Information contained herein is subject to completion or amendment. Offers to
buy these securities may not be accepted without the delivery of a Final
Prospectus Supplement and Prospectus. This prospectus supplement shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
(SUBJECT TO COMPLETION, DATED NOVEMBER 5, 1996)
PROSPECTUS SUPPLEMENT
(to Prospectus Dated November 5, 1996)
$1,001,713,000 (Approximate)
Merrill Lynch Mortgage Investors, Inc.
(Depositor)
Mortgage Pass-Through Certificates
Series 1996-C2
--------------
The Series 1996-C2 Mortgage Pass-Through Certificates (the "Certificates") will
consist of fourteen classes (each, a "Class") of Certificates, including the
eight Classes of Certificates offered hereby (collectively, the "Offered
Certificates"). The Certificates, in the aggregate, will represent the entire
undivided beneficial ownership interest in a trust fund (the "Trust Fund") to be
established by Merrill Lynch Mortgage Investors, Inc. (the "Depositor"), that
will consist primarily of a segregated pool (the "Mortgage Pool") of 300
conventional, fixed rate mortgage loans (the "Mortgage Loans") secured by first
liens on commercial and multifamily properties (each, a "Mortgaged Property")
and, in all but 55 cases, providing for balloon payments on their respective
maturity dates. As of November 1, 1996 (the "Cut-off Date"), the Mortgage Loans
had an aggregate principal balance (the "Initial Pool Balance") of approximately
$1,138,310,835, after application of all payments of principal due on or before
such date, whether or not received. First Union National Bank of North Carolina
(the "Master Servicer"), directly or through one or more subservicers, and
CRIIMI MAE Services Limited Partnership (the "Special Servicer"), will service
the Mortgage Loans. The Offered Certificates bear the class designations and
have the characteristics set forth in the table below. Simultaneously with the
issuance of the Offered Certificates, the Private Certificates (as defined
herein) will be issued. Only the Offered Certificates are offered hereby.
(Continued on next page)
--------------
Prospective investors should consider the information set forth under "Risk
Factors" beginning on page S-24 of this Prospectus Supplement and on
page 16 of the Prospectus.
--------------
PROCEEDS OF THE ASSETS IN THE TRUST FUND WILL BE THE SOLE SOURCE OF PAYMENTS ON
THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF THE DEPOSITOR, THE MASTER SERVICER, THE TRUSTEE OR
ANY OF THