a corporation or
partnership in which a Plan invests will not be deemed for purposes of
ERISA to be assets of such Plan if the equity interest acquired by the
investing Plan is a publicly-offered security. A publicly-offered
security, as defined under the Regulation, is a security that is widely
held, freely transferable, and either is (i) part of a class of securities
registered under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, or (ii) sold to the Plan as part of a securities offering to the
public pursuant to an effective registration statement under the
Securities Act of 1933, and the class of securities of which such security
is a part is registered under the Securities Exchange Act of 1934 within
120 days (or such later time as may be allowed by the Securities and
Exchange Commission) after the end of the fiscal year of the issuer during
which the offering of such securities to the public occurred. The
Certificates are not expected to be publicly-offered securities under the
terms of the Regulation.

Unless some administrative exemption under ERISA applies to the
purchase of Certificates offered hereby, and, as a result, an investing
Plan's assets could be considered to include an undivided interest in the
Contracts and any other assets held in the Contract Pool. In the event
that assets of a Contract Pool are considered assets of an investing Plan,
the Company, the Servicer, the Trustee and other persons, in providing
services with respect to the Contracts, may be considered fiduciaries to
such Plan and subject to the fiduciary responsibility provisions of Title
I of ERISA and the prohibited transaction provisions of Section 4975 of
the Code with respect to transactions involving such assets unless a
statutory or administrative exemption applies.

The U.S. Department of Labor has granted to the lead Underwriter
named in the Prospectus Supplement an exemption (the "Exemption") from
certain of the prohibited transaction rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Plans of
certificates representing interests in asset-backed pass-through trusts
that consist of certain receivables, loans and other obligations that meet
the conditions and requirements of the Exemption. The receivables covered
by the Exemption include manufactured housing installment sales contracts
and installment loan agreements such as the Contracts. The Exemption will
apply to the acquisition, holding and resale of the Senior Certificates by
a Plan, provided that certain conditions (certain of which are described
below) are met.

Among the conditions which must be satisfied for the Exemption to
apply to the Senior Certificates are the following:

(1) The acquisition of the Senior Certificates by a Plan is on
terms (including the price for the Senior Certificates) that are at
least as favorable to the Plan as they would be in an arm's length
transaction with an unrelated party;

(2) The rights and interests evidenced by the Senior
Certificates acquired by the Plan are not subordinated to the rights
and interests evidenced by other certificates of the Trust Fund;

(3) The Senior Certificates acquired by the Plan have received
a rating at the time of such acquisition that is in one of the three
highest generic rating categories from either Standard & Poor's
Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc. or
Fitch Investors Service, Inc.;

(4) The Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);

(5) The sum of all payments made to the Underwriter in
connection with the distribution of the Senior Certificates
represents not more than reasonable compensation for underwriting the
Senior Certificates; the sum of all payments made to and retained by
the Company pursuant to the sale of the Contracts to the Trust Fund
represents not more than the fair market value of such Contracts; and
the sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's
services under the Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith; and

(6) The Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of Regulation D
of the Securities and Exchange Commission under the Securities Act of
1933.

Moreover, the Exemption would provide relief from certain self-
dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior
Certificates in connection with the initial issuance, at least fifty (50)
percent of the Senior Certificates are acquired by persons independent of
the Restricted Group (as defined below), (ii) the Plan's investment in
Senior Certificates does not exceed twenty-five (25) percent of all of the
Senior Certificates outstanding at the time of the acquisition, and
(iii) immediately after the acquisition, no more than twenty-five (25)
percent of the assets of the Plan are invested in certificates
representing an interest in one or more trusts containing assets sold or
serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Company, any Underwriter, the Trustee, the Servicer, any
obligor with respect to Contracts included in the Trust Fund constituting
more than five percent of the aggregate unamortized principal balance of
the assets in the Trust Fund, or any affiliate of such parties (the
"Restricted Group").

The Company believes that the Exemption will apply to the acquisition
and holding by Plans of Senior Certificates sold by the Underwriter or
Underwriters named in the Prospectus Supplement and that all conditions of
the Exemption other than those within the control of the investors have
been met. In addition, as of the date hereof, no obligor with respect to
Contracts included in the Trust Fund constitutes more than five percent of
the aggregate unamortized principal balance of the assets of the Trust
Fund.

Employee benefit plans that are governmental plans (as defined in
section 3(32) of ERISA) and church plans (as defined in section 3(33) of
ERISA) are not subject to ERISA requirements. Accordingly, unless
otherwise specified in the Prospectus Supplement, assets of such plans may
be invested in the Senior Certificates without regard to the ERISA
restrictions described above, subject to applicable provisions of other
federal and state laws.

Any Plan fiduciary who proposes to cause a Plan to purchase Senior
Certificates should consult with its own counsel with respect to the
potential consequences under ERISA and the Code of the Plan's acquisition
and ownership of Senior Certificates. Assets of a Plan or individual
retirement account should not be invested in the Senior Certificates
unless it is clear that the assets of the Trust Fund will not be plan
assets or unless it is clear that the Exemption or a prohibited
transaction class exemption will apply and exempt all potential prohibited
transactions.

SUBORDINATED CERTIFICATES

Because the Subordinated Certificates are subordinated to the Senior
Certificates, the Exemption will not apply to the acquisition, holding and
resale of the Subordinated Certificates by a Plan.

Any Plan fiduciary considering whether to purchase any Subordinated
Certificates on behalf of a Plan should consult with its counsel regarding
the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Code to such investment. Among
other things, before purchasing any Subordinated Certificates, a fiduciary
of a Plan subject to the fiduciary responsibility provisions of ERISA or
an employee benefit plan subject to the prohibited transaction provisions
of the Code should analyze whether any prohibited transaction exemptions
are available. In particular, there are three class exemptions issued by
DOL that could apply with respect to certain transactions involving the
Certificates: PTCE 84-14 (Class Exemption for Plan Asset Transaction
Determined by Independent Qualified Professional Asset Managers), PTCE
91-38 (Class Exemption for Certain Transactions Involving Bank Collective
Investment Funds) and PTCE 90-1 (Class Exemption for Certain Transactions
Involving Insurance Company Pooled Separate Accounts). There is no
assurance that these exemptions, even if all of the conditions specified
therein are satisfied, will apply to all transactions involving the Trust
Funds assets.

In light of the foregoing, unless otherwise specified in the
Prospectus Supplement, no transfer of a Subordinated Certificate will be
permitted to be made to a Plan unless such Plan, at its expense, delivers
to the Trustee and the Company an opinion of counsel to the effect that
the purchase or holding of a Subordinated Certificate by such Plan will
not result in the assets of the Trust Fund being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee, the Company or the Servicer to
any obligation in addition to those undertaken in the Agreement. Unless
such opinion is delivered, each person acquiring a Subordinated
Certificate will be deemed to represent to the Trustee, the Company and
the Servicer that such person is not a Plan subject to ERISA or
Section 4975 of the Code.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following is a general discussion of certain federal income tax
consequences relating to the purchase, ownership, and disposition of the
Certificates and is based on advice of Brown & Wood LLP, special tax
counsel to the Company. The discussion is also based upon laws,
regulations, rulings, and decisions now in effect, including Treasury
Regulations issued on December 23, 1992, and generally effective for
REMICs with startup days on or after November 12, 1991 (the "REMIC
Regulations"), all of which are subject to change or possibly differing
interpretations. The discussion below addresses all material federal
income tax consequences generally applicable to investors. However, the
discussion does not purport to deal with federal income tax consequences
applicable to all categories of investors, some of which may be subject to
special rules. Investors should consult their own tax advisors to
determine the federal, state, local, and any other tax consequences of the
purchase, ownership, and disposition of the Certificates.

Many aspects of the federal tax treatment of the purchase, ownership,
and disposition of the Certificates will depend upon whether an election
is made to treat the Trust Fund or a segregated portion thereof evidenced
by a particular series or sub-series of Certificates as a REMIC within the
meaning of Section 860D(a) of the Code. The Prospectus Supplement for
each series will indicate whether or not an election to be treated as a
REMIC has been or will be made with respect thereto. The following
discussion deals first with Series with respect to which a REMIC Election
is made and then with Series with respect to which a REMIC Election is not
made.

REMIC SERIES

With respect to each Series of Certificates for which a REMIC
Election is made, Brown & Wood LLP, special tax counsel to the Company,
will have advised the Company that in its opinion, assuming (i) the making
of that election in accordance with the requirements of the Code and
(ii) ongoing compliance with the applicable Agreement, at the initial
issuance of the Certificates in such series the Trust Fund will qualify as
a REMIC and the Certificates in such a Series ("REMIC Certificates") will
be treated either as regular interests in the REMIC within the meaning of
Section 860G(a)(1) of the Code ("Regular Certificates") or as a residual
interests in the REMIC within the meaning of Section 860G(a)(2) of the
Code ("Residual Certificates").

Qualification as a REMIC. Qualification as a REMIC involves ongoing
compliance with certain requirements and the following discussion assumes
that such requirements will be satisfied by the Trust Fund so long as
there are any REMIC Certificates outstanding. Substantially all of the
assets of the REMIC must consist of "qualified mortgages" and "permitted
investments" as of the close of the third month beginning after the day on
which the REMIC issues all of its regular and residual interests (the
"Startup Day") and at all times thereafter. The term "qualified mortgage"
means any obligation (including a participation or certificate of
beneficial ownership in such obligation) which is principally secured by
an interest in real property that is transferred to the REMIC on the
Startup Day in exchange for regular or residual interests in the REMIC or
is purchased by the REMIC within the three-month period beginning on the
Startup Day if such purchase is pursuant to a fixed price contract in
effect on the Startup Day. The REMIC Regulations provide that a Contract
is principally secured by an interest in real property if the fair market
value of the real property securing the Contract is at least equal to
either (i) 80% of the issue price (generally, the principal balance) of
the Contract at the time it was originated or (ii) 80% of the adjusted
issue price (the then-outstanding principal balance, with certain adjust-
ments) of the Contract at the time it is contributed to a REMIC. The fair
market value of the underlying real property is to be determined after
taking into account other liens encumbering that real property.
Alternatively, a Contract is principally secured by an interest in real
property if substantially all of the proceeds of the Contract were used to
acquire or to improve or protect an interest in real property that, at the
origination date, is the only security for the Contract (other than the
personal liability of the obligor). The REMIC Regulations provide that
obligations secured by manufactured housing or mobile homes (not including
recreational vehicles, campers or similar vehicles) which are "single
family residences" under Section 25(e)(10) of the Code will qualify as
obligations secured by real property without regard to state law
classifications. See the discussion below under "REMIC Series -- Status of
Manufactured Housing Contracts." A qualified mortgage also includes a
qualified replacement mortgage that is used to replace any qualified
mortgage within three months of the Startup Day or to replace a defective
mortgage within two years of the Startup Day.

"Permitted investments" consist of (a) temporary investments of cash
received under qualified mortgages before distribution to holders of
interests in the REMIC ("cash-flow investments"), (b) amounts, such as a
Reserve Fund, if any, reasonably required to provide for full payment of
expenses of the REMIC, the principal and interest due on regular or
residual interests in the event of defaults on qualified mortgages, lower
than expected returns on cash-flow investments, prepayment interest
shortfalls or certain other contingencies ("qualified reserve assets"),
and (c) certain property acquired as a result of foreclosure of defaulted
qualified mortgages ("foreclosure property"). A reserve fund will not be
qualified if more than 30% of the gross income from the assets in the
reserve fund is derived from the sale or other disposition of property
held for three months or less, unless such sale is necessary to prevent a
default in payment of principal or interest on Regular Certificates. In
accordance with Section 860G(a)(7) of the Code, a reserve fund must be
"promptly and appropriately" reduced as payments on contracts are
received. Foreclosure property will be a permitted investment only to the
extent that such property is not held for more than two years.

The Code requires that in order to qualify as a REMIC an entity must
make reasonable arrangements designed to ensure that certain specified
entities, generally including governmental entities or other entities that
are exempt from United States tax, including the tax on unrelated business
income ("Disqualified Organizations"), not hold residual interest in the
REMIC. Consequently, it is expected that in the case of any Trust Fund
for which a REMIC Election is made the transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization will
be prohibited and the ability of a Residual Certificate to be transferred
will be conditioned on the Trustee's receipt of a certificate or other
document representing that the proposed transferee is not a Disqualified
Organization. The transferor of a Residual Certificate must not, as of
the time of the transfer, have actual knowledge that such representation
is false. The Code further requires that reasonable arrangements must be
made to enable a REMIC to provide the Internal Revenue Service (the
"Service") and certain other parties, including transferors of residual
interests in a REMIC, with the information needed to compute the tax
imposed by Section 860E(e)(1) of the Code if, in spite of the steps taken
to prevent Disqualified Organizations from holding residual interests,
such an organization does, in fact, acquire a residual interest. See
"REMIC Series -- Restrictions on Transfer of Residual Certificates" below.

If the Trust Fund fails to comply with one or more of the ongoing
requirements for qualification as a REMIC, the Trust Fund will not be
treated as REMIC for the year during which such failure occurs and
thereafter unless the Service determines, in its discretion, that such
failure was inadvertent (in which case, the Service may require any
adjustments which it deems appropriate). If the ownership interests in
the assets of the Trust Fund consist of multiple classes, failure to treat
the Trust Fund as a REMIC may cause the Trust Fund to be treated as an
association taxable as a corporation. Such treatment could result in
income of the Trust Fund being subject to corporate tax in the hands of
the Trust Fund and in a reduced amount being available for distribution to
Certificateholders as a result of the payment of such taxes.

Status of Manufactured Housing Contracts. The REMIC Regulations as
well as a Notice issued by the Service provide that obligations secured by
interests in manufactured housing, which qualify as "single family

residences" within the meaning of Section 25(e)(10) of the Code, are to be
treated as "qualified mortgages" for a REMIC. Under Section 25(e)(10) of
the Code, the term "single family residence" includes any manufactured
home which as a minimum of 400 square feet of living space and a minimum
width in excess of 102 inches and which is of a kind customarily used at a
fixed location. The Company will represent and warrant that each of the
manufactured homes securing the Contracts which are a part of a Trust Fund
meets this definition of a "single family residence." See the discussion
above under "REMIC Series -- Qualification as a REMIC."

Two-Tier REMIC Structures. For certain series of Certificates, two
separate elections may be made to treat segregated portions of the assets
of a single Trust Fund as REMICs for federal income tax purposes
(respectively, the "Subsidiary REMIC" and the "Master REMIC"). Upon the
issuance of any such series of Certificates, Brown & Wood LLP, special tax
counsel to the Company, will have advised the Company, as described above,
that at the initial issuance of the Certificates, the Subsidiary REMIC and
the Master REMIC will each qualify as a REMIC for federal income tax
purposes, and that the Certificates in such a series will be treated
either as Regular Certificates or Residual Certificates of the appropriate
REMIC. Only REMIC Certificates issued by the Master REMIC will be offered
hereunder. Solely for the purpose of determining whether such Regular
Certificates will constitute qualifying real estate or real property
assets for certain categories of financial institutions or real estate
investment trusts as described below, both REMICs in a two-tier REMIC
structure will be treated as one. See the discussion below under "REMIC
Series -- Taxation of Regular Interests."

Taxation of Regular Interests. Regular Certificates will be treated
as new debt instruments issued by the REMIC on the Startup Day. If a
Regular Certificate represents an interest in a REMIC that consists of a
specified portion of the interest payments on the REMIC's qualified
mortgages, the stated principal amount with respect to that Regular
Certificate may be zero. Such a specified portion may consist of a fixed
number of basis points, a fixed percentage of interest or a qualified
variable rate on some or all of the qualified mortgages. Stated interest
on a Regular Certificate will be taxable as ordinary income. Holders of
Regular Certificates that would otherwise report income under a cash
method of accounting will be required to report income with respect to
such Regular Certificates under the accrual method. Under Temporary
Treasury Regulations, if a Trust Fund, with respect to which a REMIC
Election is made, is considered to be a "single-class REMIC," a portion of
the REMIC's servicing fees, administrative and other non-interest
expenses, including assumption fees and late payment charges retained by
the Company, will be allocated as a separate item to those Regular
Certificateholders that are "pass-through interest holders." Generally, a
single-class REMIC is defined as a REMIC that would be treated as a fixed
investment trust under applicable law but for its qualification as a
REMIC, or a REMIC that is substantially similar to an investment trust but
is structured with the principal purpose of avoiding this allocation
requirement imposed by the Temporary Treasury Regulations. Generally, a
pass-through interest holder refers to individuals, entities taxed as
individuals, such as certain trusts and estates, and regulated investment
companies. An individual, an estate, or a trust that holds a Regular
Certificate in such a REMIC will be allowed to deduct the foregoing
expenses under Section 212 of the Code only to the extent that, in the
aggregate and combined with certain other itemized deductions, they exceed
2% of the adjusted gross income of the holder. In addition, Section 68 of
the Code provides that the amount of itemized deductions (including those
provided for in Section 212 of the Code) otherwise allowable for the
taxable year for an individual whose adjusted gross income exceeds a
threshold amount specified in the Code ($100,000 in the case of a joint
return) will be reduced by the lesser of (i) 3% of the excess of adjusted
gross income over the specified threshold amount or (ii) 80% of the amount
of itemized deductions otherwise allowable, for such taxable year. As a
result of the foregoing limitations, certain holders of Regular
Certificates in "single-class REMICs" may not be entitled to deduct all or
any part of the foregoing expenses.

Tax Status of REMIC Certificates. In general, (i) Regular
Certificates held by a financial institution as described in
Section 593(a) of the Code will represent interest in "qualifying real
property loans" within the meaning of Section 593(d) of the Code;
(ii) Regular Certificates held by a thrift institution taxes as a
"domestic building and loan association" within the meaning of
Section 7701(a)(19) of the Code will constitute "a regular . . . interest
in a REMIC" within the meaning of Section 7701(a)(19)(C)(xi) of the Code:
and (iii) Regular Certificates held by a real estate investment trust will
constitute "real estate assets" within the meaning of Section 856(c)(5)(A)
of the Code and interest thereon will be considered "interest on
obligations secured by mortgages on real property" within the meaning of
Section 856(c)(3)(B) of the Code, in each such case as long as the portion
of the assets of the Trust Fund qualifying for the corresponding status is
at least 95% of the assets of the REMIC. If less than 95% of the average
adjusted basis of the assets comprising the REMIC are assets qualifying
under any of the foregoing Sections of the Code (including assets
described in Section 7701(a)(19)(C) of the Code), then the Regular
Certificates will be qualifying assets only to the extent that the assets
comprising the REMIC are qualifying assets. Treasury Regulations
promulgated pursuant to Section 593 of the Code define "qualifying real
property loans" to include a loan secured by a mobile home unit
"permanently fixed to real property" except during a brief period in which
the unit is transported to its site. Section 7701(a)(19)(C)(v) of the
Code provides that "loans secured by an interest in real property"
includes loans secured by mobile homes not used on a transient basis.
Treasury Regulations promulgated pursuant to Section 856 of the Code state
that local law definitions are not controlling in determining the meaning
of the term "Real Property" for purposes of that section, and the Service
has ruled that obligations secured by permanently installed mobile home
units qualify as "real estate assets" under this provision. Entities
affected by the foregoing provisions of the Code that are considering the
purchase of Certificates should consult their own tax advisors regarding
these provisions. Furthermore, interest paid with respect to Certificates
held by a real estate investment trust will be considered "interest on
obligations secured by mortgages on real property or on interest in real
property" within the meaning of Section 856(c)(3)(B) of the Code to the
same extent that the Certificates themselves are treated as real estate
assets. Regular Certificates held by a regulated investment company or a
real estate investment trust will not constitute "Government securities"
within the meaning of Sections 851(b)(4)(A)(i) and 856(c)(5)(A) of the
Code, respectively. In addition, the REMIC Regulations provide that
payments on Contracts qualifying for the corresponding status that are
held and reinvested pending distribution to Certificateholders will be
considered to be "qualifying real property loans" within the meaning of
Section 593(b) of the Code and "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code.

Original Issue Discount. Regular Certificates may be issued with
"original issue discount." Rules governing original issue discount are set
forth in Sections 1271-1273 and 1275 of the Code and the Treasury
Regulations issued thereunder in January 1994 and in June 1996 (the "OID
Regulations"). The discussion herein is based in part on the OID
Regulations, which generally apply to debt instruments issued on or after
April 4, 1994, but which generally may be relied upon for debt instruments
issued after December 21, 1992. The June 1996 Regulations apply to debt
instruments issued after August 13, 1996. Moreover, although the rules
relating to original issue discount contained in the Code were modified by
the Tax Reform Act of 1986 specifically to address the tax treatment of
securities, such as the Regular Certificates, on which principal is
required to be prepaid based on prepayments of the underlying assets,
regulations under that legislation have not yet been finalized.
Certificateholders also should be aware that the OID Regulations do not
address certain issues relevant to prepayable securities such as the
Regular Certificates.

In general, in the hands of the original holder of a Regular
Certificate, original issue discount, if any, is the difference between
the "stated redemption price at maturity" of the Regular Certificate and
its "issue price." The original issue discount with respect to a Regular
Certificate will be considered to be zero if it is less than .25% of the
Regular Certificate's stated redemption price at maturity multiplied by
the number of complete years from the date of issue of such Regular
Certificate to its maturity date. The OID Regulations, however, provide a
special de minimis rule to apply to obligations such as the Regular
Certificates that have more than one principal payment or that have
interest payments that are not qualified stated interest as defined in the
OID Regulations, payable before maturity ("installment obligations").
Under the special rule, original issue discount on an installment
obligation is generally considered to be zero if it is less than .25% of
the principal amount of the obligation multiplied by the weighted
average maturity of the obligation as defined in the OID Regulations.
Because of the possibility of prepayments, it is not clear whether or how
the de minimis rules will apply to the Regular Certificates. It is
possible that the anticipated rate of prepayments assumed in pricing
the debt instrument (the "Prepayment Assumption") will be required to
be used in determining the weighted average maturity of the Regular
Certificates. In the absence of authority to the contrary, the Company
expects to apply the de minimis rule applicable to installment
obligations by using the Prepayment Assumption. The OID Regulations
provide a further special de minimis rule applicable to any Regular
Certificates that are "self-amortizing installment obligations," i.e.,
Regular Certificates that provide for equal payments composed of
principal and qualified stated interest payable unconditionally at least
annually during its entire term, with no significant additional
payment required at maturity. Under this special rule, original issue
discount on a self-amortizing installment obligation is generally
considered to be zero if it is less than .167% of the principal amount
of the obligation multiplied by the number of complete years from the date
of issue of such a Regular Certificate to its maturity date.

Generally, the original holder of a Regular Certificate that includes
a de minimis amount of original issue discount includes that original
issue discount in income as principal payments are made. The amount
included in income with respect to each principal payment equals a pro
rata portion of the entire amount of de minimis original issue discount
with respect to that Regular Certificate. Any de minimis amount of
original issue discount included in income by a holder of a Regular
Certificate is generally treated as a capital gain if the Regular
Certificate is a capital asset in the hands of the holder thereof.
Pursuant to the OID Regulations, a holder of a Regular Certificate that
uses the accrual method of tax accounting or that acquired such Regular
Certificate on or after April 4, 1994, may, however, elect to include in
gross income all interest that accrues on a Regular Certificate, including
any de minimis original issue discount and market discount, by using the
constant yield method described below with respect to original issue
discount.

The stated redemption price at maturity of a Regular Certificate
generally will be equal to the sum of all payments, whether denominated as
principal or interest, to be made with respect thereto other than
"qualified stated interest." Pursuant to the OID Regulation, qualified
stated interest is stated interest that is unconditionally payable at
least annually at a single fixed rate of interest (or, under certain
circumstances, a variable rate tied to an objective index) during the
entire term of the Regular Certificate (including short periods). It is
possible that the IRS could assert that the stated rate of interest on the
Certificates is not unconditionally payable or otherwise does not qualify
as qualified stated interest. Such position, if successful, would require
all holders of Certificates to accrue all income on the Certificates under
the OID Regulations. The Company, however, intends to treat all stated
interest on the Certificates as qualified stated interest. Under the OID
Regulations, certain variable interest rates payable on Regular Certif-
icates, including rates based upon the weighted average interest rate of a
Pool of Contracts, may not be treated as qualified stated interest. In
such case, the OID Regulations would treat interest under such rates as
contingent interest which generally must be included in income by the
Regular Certificateholder when the interest becomes fixed, as opposed to
when it accrues. Until further guidance is issued concerning the
treatment of such interest payable on Regular Certificates, the REMIC will
treat such interest as being payable at a variable rate tied to a single
objective index of market rates. Prospective investors should consult
their tax advisors regarding the treatment of such interest under the OID
Regulations. In the absence of authority to the contrary and if otherwise
appropriate, the Company expects to determine the stated redemption price
at maturity of a Regular Certificate by assuming that the anticipated rate
of prepayment for all Contracts will occur in such a manner that the
initial Remittance Rate for a Certificate will not change. Accordingly,
interest at the initial Remittance Rate will constitute qualified stated
interest payments for purposes of applying the original issue discount
provisions of the Code. In general, the issue price of a Regular
Certificate is the first price at which a substantial amount of the Regular
Certificates of such class are sold for money to the public (excluding
bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers). If a portion
of the initial offering price of a Regular Certificate is allocable to
interest that has accrued prior to its date of issue, the issue price of
such a Regular Certificate includes that pre-issuance accrued interest.

If the Regular Certificates are determined to be issued with original
issue discount, a holder of a Regular Certificate must generally include
the original issue discount in ordinary gross income for federal income
tax purposes as it accrues in advance of the receipt of any cash
attributable to such income. The amount of original issue discount, if
any, required to be included in a Regular Certificateholder's ordinary
gross income for federal income tax purposes in any taxable year will be
computed in accordance with Section 1272(a) of the Code and the OID
Regulations. Under such Section and the OID Regulations, original issue
discount accrues on a daily basis under a constant yield method that takes
into account the compounding of interest. The amount of original issue
discount to be included in income by a holder of a debt instrument, such
as a Regular Certificate, under which principal payments may be subject to
acceleration because of prepayments of other debt obligations securing
such instruments, is computed by taking into account the Prepayment
Assumption.

The amount of original issue discount included in income by a holder
of a Regular Certificate is the sum of the "daily portions" of the
original issue discount for each day during the taxable year on which the
holder held the Regular Certificate. The daily portions of original issue
discount are determined by allocating to each day in any "accrual period"
a pro rata portion of the excess, if any, of the same of (i) the present
value of all remaining payments to be made on the Regular Certificate as
of the close of the "accrual period" and (ii) the payments during the
"accrual period" of amounts included in the stated redemption price of the
Regular Certificate over the "adjusted issue price" of the Regular Certif-
icate at the beginning of the "accrual period." Generally, the "accrual
period" for the Regular Certificates corresponds to the intervals at which
amounts are paid or compounded with respect to such Regular Certificate,
beginning with their date of issuance and ending with the maturity date.
The "adjusted issue price" of a Regular Certificate at the beginning of
any accrual period is the sum of the issue price and accrued original
issue discount for each prior accrual period reduced by the amount of pay-
ments other than payments of qualified stated interest made during each
prior accrual period. The Code requires the present value of the
remaining payments to be determined on the bases of (a) the original yield
to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual
period), (b) events, including actual prepayments, which have occurred
before the close of the accrual period, and (c) the assumption that the
remaining payments will be made in accordance with the original Prepayment
Assumption. The effect of this method is to increase the portions of
original issue discount that a Regular Certificateholder must include in
income to take into account prepayments with respect to the Contracts held
by the Trust Fund that occur at a rate that exceeds the Prepayment
Assumption and to decrease (but not below zero for any period) the
portions of original issue discount that a Regular Certificateholder must
include in income to take into account prepayments with respect to the
Contracts that occur at a rate that is slower than the Prepayment
Assumption. Although original issue discount will be reported to Regular
Certificateholders based on the Prepayment Assumption, no representation
is made to Regular Certificateholders that the Contracts will be prepaid
at that rate or at any other rate.

A subsequent purchaser of a Regular Certificate will also be required
to include in such purchaser's ordinary gross income for federal income
tax purposes the original issue discount, if any, accruing with respect to
such Regular Certificate, unless the price paid equals or exceeds the
Regular Certificate's outstanding principal amount. If the price paid
exceeds the sum of the Regular Certificate's issue price plus the
aggregate amount of original issue discount accrued with respect to the
Regular Certificate, but does not equal or exceed the outstanding
principal amount of the Regular Certificate, the amount of original issue
discount to be accrued will be reduced in accordance with a formula set
forth in Section 1272(a)(7)(B) of the Code.

The Company believes, upon the advice of Brown & Wood LLP, special
tax counsel to the Company, that the holder of a Regular Certificate
determined to be issued with non-de minimis original issue discount will
be required to include the original issue discount in ordinary gross
income for federal income tax purposes computed in the manner described
above. However, the OID Regulations either do not address or are subject
to varying interpretations with respect to several issues concerning the
computation of original issue discount for obligations such as the Regular
Certificates.

Variable Rate Regular Certificates. Regular Certificates may bear
interest at a variable rate. Under the OID Regulations, if a variable
rate Regular Certificate provides for qualified stated interest payments
computed on the basis of certain qualified floating rates or objective
rates, then any original issue discount on such a Regular Certificate is
computed and accrued under the same methodology that applies to Regular
Certificates paying qualified stated interest at a fixed rate. See the
discussion above under "REMIC Series -- Original Issue Discount."
Accordingly, if the issue price of such a Regular Certificate is equal to
its stated redemption price at maturity, the Regular Certificate will not
have any original issue discount.

For purposes of applying the original issue discount provisions of
the Code, all or a portion of the interest payable with respect to a
variable rate Regular Certificate may not be treated as qualified stated
interest in certain circumstances, including the following: (i) if the
variable rate of interest is subject to one or more minimum or maximum
rate floors or ceilings which are not fixed throughout the term of the
Regular Certificate and which are reasonably expected as of the issue date
to cause the rate in certain accrual periods to be significantly higher or
lower than the overall expected return on the Regular Certificate
determined without such floor or ceiling; or (ii) if it is reasonably
expected that the average value of the variable rate during the first half
of the term of the Regular Certificate will be either significantly less
than or significantly greater than the average value of the rate during
the final half of the term of the Regular Certificate. In these
situations, as well as others, it is unclear under the OID Regulations
whether such interest payments constitute qualified stated interest
payments, or must be treated either as part of a Regular Certificate's
stated redemption price at maturity resulting in original issue discount,
or represent contingent payments. The amended OID Regulations issued on
June 11, 1996 generally require the accrual of original issue discount on
contingent payment debt instruments based on the comparable yield of fixed
rate debt instruments with similar terms and conditions, followed by
adjustments to reflect the differences between the payments so projected
and the actual contingent payments. Although the new rules technically do
not adequately address certain issues relevant to, or applicable to,
prepayable securities such as REMIC regular interests, in the absence of
other authority, the Servicer intends to be guided by certain principles
of the OID Regulations applicable to variable rate debt instruments in
determining whether such Certificates should be treated as issued with
original issue discount and in adapting the provisions of Section
1272(a)(6) of the Code to such Certificates for the purpose of preparing
reports furnished to Certificateholders and the IRS. Investors acquiring
Regular Certificates whose rates are subject to the variations outlined
above should consult their tax advisors concerning their appropriate tax
treatment.

If a variable rate Regular Certificate is deemed to have been issued
with original issue discount, as described above, the amount of original
issue discount accrues on a daily basis under a constant yield method that
takes into account the compounding of interest; provided, however, that
the interest associated with such a Regular Certificate generally is
assumed to remain constant throughout the term of the Regular Certificate
at a rate that, in the case of a qualified floating rate, equals the value
of such qualified floating rate as of the issue date of the Regular
Certificate, or, in the case of an objective rate, at a fixed rate that
reflects the yield that is reasonably expected for the Regular
Certificate. A holder of such a Regular Certificate would then recognize
original issue discount during each accrual period which is calculated
based upon such Regular Certificate's assumed yield to maturity,
adjusted to reflect the difference between the assumed and actual
interest rate.

The OID Regulations either do not address or are subject to varying
interpretations with respect to several issues concerning the computation
of original issue discount with respect to the Regular Certificates,
including variable rate Regular Certificates. Additional information
regarding the manner of reporting original issue discount to the Service
and to holders of variable rate Regular Certificates will be set forth in
the Prospectus Supplement relating to the issuance of such Regular
Certificates.

Market Discount. Regular Certificates, whether or not issued with
original issue discount, will be subject to the market discount rules of
the Code. A purchaser of a Regular Certificate who purchases the Regular
Certificate at a market discount (i.e., a discount from its original issue
price plus any accrued original issue discount, if any, as described
above) will be required to recognize accrued market discount as
ordinary income as payments of principal are received on such Regular
Certificate or upon the sale or exchange of the Regular Certificate. In
general, the holder of a Regular Certificate may elect to treat market
discount as accruing either (i) under a constant yield method that is
similar to the method for the accrual of original issue discount or (ii)
in proportion to accruals of original issue discount (or, if there is no
original issue discount, in proportion to accruals of stated interest), in
each case computed taking into account the Prepayment Assumption.

The Code provides that the market discount in respect of a Regular
Certificate will be considered to be zero if the amount allocable to the
Regular Certificate is less than 0.25% of the Regular Certificate's stated
redemption price at maturity multiplied by the number of complete years
remaining to its maturity after the holder acquired the obligation. If
market discount is treated as de minimis under this rule, the actual
discount would be allocated among a portion of each scheduled distribution
representing the stated redemption price of such Regular Certificate and
that portion of the discount allocable to such distribution would be
reported as income when such distribution occurs or is due.

The Code further provides that any principal payment with respect to
a Regular Certificate acquired with market discount or any gain on
disposition of such a Regular Certificate shall be treated as ordinary
income to the extent it does not exceed the accrued market discount at the
time of such payment. The amount of accrued market discount for purposes
of determining the amount of ordinary income to be recognized with respect
to subsequent payments on such a Regular Certificate is to be reduced by
the amount previously treated as ordinary income.

The Code grants authority to the Treasury Department to issue
regulations providing for the computation of accrued market discount on
debt instruments such as the Regular Certificates. Until such time as
regulations are issued, rules described in the legislative history for
these provisions of the Code will apply. Under those rules, as described
above, the holder of a Regular Certificate with market discount may elect
to accrue market discount either on the basis of a constant interest rate
or according to certain other methods. Certificateholders who acquire a
Regular Certificate at a market discount should consult their tax advisors
concerning various methods which are available for accruing that market
discount.

In general, limitations imposed by the Code that are intended to
match deductions with the taxation of income may require a holder of a
Regular Certificate having market discount to defer a portion of the
interest deductions attributable to any indebtedness incurred or continued
to purchase or carry such Regular Certificate. Alternatively, a holder of
a Regular Certificate may elect to include market discount in gross income
as it accrues and, if he makes such an election, is exempt from this rule.
The adjusted basis of a Regular Certificate subject to such election will
be increased to reflect market discount included in gross income, thereby
reducing any gain or increasing any loss on a sale or taxable disposition.

Amortizable Premium. A holder of a Regular Certificate who holds the
Regular Certificate as a capital asset and who purchased the Regular
Certificate at a cost greater than its outstanding principal amount will
be considered to have purchased the Regular Certificate at a premium. In
general, the Regular Certificateholder may elect to deduct the amortizable
bond premium as it accrues under a constant yield method. A Regular
Certificateholder's tax basis in the Regular Certificate will be reduced
by the amount of the amortizable bond premium deducted. In addition, it
appears that the same methods which apply to the accrual of market
discount on installment obligations are intended to apply in computing the
amortizable bond premium deduction with respect to a Regular Certificate.
It is not clear, however, (i) whether the alternatives to the constant-
yield method which may be available for the accrual of market discount are
available for amortizing premium on Regular Certificates and (ii) whether
the Prepayment Assumption should be taken into account in determining the
term of a Regular Certificate for this purpose. Certificateholders who
pay a premium for a Regular Certificate should consult their tax advisors
concerning such an election and rules for determining the method for
amortizing bond premium.

Gain or Loss on Disposition. If a Regular Certificate is sold, the
seller will recognize gain or loss equal to the difference between the
amount realized from the sale and the seller's adjusted basis in such
Regular Certificate. The adjusted basis generally will equal the cost of
such Regular Certificate to the seller, increased by any original issue
discount included in the seller's ordinary gross income with respect to
such Regular Certificate and reduced (but not below zero) by any payments
on the Regular Certificate previously received or accrued by the seller
(other than qualified stated interest payment) and any amortizable
premium. Similarly, a Regular Certificateholder who receives a principal
payment with respect to a Regular Certificate will recognize gain or loss
equal to the difference between the amount of the payment and the holder's
allocable portion of his or her adjusted basis in the Regular Certificate.
Except as discussed below or with respect to market discount, any gain or
loss recognized upon a sale, exchange, retirement, or other disposition of
a Regular Certificate will be capital gain if the Regular Certificate is
held as a capital asset.

Gain from the disposition of a Regular Certificate that might
otherwise be capital gain, including any gain attributable to de minimis
original issue discount, will be treated as ordinary income to the extent
of the excess, if any, of (i) the amount that would have been included in
the holder's income if the yield on such Regular Certificate had equaled
110% of the applicable federal rate determined as of the beginning of such
holder's holding period, over (ii) the amount of ordinary income actually
recognized by the holder with respect to such Regular Certificate.

If the Company is determined to have intended on the date of issue of
the Regular Certificates to call all or any portion of the Regular
Certificates prior to their stated maturity within the meaning of Section
1271(a)(2)(A) of the Code, any gain realized upon a sale, exchange,
retirement, or other disposition of a Regular Certificate would be
considered ordinary income to the extent it does not exceed the
unrecognized portion of the original issue discount, if any, with respect
to the Regular Certificate. The OID Regulations provide that the
intention to call rule will not be applied to mortgage-backed securities
such as the Regular Certificates. In addition, under the OID Regulations,
a mandatory sinking fund or call option is not evidence of an intention to
call.

Taxation of Residual Interests. Generally, the "daily portions" of
the taxable income or net loss of a REMIC will be included as ordinary
income or loss in determining the taxable income of holders of Residual
Certificates ("Residual Holders"), and will not be taxed separately to the
REMIC. The daily portions are determined by allocating the REMIC's
taxable income or net loss for each calendar quarter ratably to each day
in such quarter and by allocating such daily portion among the Residual
Holders in proportion to their respective holdings of Residual
Certificates in the REMIC on such day.

REMIC taxable income is generally determined in the same manner as
the taxable income of an individual using the accrual method of accounting
except that (i) the limitation on deductibility of investment interest
expense and expenses for the production of income do not apply, (ii) all
bad loans will be deductible as business bad debts, and (iii) the
limitation on the deductibility of interest and expenses related to tax-
exempt income will apply. REMIC taxable income generally means a REMIC's
gross income, including interest, original issue discount income, and
market discount income, if any, on the Contracts, plus income on
reinvestment of cash flows and reserve assets, minus deductions, including
interest and original issue discount expense on the Regular Certificates,
servicing fees on the Contracts, other administrative expenses of a REMIC,
and amortization of premium, if any, with respect to the Contracts.

The taxable income recognized by a Residual Holder in any taxable
year will be affected by, among other factors, the relationship between
the timing of interest, original issue discount or market discount income,
or amortization of premium with respect to the Contracts, on the one hand,
and the timing of deductions for interest (including original issue
discount) on the Regular Certificates, on the other hand. In the event
that an interest in the Contracts is acquired by a REMIC at a discount,
and one or more of such Contracts is prepaid, the Residual Holder may
recognize taxable income without being entitled to receive a corresponding
cash distribution because (i) the prepayment may be used in whole or in
part to make distributions on Regular Certificates, and (ii) the discount
on the Contracts which is included in a REMIC's income may exceed its
deduction with respect to the distributions on those Regular Certificates.
When there is more than one class of Regular Certificates that receive
payments sequentially (i.e., a fast-pay, slow-pay structure), this
mismatching of income and deductions is particularly likely to occur in
the early years following issuance of the Regular Certificates, when
distributions are being made in respect of earlier classes of Regular
Certificates to the extent that such classes are not issued with
substantial discount. If taxable income attributable to such a
mismatching is realized, in general, losses would be allowed in later
years as distributions on the later classes of Regular Certificates are
made. Taxable income may also be greater in earlier years than in later
years as a result of the fact that interest expense deductions, expressed
as a percentage of the outstanding principal amount of Regular
Certificates, may increase over time as distributions are made on the
lower yielding classes of Regular Certificates, whereas interest income
with respect to any given Contract will remain constant over time as a
percentage of the outstanding principal amount of that loan (assuming it
bears interest at a fixed rate). Consequently, Residual Holders must have
sufficient other sources of cash to pay any federal, state, or local
income taxes due as a result of such mismatching, or such holders must
have unrelated deductions against which to offset such income, subject to
the discussion of "excess inclusions" below under "REMIC Series --
Limitations on Offset or Exemption of REMIC Income." The mismatching of
income and deductions described in this paragraph, if present with respect
to a series of Certificates, may have a significant adverse effect upon
the Residual Holder's after-tax rate of return.

The amount of any net loss of a REMIC that may be taken into account
by the Residual Holder is limited to the adjusted basis of the Residual
Certificate as of the close of the quarter (or time of disposition of the
Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser
of a Residual Certificate is the amount paid for such Residual
Certificate. Such adjusted basis will be increased by the amount of
taxable income of the REMIC reportable by the Residual Holder and
decreased by the amount of loss of the REMIC reportable by the Residual
Holder. A cash distribution from the REMIC also will reduce such adjusted
basis (but not below zero). Any loss that is disallowed on account of
this limitation may be carried over indefinitely by the Residual Holder
for whom such loss was disallowed and may be used by such Residual Holder
only to offset any income generated by the same REMIC.

If a Residual Certificate has a negative value, it is not clear
whether its issue price would be considered to be zero or such negative
amount for purposes of determining the REMIC's basis in its assets. The
REMIC Regulations imply that residual interest cannot have a negative
basis or a negative issue price. However, the preamble to the REMIC
Regulations indicates that, while existing tax rules do not accommodate
such concepts, the Service is considering the tax treatment of these types
of residual interest, including the proper tax treatment of a payment made
by the transferor of such a residual interest to induce the transferee to
acquire that interest. Absent regulations or administrative guidance to
the contrary, the Company does not intend to treat a class of Residual
Certificates as having a value of less than zero for purposes of
determining the basis of the related REMIC in its assets.

Further, to the extent that the initial adjusted basis of a Residual
Holder(other than an original holder) in the Residual Certificate is
greater than the corresponding portion of the REMIC's basis in the
Contracts, the Residual Holder will not recover a portion of such basis
until termination of the REMIC unless Treasury Regulations yet to be
issued provide for periodic adjustments to the REMIC income otherwise
reportable by such holder.

Treatment of Certain Items of REMIC Income and Expense. Generally, a
REMIC's deductions for original issue discount will be determined in the
same manner as original issue discount income on Regular Certificates as
described above under "REMIC Series -- Original Issue Discount" and "---
Variable Rate Regular Certificates," without regard to the de minimis rule
described therein.

The REMIC will have market discount income in respect of the
Contracts if, in general, the basis of the REMIC in such Contracts is
exceeded by their unpaid principal balances. The REMIC's basis in such
Contracts is generally the fair market value of the Contracts immediately
after the transfer thereof to the REMIC (which may equal a proportionate
part of the aggregate fair market value of the REMIC Certificates). In
respect of the Contracts that have market discount to which Code Section
1276 applies, the Market discount income generally should accrue in the
manner described above under "REMIC Series -- Market Discount."

Generally, if the basis of a REMIC in the Contracts exceeds the
unpaid principal balances thereof, the REMIC will be considered to have
acquired such Contracts at a premium equal to the amount of such excess.
As stated above, the REMIC's basis in the Contracts is the fair market
value of the Contracts immediately after the transfer thereof to the
REMIC. Generally, a person that holds a Contract as a capital asset may
elect to amortize premium on the Contracts under a constant interest
method. See the discussion under "REMIC Series -- Amortizable Premium."

Limitations on Offset or Exemption of REMIC Income. If the aggregate
value of the Residual Certificates relative to the aggregate value of the
Regular Certificates and Residual Certificates is considered to be
"significant," as described below, then a portion (but not all) of the
REMIC taxable income included in determining the federal income tax
liability of a Residual Holder will be subject to special treatment. That
portion, referred to as the "excess inclusion," is equal to the excess of
REMIC taxable income for the calendar quarter allocable to a Residual
Certificate over the daily accruals for such quarterly period of (i) 120%
of the long-term applicable Federal rate that would have applied to the
Residual Certificate (if it were a debt instrument) on the Startup Day
under Section 1274(d) of the Code, multiplied by (ii) the adjusted issue
price of such Residual Certificate at the beginning of such quarterly
period. For this purpose, the adjusted issue price of a Residual
Certificate at the beginning of a quarter is the issue price of the
Residual Certificate, plus the amount of such daily accruals of REMIC
income described in this paragraph for all prior quarters decreased by any
distributions made with respect to such Residual Certificate prior to the
beginning of such quarterly period. The value of the Residual Certif-
icates would be significant in cases where the aggregate issue price
of the Residual Certificates is at least 2% of the aggregate issue price
of the Regular Certificates and Residual Certificates, and the anticipated
weighted average life of the Residual Certificates is at least 20% of the
anticipated weighted average life of the REMIC.

The portion of a Residual Holder's REMIC taxable income consisting of
the excess inclusions generally may not be offset by other deductions on
such Residual Holder's tax return, including net operating loss carry
forwards. Further, if the Residual Holder is an organization subject to
the tax on unrelated business income imposed by Section 511 of the Code,
the Residual Holder's excess inclusions will be treated an unrelated
business taxable income of such Residual Holder for purposes of Section
511. Finally, if a real estate investment trust or regulated investment
company owns a Residual Certificate, a portion (allocated under Treasury
Regulations yet to be issued) of dividends paid by such real estate
investment trust or regulated investment company could not be offset by
net operating losses of its shareholders, would constitute unrelated
business taxable income for tax-exempt shareholders, and would be
ineligible for reduction of withholding to certain persons who are not
U.S. persons.

An exception to the inability of a Residual Holder to offset excess
inclusions with unrelated deductions and net operating losses applies to
certain financial institutions described in Section 593 of the Code
("thrift institutions"). For purposes of applying this rule, all members
of an affiliated group filing a consolidated return are treated as one
taxpayer, except the thrift institutions to which Section 593 applies and
each of their subsidiaries formed to issue REMICs are treated as separate
corporations. Furthermore, the Code provides that regulations may be
issued to disallow the ability of a thrift institution to use deductions
to offset excess inclusions if necessary or appropriate to prevent the
avoidance of tax. A thrift institution may not so offset its excess
inclusions unless the Residual Certificates have "significant value,"
which requires that (i) the Residual Certificates have an issue price that
is at least equal to 2% of the aggregate of the issue prices of all
Residual Certificates and Regular Certificate with respect to the REMIC,
and (ii)the anticipated weighted average life of the Residual Certificates
is a least 20% of the anticipated weighted average life of the REMIC. The
anticipated weighted average life of the Residual Certificates is based on
all anticipated payments to be received with respect thereto (using the
Prepayment Assumption). The anticipated weighted average life of the
REMIC is the weighted average of the anticipated weighted average lives of
all classes of Certificates in the REMIC (computed using all anticipated
payments on a Regular Certificate with nominal or no principal). Finally,
an ordering rule under the REMIC Regulations provides that a thrift
institution may only offset its excess inclusion income with deductions
after it has first applied its deductions against income that is not
excess inclusion income. If applicable, the Prospectus Supplement with
respect to the series will set forth whether the Residual Certificates are
expected to have "significant value."

Restrictions on Transfer of Residual Certificates. As described
above under "REMIC Series -- Qualification as a REMIC," an interest in a
Residual Certificate may not be transferred to a Disqualified
Organization. If any legal or beneficial interest in a Residual
Certificate is, nonetheless, transferred to a Disqualified Organization, a
tax would be imposed in an amount equal to the product of (i) the present
value of the total anticipated excess inclusions with respect to such
Residual Certificate for periods after the transfer, and (ii) the highest
marginal federal income tax rate applicable to corporations. The
anticipated excess inclusions are based on actual prepayment experience to
the date of the transfer and projected payments based on the Prepayment
Assumption. The present value rate equals the applicable federal rate
under Section 1274(d) of the Code as of the date of the transfer for a
term ending on the close of the last quarter in which excess inclusions
are expected to accrue. Such rate is applied to the anticipated excess
inclusions from the end of the remaining calendar quarters in which they
arise to the date of the transfer. Such a tax generally would be imposed
on the transferor of the Residual Certificate, except that where such
transfer is through an agent (including a broker, nominee, or other
middleman) for a Disqualified Organization, the tax would instead by
imposed on such agent. However, a transferor of a Residual Certificate
would in no event be liable for such tax with respect to a transfer
if the transferee furnishes to the transferor an affidavit, under penalties
of perjury, that the transferee is not a Disqualified Organization and,
as of the time of the transfer, the transferor does not have the actual
knowledge that such affidavit is false. The tax also may be waived by
the Treasury Department if the Disqualified Organization promptly disposes
of the residual interest and the transferor pays such amount of tax as
the Treasury Department may require (presumably, a corporate tax on the
excess inclusion for the period the residual interest is actually
held by the Disqualified Organization).

In addition, if a "Pass-Through Entity" (as defined below) has excess
inclusion income with respect to a Residual Certificate during a taxable
year and a Disqualified Organization is the record holder of an equity
interest in such entity, then a tax is imposed on such entity equal to the
product of (i) the amount of excess inclusions on the Residual Certificate
that are allocable to the interest in the Pass-Through Entity during the
period such interest is held by such Disqualified Organization, and
(ii) the highest marginal federal income tax rate imposed on corporations.
Such tax would be deductible from the ordinary gross income of the Pass-
Through Entity during the period such interest is held by such
Disqualified Organization, and (iii) the highest marginal federal income
tax rate imposed on corporations. Such tax would be deductible from the
ordinary gross income of the Pass-Through Entity for the taxable year.
The Pass-Through Entity would not be liable for such tax if it has
received an affidavit from such record holder that it is not a
Disqualified Organization and, during the period such person is the record
holder of the Residual Certificate, the Pass-Through Entity would not be
liable for such tax if it has received an affidavit from such record
holder that it is not a Disqualified Organization and, during the period
such person is the record holder of the Residual Certificate, the Pass-
Through Entity does not have actual knowledge that such affidavit is
false.

For these purposes, a "Pass-Through Entity" means any regulated
investment company, real estate investment trust, common trust fund,
partnership, trust or estate and certain corporations operating on a
cooperative basis. Except as may be provided in Treasury Regulations, any
person holding an interest in a Pass-Through Entity as a nominee for
another will, with respect to such interest, be treated as a Pass-Through
Entity.

Noneconomic Residual Interests. The REMIC Regulations would
disregard certain transfers of Residual Certificates, in which case the
transferor would continue to be treated as the owner of the Residual
Certificates and thus would continue to be subject to tax on its allocable
portion of the net income of the REMIC. Under the REMIC Regulations, a
transfer of a "noneconomic residual interest" (as defined below) to a
Residual Holder is disregarded for all federal income tax purposed if a
significant purpose of the transfer is to enable the transferor to impede
the assessment or collection of tax. A residual interest in a REMIC
(including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of transfer, (i) the
present value of the expected future distributions on the residual
interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax rate in
effect for the year in which the transfer occurs, and (ii) the transferor
reasonably expects that the transferee will receive distributions from the
REMIC at or after the time at which taxes accrue on the anticipated excess
inclusions in an amount sufficient to satisfy the accrued taxes. The
anticipated excess inclusions and the present value rate are determined in
the same manner as set forth above. The REMIC Regulations explain that a
significant purpose to impede the assessment or collection of tax exists
if the transferor, at the time of the transfer, either knew or should have
known that the transferee would be unwilling or unable to pay taxes due on
its share of the taxable income of the REMIC. A safe harbor is provided
if (i) the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and found at
the time of the transferor that it understands that, as the holder of a
non-economic residual transferee represents to the transferor that it
understands that, as the holder of a non-economic residual interest, the
transferee may incur tax liabilities in excess of any cash flows generated
by the interest and that the transferee intends to pay taxes associated
with holding the residual interest as they become due. The Pooling and
Servicing Agreement with respect to each series of REMIC Certificates will
require the transferee of a Residual Certificate to certify to the
statements in clause (ii) of the preceding sentence as part of the affidavit
described above under "Restrictions on Transfer of Residual Certificates."

Mark-to-Market Rules. On December 28, 1993, the Service released
temporary regulations (the "Temporary Mark-to-Market Regulations")
relating to the requirement that a securities dealer mark to market
securities held for sale to customers. This mark-to-market requirement
applies to all securities owned by a dealer, except to the extent that the
dealer has specifically identified a security as held for investment. The
Temporary Mark-to-Market Regulations provide that, for purposes of this
mark-to-market requirement, a "negative value" REMIC Residual Certificate
is not treated as a security, and thus may not be marked to market. In
general, a REMIC Residual Certificate has negative value if, as of the
date a taxpayer acquires the REMIC Residual Certificate, the present value
of the tax liabilities associated with holding the REMIC Residual
Certificate exceeds the sum of (i) the present value of the expected
future distributions on the REMIC Residual Certificate, and (ii) the
present value of the anticipated tax savings associated with holding the
REMIC Residual Certificate as the REMIC generates losses. The amounts and
present values of the anticipated tax liabilities, expected future
distributions and anticipated tax savings are all to be determined using
(i) the prepayment and reinvestment assumptions adopted under Section
1272(a)(6) of the Code, or that would have been adopted had the REMIC's
regular interests been issued with original issue discount, (ii) any
required or permitted clean-up calls, or required qualified liquidation,
provided for in the REMIC's organizational documents, and (iii) a discount
rate equal to the "applicable Federal rate" (as specified in Section
1274(d)(1) of the Code) that would apply to a debt instrument issued on
the date of acquisition of the REMIC Residual Certificate. The Temporary
Mark-to-Market Regulations apply to taxable years ending on or after
December 31, 1993. Furthermore, the Temporary Mark-to-Market Regulations
provide the Service with the authority to treat any REMIC Residual
Certificate having substantially the same economic effect as a "negative
value" residual interest. In addition, the Service recently released
proposed regulations (the "Proposed Mark-to-Market Regulations") which
provide that a REMIC Residual Certificate acquired after January 3, 1995
cannot be marked-to-market. The Proposed Mark-to-Market Regulations change
the Temporary Mark-to-Market Regulations which, as noted above, permit a
REMIC Residual Certificate to be marked-to-market provided that it was not
a "negative value" residual interest and did not have the same economic
effect as a "negative value" residual interest. In addition, the Service
could issue subsequent regulations which could apply retroactively,
providing additional or different requirements with respect to such deemed
negative value residual interests. Any such regulations could also limit
the applicability of the mark-to-market requirements to residual interests
having economic value at the time of their acquisition. Prospective
purchasers of a REMIC Residual Certificate should consult their tax
advisors regarding the possible application of the Temporary Mark-to-
Market Regulations and Proposed Mark-to-Market Regulations to REMIC
Residual Certificates.

Sale or Exchange of a Residual Certificate. Upon the sale or
exchange of a Residual Certificate, the Residual Holder will recognize
gain or loss equal to the excess, if any, of the amount realized over the
adjusted basis as described above of such Residual Holder in such Residual
Certificate at the time of the sale or exchange. In addition to reporting
the taxable income of the REMIC, a Residual Holder will have taxable
income to the extent that any cash distribution to him from the REMIC
exceeds such adjusted basis on that Distribution Date. Such income will
be treated as gain from the sale or exchange of the Residual Certificate.
It is possible that the termination of the REMIC may be treated as a sale
or exchange of a Residual Holder's Residual Certificate, in which case, if
the Residual Holder has and adjusted basis in his Residual Certificate
remaining when his interest in the REMIC terminates, and if he holds such
Residual Certificate as a capital asset, then he will recognize a capital
loss at that time in the amount of such remaining adjusted basis.

The Conference Committee Report to the Tax Reform Act of 1986
provides that, except as provided in Treasury Regulations, the wash sale
rules of Code Section 1091 will apply to dispositions of Residual
Certificates where the seller of the Residual Certificate, during the
period beginning six months before the sale or disposition of the Residual
Certificate and ending six months after such sale or disposition, acquires
(or enters into any other transaction that results in the application of
Code Section 1091) any residual interest in any REMIC or any interest in a
"taxable mortgage pool" (such as a non-REMIC owner trust) that is
economically comparable to a Residual Certificate.

Certain Other Taxes on the REMIC. The REMIC provisions of the Code
impose a 100% tax on any net income derived by a REMIC from certain
prohibited transactions. Such transactions are: (i) any disposition of a
qualified mortgage, other than pursuant to the substitution of a qualified
replacement mortgage for a qualified mortgage (or the repurchase in lieu
of substitution of a defective obligation), a disposition incident to the
foreclosure, default, or imminent default of a mortgage, the bankruptcy or
insolvency of the REMIC, or a qualified liquidation of the REMIC; (ii) the
receipt of income from assets other than qualified mortgages and permitted
investments; (iii) the receipt of compensation for services; and (iv) the
receipt of gain from the dispositions of cash flow investments. The REMIC
Regulations provide that the modification of the terms of a Contract
occasioned by default or a reasonably foreseeable default of the Contract,
the assumption of the Contract, the waiver of a due-on-sale clause or the
conversion of an interest rate by an Obligor pursuant to the terms of a
convertible adjustable-rate Contract will not be treated as a disposition
of the Contract. In the event that a REMIC holds Convertible ARM Loans
which are convertible at the option of the Obligor into fixed-rate, fully
amortizing, level payment Contracts, a sale of such Contracts by the REMIC
pursuant to a purchase agreement or other contract with the Company or
other party, if and when the Obligor elects to so convert the terms of the
Contract, is not expected to result in a prohibited transaction for the
REMIC. The Code also imposes a 100% tax on contributions to a REMIC made
after the Startup Day, unless such contributions are payments made to
facilitate a cleanup call or a qualified liquidation of the REMIC,
payments in the nature of a guaranty, contributions during the three-month
period beginning on the Startup Day or contributions to a qualified
reserve fund of the REMIC by a holder of a residual interest in the
foreclosure property that the REMIC derives at the highest corporate rate
on certain net income from foreclosure property that the REMIC derives
from the management, sale, or disposition of any real property, or any
personal property incident thereto, acquired by the REMIC in connection
with the default or imminent default of a loan. Generally, it is not
anticipated that a REMIC will generate a significant amount of such
income.

Liquidation of the REMIC. A REMIC may liquidate without the
imposition of entity-level tax only in a "qualified liquidation." A
liquidation is considered qualified if a REMIC adopts a plan of complete
liquidation (which may be accomplished by designating in the REMIC's final
tax return a date on which such adoption is deemed to occur) and sells all
of its assets (other than cash) within the ninety-day period beginning on
the date of the adoption of the plan of liquidation, provided that it
distributes to holders of Regular or Residual Certificates, on or before
the last day of the ninety-day liquidation period, all the proceeds of the
liquidation (including all cash), less amounts retained to meet claims.

Taxation of Certain Foreign Investors. For purposes of this
discussion, a "Foreign Holder" is a Certificateholder who holds a Regular
Certificate and who is not (i) a citizen or resident of the United States,
(ii) a corporation, partnership, or other entity organized in or under the
laws of the United States or a political subdivision thereof or (iii) an
estate or trust the income of which is included in gross income for United
States tax purposes regardless of its source. Unless the interest on a
Regular Certificate is effectively connected with the conduct by the
Foreign Holder of a trade or business within the United States, the
Foreign Holder is not subject to federal income or withholding tax on
interest (or original issue discount, if any) on a Regular Certificate
(subject to possible backup withholding of tax, discussed below), provided
the Foreign Holder is not a controlled foreign corporation related to the
Company and does not own actually or constructively 10% or more of the
voting stock of the Company. To qualify for this tax exemption, the
Foreign Holder will be required to provide periodically a statement signed
under penalties of perjury certifying that the Foreign Holder meets the
requirements for treatment as a Foreign Holder and providing the Foreign
Holder's name and address. The statement, which may be made on a Form W-8
or substantially similar substitute form, generally must be provided
in the year a payment occurs or it either of the two preceding years.
The intermediaries, to the person that otherwise would withhold tax. This
exemption may not apply to a Foreign Holder that owns both Regular
Certificates and Residual Certificates. If the interest on a Regular
Certificate is effectively connected with the conduct by a Foreign Holder of
a trade or business within the United States, then the Foreign Holder will
be subject to tax at regular graduated rates. Foreign Holders should consult
their own advisors regarding the specific tax consequences of their owning a
Regular Certificate.

Any gain recognized by a Foreign Holder upon a sale, retirement or
other taxable disposition of a Regular Certificate generally will not be
subject to United States federal income tax unless either (i) the Foreign
Holder is a non-resident alien individual who holds the Regular
Certificate as a capital asset and who is present in the United States for
183 days or more in the taxable year of the disposition and either the
gain is attributable to an office or other fixed place of business
maintained in the U.S. by the individual or the individual has a "tax
home" in the United States, or (ii) the gain is effectively connected with
the conduct by the Foreign Holder of a trade or business within the United
States.

A Regular Certificate will not be included in the estate of a Foreign
Holder who does not own actually or constructively 10% or more of the
voting stock of the Company.

Backup Withholding. Under certain circumstances, a REMIC
Certificateholder may be subject to "backup withholding" at a 31% rate.
Backup withholding may apply to a REMIC Certificateholder who is a United
States person if the holder, among other circumstances, fails to furnish
his Social Security number or other taxpayer identification number to the
Trustee. Backup withholding may apply, under certain circumstances, to a
REMIC Certificateholder who is a foreign person if the REMIC
Certificateholder fails to provide the Trustee or the REMIC
Certificateholder's securities broker with the statement necessary to
establish the exemption from federal income and withholding tax on
interest on the REMIC Certificates. Backup withholding, however, does not
apply to payments on a Certificate made to certain exempt recipients, such
as corporations and tax-exempt organizations, and to certain foreign
persons. REMIC Certificateholders should consult their tax advisors for
additional information concerning the potential application of backup
withholding to payments received by them with respect to a Certificate.

Reporting Requirements and Tax Administration. The Company will
report annually to the Service, holders of record of the Regular
Certificates that are not excepted from the reporting requirements and, to
the extent required by the Code, other interested parties, information
with respect to the interest paid or accrued on the Regular Certificates,
original issue discount, if any, accruing on the Regular Certificates and
information necessary to compute the accrual of any market discount or the
amortization of any premium on the Regular Certificates.

The Treasury Department has issued temporary regulations concerning
certain aspects of REMIC tax administration. Under those regulations, a
Residual Certificateholder must be designated as the REMICs "tax matters
person." The tax matters person, generally, has responsibility for
overseeing and providing notice to the other Residual Certificateholders
of certain administrative and judicial proceedings regarding the REMIC's
tax affairs. The Company will be designated as tax matters person for
each REMIC, and in conjunction with the Trustee will act as the agent of
the Residual Certificateholders in the preparation and filing of the
REMIC's federal and state income tax and other information returns.

NON-REMIC SERIES

Tax Status of the Trust Fund. In the case of a Trust Fund evidenced
by a series or sub-series of Certificates, or a segregated portion
thereof, with respect to which a REMIC Election is not made ("Non-REMIC
Certificates"), Brown & Wood LLP, special tax counsel to the Company, will
have advised the Company that, in their opinion, each Contract Pool and
the arrangement to be administered by the Company under which the Trustee
will hold and the Company will be obligated to service the Contracts and
pursuant to which Non-REMIC Certificates will be issued to Non-REMIC
Certificateholders will not be classified as an association taxable as a
corporation or a "taxable mortgage pool," within the meaning of Code
Section 7701(i), but rather will be classified as a grantor trust under
Subpart E, Part 1 of Subchapter J of the Code. Each Non-REMIC
Certificateholder will be treated as the owner of a pro rata undivided
interest in the ordinary income and corpus portions of the trust
attributable to the Contract Pool in which its Certificate evidences an
ownership interest and will be considered the equitable owner of a pro
rata undivided interest in each of the Contracts included therein.

Tax Status of Non-REMIC Certificates. In general, (i) Certificates
held by a financial institution taxed as described in Section 593(a) of
the Code may represent interests in "qualifying real property loans"
within the meaning of Section 593(d) of the Code; (ii) Certificates held
by a "domestic building and loan association" within the meaning of
Section 7701(a)(19) of the Code may be considered to represent "qualifying
real property loans" within the meaning of Section 7701(a)(19)(C)(v) of
the Code; and (iii) Certificates held by a real estate investment trust
may constitute "real estate assets" within the meaning of Section
856(c)(5)(A) of the Code and interest thereon may be considered "interest
on obligations secured by mortgages on real property" within the meaning
of Section 856(c)(3)(B) of the Code. See the discussions of such Code
provisions above under "REMIC Series Tax Status of REMIC Certificates."
Investors should review the related Prospectus Supplement for a discussion
of the treatment of Non-REMIC Certificates and Contracts under these Code
sections and should, in addition, consult with their own tax advisors with
respect to these matters.

Tax Treatment of Non-REMIC Certificates. Non-REMIC
Certificateholders will be required to report on their federal income tax
returns, and in a manner consistent with their respective methods of
accounting, their pro rata share of the entire income arising from the
Contracts comprising such Contract Pool, including interest, original
issue discount, if any, prepayment fees, assumption fees, and late
payments charges received by the Company, and any gain upon disposition of
such Contracts. (For purposes of this discussion, the term "disposition,"
when used with respect to the Contracts, includes scheduled or prepaid
collections with respect to the Contracts, as well as the sale or exchange
of a Non-REMIC Certificate.) Non-REMIC Certificateholders will be entitled
under Section 162 or 212 of the Code to deduct their pro rata share of
related servicing fees, administrative and other non-interest expenses,
including assumption fees and late payment charges retained by the
Company. An individual, an estate, or a trust that holds a Non-REMIC
Certificate either directly or through a pass-through entity will be
allowed to deduct such expenses under Section 212 of the Code only to the
extent that, in the Aggregate and combined with certain other itemized
deductions, they exceed 2% of the adjusted gross income of the holder. In
addition, Section 68 of the Code provides that the amount of itemized
deductions (including those provided for in Section 212 of the Code)
otherwise allowable for the taxable year for an individual whose adjusted
gross income exceeds a threshold amount specified in the Code ($100,000 in
the case of a joint return) will be reduced by the lesser of (i) 3% of the
excess of adjusted gross income over the specified threshold amount or
(ii) 80% of the amount of itemized deductions otherwise allowable for such
taxable year. To the extent that a Non-REMIC Certificateholder is not
permitted to deduct servicing fees allocable to a Non-REMIC Certificate,
the taxable income of the Non-REMIC Certificateholder attributable to that
Non-REMIC Certificate will exceed the net cash distributions related to
such income. Non-REMIC Certificateholders may deduct any loss on
disposition of the Contracts to the extent permitted under the Code.

Under current Service interpretations of applicable Treasury
Regulations the Company would be able to sell or otherwise dispose of any
subordinated Non-REMIC Certificates. Accordingly, the Company expects to
offer subordinated Non-REMIC Certificates for sale to investors. In
general, such subordination should not affect the federal income tax
treatment of either the subordinated or senior Certificates. Holders of
subordinated classes of Certificates should be able to recognize any
losses allocated to such class when and if losses are realized.

To the extent that any of the Contracts comprising a Contract Pool
were originated on or after March 2, 1984 and under circumstances giving
rise to original issue discount, Certificateholders will be required to
report annually an amount of additional interest income attributable to
such discount in such Contracts prior to receipt of cash related to such
discount. See the discussion above under "REMIC Series -- Original Issue
Discount." Similarly, Code provisions concerning market discount and
amortizable premium will apply to the Contracts comprising a Contract Pool
to the extent that the loans were originated after July 18, 1984 and
September 27, 1985, respectively. See the discussions above under "REMIC
Series -- Market Discount" and "REMIC Series -- Amortizable Premium."

Stripped Non-REMIC Certificates. Certain classes of Non-REMIC
Certificates may be subject to the stripped bond rules of Section 1286 of
the Code and for purposes of this discussion will be referred to as
"Stripped Certificates." In general, a Stripped Certificate will be
subject to the stripped bond rules where there has been a separation of
ownership of the right to receive some or all of the principal payments on
a Contract from ownership of the right to receive some or all of the
related interest payments. Non-REMIC Certificates will constitute
Stripped Certificates and will be subject to these rules under various
circumstances, including the following: (i) if any servicing compensation
is deemed to exceed a reasonable amount; (ii) if the Company or any other
party retains a Retained Yield with respect to the Contracts comprising a
Contract Pool; (iii) if two or more classes of Non-REMIC Certificates are
issued representing the right to non-pro rata percentages of the interest
or principal payments on the Contracts; or (iv) if Non-REMIC Certificates
are issued which represent the right to interest only payments or
principal only payments.

Although not entirely clear, each Stripped Certificate should be
considered to be a single debt instrument issued on the day it is
purchased for purposes of calculating any original issue discount.
Original issue discount with respect to a Stripped Certificate, if any,
must be included in ordinary gross income for federal income tax purposes
as it accrues in accordance with the constant-yield method that takes into
account the compounding of interest and such accrual of income may be in
advance of the receipt of any cash attributable to such income. See
"REMIC Series -- Original Issue Discount" above. For purposes of applying
the original issue discount provisions of the Code, the issue price of a
Stripped Certificate will be the purchase price paid by each holder
thereof and the stated redemption price at maturity may include the
aggregate amount of all payments to be made with respect to the Stripped
Certificate whether or not denominated as interest. The amount of
original issue discount with respect to a Stripped Certificate may be
treated as zero under the original issue discount de minimis rules
described above. A purchaser of a Stripped Certificate will be required
to account for any discount on the certificate as market discount rather
than original issue discount if either (i) the amount of original issue
discount with respect to the certificate was treated as zero under the
original issue discount de minimis rule when the certificate was stripped
or (ii) no more than 100 basis points (including any amount of servicing
in excess of reasonable servicing) is stripped off of the Contracts. See
"REMIC Series -- Market Discount" above.

When an investor purchases more than one class of Stripped
Certificates it is currently unclear whether for federal income tax
purposes such classes of Stripped Certificates should be treated
separately or aggregated for purposes of applying the original issue
discount rules described above.

It is possible that the Service may take a contrary position with
respect to some or all of the foregoing tax consequences. For example, a
holder of a Stripped Certificate may be treated as the owner of (i) as
many stripped bonds or stripped coupons as there are scheduled payments of
principal and/or interest on each Contract or (ii) a separate installment
obligation for each Contract representing the Stripped Certificate's pro
rata share of price; and/or interest payments to be made with respect
thereto. As a result of these possible alternative characterizations,
investors should consult their own tax advisors regarding the proper
treatment of Stripped Certificates for federal income tax purposes.

Gain or Loss on Disposition. Upon sale or exchange of a Non-REMIC
Certificate, a Non-REMIC Certificateholder will recognize gain or loss
equal to the difference between the amount realized in the sale and its
aggregate adjusted basis in the Contracts represented by the Non-REMIC
Certificate. Generally, the aggregate adjusted basis will equal the Non-
REMIC Certificateholder's cost for the Non-REMIC Certificate increased by
the amount of any previously reported gain with respect to the Non-REMIC
Certificate and decreased by the amount of any losses previously reported
with respect to the Non-REMIC Certificate and the amount of any
distributions received thereon. Except as provided above with respect to
the original issue discount and market discount rules, any such gain or
loss would be capital gain or loss if the Non-REMIC Certificate was held
as a capital asset.

Recharacterization of Servicing Fees. The servicing compensation to
be received by the Servicer may be questioned by the Service with respect
to certain Certificates or Contracts as exceeding a reasonable fee for the
services being performed in exchange therefor, and a portion of such
servicing compensation could be recharacterized as an ownership interest
retained by the Servicer or other party in a portion of the interest
payments to be made pursuant to the Contracts. In this event, a
Certificate might be treated as a Stripped Certificate subject to the
stripped bond rules of Section 1286 of the Code and the original issue
discount provisions rather than to the market discount and premium rules.
See the discussion above under "Non-REMIC Series -- Stripped Non-REMIC
Certificates."

Tax Treatment of Certain Foreign Investors. Generally, interest or
original issue discount paid to or accruing for the benefit of a Non-REMIC
Certificateholder who is a Foreign Holder (as defined in "REMIC Series --
Taxation of Certain Foreign Investors") will be treated as "portfolio
interest" and therefore will be exempt from the 30% withholding tax. Such
Non-REMIC Certificateholder will be entitled to receive interest payments
and original issue discount on the Non-REMIC Certificates free of United
States federal income tax, but only to the extent the Contracts were
originated after July 18, 1984 and provided that such Non-REMIC
Certificateholder periodically provides the Trustee (or other person who
would otherwise be required to withhold tax) with a statement certifying
under penalty of perjury that such Non-REMIC Certificateholder is not a
United States person and providing the name and address of such Non-REMIC
Certificateholder. For additional information concerning interest or
original issue discount paid by the Company to a Foreign Holder and the
treatment of a sale or exchange of a Non-REMIC Certificate by a Foreign
Holder, which will generally have the same tax consequences as the sale of
a Regular Certificate, see the discussion above under "REMIC Series --
Taxation of Certain Foreign Investors".

Tax Administration and Reporting. The Company will furnish to each
Non-REMIC Certificateholder with each distribution a statement setting
forth the amount of such distribution allocable to principal and to
interest. In addition, the Company will furnish, within a reasonable time
after the end of each calendar year, to each Non-REMIC Certificateholder
who was a Certificateholder at any time during such year, information
regarding the amount of servicing compensation received by the Company and
any sub-servicer and such other customary factual information as the
Company deems necessary or desirable to enable Certificateholders to
prepare their tax returns. Reports will be made annually to the Service
and to holders of record that are not expected from the reporting
requirements regarding information as may be required with respect to
interest and original issue discount, if any, with respect to the Non-REMIC
Certificates.

STATE AND LOCAL TAX CONSIDERATIONS

No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax
effect of ownership of Certificates in any state or locality.
Certificateholders are advised to consult their own tax advisors with
respect to any state or local income, franchise, personal property, or
other tax consequences arising out of their ownership of Certificates.

LEGAL INVESTMENT CONSIDERATIONS

Unless otherwise specified in the applicable Prospectus Supplement,
any Certificates offered hereby that are rated in one of the two highest
rating categories by at least one nationally recognized statistical rating
organization will constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA") and, as
such, will be legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities
(including depository institutions, life insurance companies and pension
funds) created pursuant to or existing under the laws of the United States
or of any state whose authorized investments are subject to state
regulation to the same extent as, under applicable law, obligations issued
by or guaranteed as to principal and interest by the United States or any
such entities. Under SMMEA, certain states have created legislation
specifically limiting the legal investment authority of any such entities
with respect to "mortgage related securities," in which case such
Certificates will constitute legal investments for entities subject to
such legislation only to the extent provided therein. SMMEA provides,
however, that in no event will the enactment of any such legislation
affect the validity of any contractual commitment to purchase, hold or
invest in Certificates, or require the sale or other disposition of
Certificates, so long as such contractual commitment was made or such
Certificates were acquired prior to the enactment of such legislation.

SMMEA also amended the legal investment authority of federally-
chartered depository institutions as follows: federal savings and loan
associations and federal savings banks may invest in, sell or otherwise
deal in Certificates without limitation as to the percentage of their
assets represented thereby; federal credit unions may invest in
Certificates; and national banks may purchase Certificates for their own
account without regard to the limitations generally applicable to
investment securities set forth in 12 U.S.C. 24 (Seventh), subject in
each case to such regulations as the applicable federal regulatory
authority may prescribe.

Some Classes of Certificates offered hereby may not be rated in one
of the two highest rating categories, or may not otherwise satisfy the
requirements of SMMEA, and thus would not constitute "mortgage related
securities" for purposes of SMMEA.

The Federal Financial Institutions Examination Council, The Federal
Deposit Insurance Corporation, the Office of Thrift Supervision, the
Office of the Comptroller of the Currency and the National Credit Union
Administration have proposed or adopted guidelines regarding investment in
various types of mortgage-backed securities. In addition, certain state
regulators have taken positions that may prohibit regulated institutions
subject to their jurisdiction from holding securities representing
residual interest, including securities previously purchased. There may
be other restrictions on the ability of certain investors, including
depository institutions, either to purchase Certificates or to purchase
Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors.

RATINGS

It is a condition precedent to the issuance of any Class of
Certificates sold under this Prospectus that they be rated by at least one
nationally recognized statistical rating organization in one of its four
highest rating categories (within which there may be sub-categories or
gradations indicating relative standing). A security rating is not a
recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning rating agency. The
security rating of any Series of Certificates should be evaluated
independently of similar security ratings assigned to other kinds of
securities.

Ratings of the Certificates address the likelihood of the ultimate
receipt of all distributions on the contracts by the related
certificateholders under the agreements pursuant to which such
certificates are issued. The ratings take into consideration the credit
quality of the related contract pool, including any credit support
providers, structural and legal aspects associated with such certificates,
and the extent to which payment stream on such contract pool is adequate
to make payments required by such certificates. The ratings on such
certificates do not, however, constitute a statement regarding frequency
of prepayments on the related contracts.

UNDERWRITING

The Company may sell Certificates of each Series to or through
underwriters (the "Underwriters") by a negotiated firm commitment
underwriting and public reoffering by the Underwriters, and also may sell
and place Certificates directly to other purchasers or through agents.
The Company intends that Certificates will be offered through such various
methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
Series of Certificates may be made through a combination of such methods.

The distribution of the Certificates may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.

In connection with the sale of the Certificates, Underwriters may
receive compensation from the Company or from purchasers of Certificates
for whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell the Certificates of a Series to or
through dealers and such dealers may receive compensation in the form of
discounts, concessions or commissions from the Underwriters and/or
commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of
the Certificates of a Series may be deemed to be Underwriters, and any
discounts or commissions received by them from the Company and any profit
on the resale of the Certificates by them may be deemed to be underwriting
discounts and commissions, under the Securities Act of 1933, as amended
(the "Act"). Any such Underwriters or agents will be identified, and any
such compensation received from the Company will be described, in the
Prospectus Supplement.

Under agreements which may be entered into by the Company,
Underwriters and agents who participate in the distribution of the
Certificates may be entitled to indemnification by the Company against
certain liabilities, concluding liabilities under the Act.

The Company may authorize Underwriters or other persons acting as the
Company's agents to solicit offers by certain institutions to purchase the
Certificates from the Company pursuant to contracts providing for payment
and delivery on a future date. Institutions with which such contracts may
be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational charitable institutions and
others, but in all cases such institutions must be approved by the
Company. The obligation of any purchaser under any such contract will be
subject to the condition that the purchaser of the offered Certificates
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject from purchasing such
Certificates. The Underwriters and such other agents will not have
responsibility in respect of the validity or performance of such
contracts.

The Underwriters may, from time to time, buy and sell Certificates,
but there can be no assurance that an active secondary market will develop
and there is no assurance that any such market, if established, will
continue.

Certain of the Underwriters and their associates may engage in
transactions with and perform services for the Company in the ordinary
course of business.

LEGAL MATTERS

The validity of the Certificates will be passed upon for the Company
by Boult, Cummings, Conners & Berry, PLC. The material federal income tax
consequences of the Certificates will be passed upon for the Company by
Brown & Wood LLP, New York, New York.

EXPERTS

The consolidated financial statements of CHI as of June 30, 1995 and
1996 and for each of the three years in the period ended June 30, 1996,
incorporated by reference herein, have been incorporated herein in
reliance on the report of Coopers & Lybrand, L.L.P., independent
accountants, given on the authority of that firm as experts in accounting
and auditing.

GLOSSARY

There follows abbreviated definitions of certain capitalized terms
used in this Prospectus and the Prospectus Supplement. The Agreement may
contain a more complete definition of certain of the terms defined herein
and reference should be made to the Agreement for a more complete
definition of all such terms.

"Accrual Remittance Amount" means, with respect to the Compound
Interest Certificates of a Series of Certificates providing for sequential
distributions in reduction of the Stated Balance of the Classes of such
Series, as any Remittance Date, the amount of interest, calculated at the
Interest Rate, which has accrued on such Compound Interest Certificates
from the prior Remittance Date.

"Advances" means the advances made by a Servicer (including from
advances made by a Sub-servicer) on any Remittance Date pursuant to an
Agreement.

"Agreement" means each Pooling and Servicing Agreement by and among
the Company, the Trustee, the Servicer and any other party specified in
the related Prospectus Supplement.

"APR" means, with respect to any Contract and any time, the per annum
rate of interest then being borne by such Contract, as set forth on the
face thereof.

"Asset Value" means the Asset Value of the Contracts included in a
Trust Fund, determined in the manner set forth in the related Agreement.

"Available Distribution Amount" means, with respect to each Series of
Certificates, certain amounts on deposit in the Certificate Account on a
Determination Date.

"Available Subordination Amount" means, with respect to a Series of
Certificates having a Class of Subordinated Certificates, as of any
Remittance Date, the excess, if any, of the then applicable Maximum
Subordination Amount over the Cumulative Subordination Payments as of the
preceding Remittance Date.

"Certificate Account" means the account maintained by the Servicer or
the Trustee, as specified in the related Prospectus Supplement.

"Certificate Distribution Amount" means with respect to a Series of
Certificates evidencing an interest in a Contract Pool the amount of
interest (calculated as specified in such Prospectus Supplement) and the
amount of Principal (calculated as specified in such Prospectus
Supplement) to be distributed to Certificateholders on each Remittance
Date.

"Certificates" means the Manufactured Housing Contract Pass-Through
Certificates issued pursuant to an Agreement.

"CHI" means Clayton Homes, Inc.

"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.

"Company" means Vanderbilt Mortgage and Finance, Inc.

"Compound Interest Certificates" means Certificates on which interest
may accrue but not be paid for the period described in the related
Prospectus Supplement.

"Contract Pool" means, with respect to each Series of Certificate,
the pool of manufactured housing conditional sales contracts and
installment loan agreements transferred by the Company to the Trustee.

"Contract Rate" means, with respect to each Contract, the interest
rate specified in the Contract.

"Contracts" means manufactured housing installment sales contracts
and installment loan agreements, including any an all rights to receive
payments due thereunder on and after the Cut-off Date and security
interest in Manufactured Homes purchased with the proceeds of such
contracts.

"Cumulative Subordination Payments" means, with respect to a Series
of Certificates having a class of Subordinated Certificates, as of any
Remittance Date, the cumulative amount equal to (i) the total of all
amounts distributed to the Senior Certificateholders, exclusive of
Advances made by the Servicer and the Initial Deposit to the Reserve Fund,
up to and including such Remittance Date minus (ii) the Senior Percentage
times the Available Distribution Amount for all Remittance Dates up to and
including such Remittance Date.

"Cut-off Date" means the date specified in the related Prospectus
Supplement as the date from which principal and interest payments on the
Contracts are included in the Trust Fund.

"Determination Date" means, unless otherwise specified in the related
Prospectus Supplement, the third Business Day immediately preceding the
related Remittance Date.

"Due Period" means, unless otherwise provided in a related Prospectus
Supplement, with respect to any Remittance Date, the period beginning on
the 26th day of the second month preceding the month of the Remittance
Date and ending on the 25th day of the month preceding the month of the
Remittance Date.

"Eligible Investments" means one or more of the investments specified
in the Agreement in which moneys in the Certificate Account and certain
other accounts are permitted to be invested.

"Excess Interest or Excess Interest Rate" means, with respect to any
Contract, the per annum percentage of the principal balance from time to
time outstanding, which may be retained by the Company or the Servicer or
allocated to a designated Class of Certificates, as specified in the
related Prospectus Supplement.

"FDIC" means the Federal Deposit Insurance Corporation.

"FHA" means the Federal Housing Administration.

"Final Scheduled Remittance Date" means, with respect to a Series of
Certificates providing for sequential distributions in reduction of the
Stated Balance of the Classes of each Series, the date, based on the
assumptions set forth in the related Prospectus Supplement, on which the
Stated Balance of all Certificates of each Class shall have been reduced
to zero.

"HUD" means the United States Department of Housing and Urban
Development.

"Initial Deposit" means, with respect to a Series of Certificates,
the amount, if any, deposited into the Reserve Fund on the date of the
initial issuance of the Certificates.

"Interest Rate" means, with respect to a Series of Certificates
providing for sequential distributions in reduction of the Stated Balance
of the Classes of such Series, the interest payable on the Principal
Balance outstanding of each such Class.

"Liquidation Proceeds" means cash (including insurance proceeds)
received in connection with the repossession of a Manufactured Home.

"Loan-to-Value Ratio" means the loan-to-value ratio at the time of
origination of the Contract.

"Manufactured Home" means a unit of manufactured housing, including
all accessions thereto, securing the indebtedness of the Obligor under the
related Contract.

"Maximum Subordination Amount" means, with respect to a Series of
Certificate having a Class of Subordinated Certificates, the amount
specified in the related Prospectus Supplement, representing the maximum
amount of Cumulative Subordination Payments which may be required to be
made over the term of the related Agreement.

"Modular Home" means a unit of manufactured housing that does not
meet the requirements of a "manufactured home" under 42 United States
Code, Section 5402(6), and which is further defined in a related
Prospectus Supplement.

"Monthly Payment" means the scheduled monthly payment of principal
and interest on a Contract.

"Obligor" means each person who is indebted under a Contract or who
has acquired a Manufactured Home subject to a Contract.

"Record Date" means the date specified in the related Prospectus
Supplement for the list of Certificateholders entitled to distributions on
the Certificates.

"REMIC" means a "real estate mortgage investment conduit" as defined
in the Code.

"Remittance Date" means the date specified in the related Prospectus
Supplement for payments on the Certificates.

"Remittance Rate" means, as to a Certificate, the rate or rates of
interest thereon specified in the related Prospectus Supplement.

"Seller" means, with respect to a Series of Certificates evidencing
interest in Contracts, the Seller specified in the Prospectus Supplement.

"Senior Certificates" means, with respect to each Series of
Certificates, the Class or Classes which have rights senior to another
Class or Classes in such Series.

"Servicer" means, with respect to each Series of Certificates
evidencing interests in Contacts, the Servicer specified in the related
Prospectus Supplement.

"Servicing Fee" means the amount of the annual fee paid to the
Servicer or the Trustee as specified in the related Prospectus Supplement.

"Single Certificate" means, for each Class of Certificates of any
Series, the initial principal amount of Contracts evidenced by a single
Certificate of such Class.

"Stated Balance" means, with respect to a Series of Certificates
providing for sequential distributions in reduction of Stated Balance of
the Classes of such Series, the maximum specified dollars amount
(exclusive of interest at the related Interest Rate) to which the Holder
thereof is entitled from the cash flow of the Trust Fund.

"Subordinated Certificates" means, with respect to each Series of
Certificates, the Class or Classes with rights subordinate to another
Class or Classes of such Series.

"Subordinated Percentage" means, with respect to a Series of
Certificates, the Class or Classes with rights subordinate to another
Class or Classes of such Series.

"Trust Fund" means, with respect to each Series of Certificates, the
corpus of the trust created by the related Agreement, to the extent
described in such Agreement, consisting of, among other things, Contracts,
such assets as shall from time to time be identified as deposited in the
Certificate Account, the Manufactured Home which secured a Contract,
insurance, a reserve fund and other forms of credit enhancement, if any.

"Trustee" means the Trustee for a Series of Certificates specified in
the related Prospectus Supplement.

"VA" means the Veterans' Administration.

"Variable Rate Regular Certificates" means Certificates which
evidence the right to receive distributions of income at a variable
Remittance Rate.

NO PERSON HAS BEEN AUTHORIZED TO ---
GIVE ANY INFORMATION OR TO MAKE -
ANY REPRESENTATIONS OTHER THAN PROSPECTUS SUPPLEMENT
THOSE CONTAINED IN THIS PROSPECTUS Summary of Terms of the
SUPPLEMENT OR THE PROSPECTUS AND, Certificates . . . . . . . . S-4
IF GIVEN OR MADE, SUCH INFORMATION Risk Factors . . . . . . . . S-20
OR REPRESENTATIONS MUST NOT BE The Contract Pool . . . . . . S-22
RELIED UPON. THIS PROSPECTUS Vanderbilt Mortgage and Finance,
SUPPLEMENT AND THE PROSPECTUS DO Inc. . . . . . . . . . . . . S-29
NOT CONSTITUTE AN OFFER TO SELL OR Ratio of Earnings to Fixed Charges
A SOLICITATION OF AN OFFER TO BUY for CHI . . . . . . . . . . . S-32
ANY SECURITIES OTHER THAN THE Yield and Prepayment
OFFERED CERTIFICATES OFFERED Considerations . . . . . . . S-32
HEREBY, NOR AN OFFER OF THE Description of the Certificates
S-41
OFFERED CERTIFICATES IN ANY STATE Use of Proceeds . . . . . . . S-56
OR JURISDICTION IN WHICH, OR TO Certain Federal Income Tax
ANY PERSON TO WHOM, SUCH OFFER Consequences . . . . . . . S-56
WOULD BE UNLAWFUL. THE DELIVERY ERISA Considerations . . . . S-57
OF THIS PROSPECTUS SUPPLEMENT OR Legal Investment Considerations
S-58
ANY PROSPECTUS AT ANY TIME DOES Underwriting . . . . . . . . S-59
NOT IMPLY THAT INFORMATION HEREIN Legal Matters . . . . . . . . S-60
OR THEREIN IS CORRECT AS OF ANY Annex I . . . . . . . . . . . I-1
TIME SUBSEQUENT TO ITS DATE;
HOWEVER, IF ANY MATERIAL CHANGE PROSPECTUS
OCCURS WHILE THIS PROSPECTUS Reports to Certificateholders . 2
SUPPLEMENT OR THE PROSPECTUS IS Available Information . . . . . 2
REQUIRED BY LAW TO BE DELIVERED, Incorporation of Certain Documents
THIS PROSPECTUS SUPPLEMENT OR THE of the Company by Reference 2
PROSPECTUS WILL BE AMENDED OR Incorporation of Certain Documents
SUPPLEMENTED ACCORDINGLY. of CHI by Reference . . . . 2
Summary of Terms . . . . . . . 4
TABLE OF CONTENTS Risk Factors . . . . . . . . . 9
PAGE The Trust Fund . . . . . . . . 11
Use of Proceeds . . . . . . . . 12

Vanderbilt Mortgage and Finance, $4,969,000 ( APPROXIMATE )
Inc. . . . . . . . . . . . . . 13 CLASS B-2
Underwriting Policies . . . . . 13
Yield Considerations . . . . . 15
Maturity and Prepayment
Considerations . . . . . . . . 15
Description of the Certificates 16
Description of FHA Insurance and
VA
Guarantees . . . . . . . . . 28
Certain Legal Aspects of the
Contracts . . . . . . . . . . . 29
ERISA Considerations . . . . . 34 PRUDENTIAL SECURITIES INCORPORATED
Certain Federal Income Tax
Consequences . . . . . . . . . 37 J.P. MORGAN & CO.
State and Local Tax Consequences
52
Legal Investment Considerations 52 PROSPECTUS SUPPLEMENT
Ratings . . . . . . . . . . . . 53 DATED OCTOBER 18, 1996
Underwriting . . . . . . . . . 53
Legal Matters . . . . . . . . . 54
Experts . . . . . . . . . . . . 54
Glossary . . . . . . . . . . . 54

$124,221,000
(APPROXIMATE)

VANDERBILT MORTGAGE
AND FINANCE, INC.

SELLER AND SERVICER

MANUFACTURED HOUSING CONTRACT
SENIOR / SUBORDINATE
PASS-THROUGH CERTIFICATES,
SERIES 1996C

$28,800,000 ( APPROXIMATE )
CLASS A-1

$27,300,000 ( APPROXIMATE )
CLASS A-2

$19,100,000 ( APPROXIMATE )
CLASS A-3

$11,800,000 ( APPROXIMATE )
CLASS A-4

$15,481,000 ( APPROXIMATE )
CLASS A-5

$9,938,000 ( APPROXIMATE )
CLASS A-6

$6,833,000 ( APPROXIMATE )
CLASS B-1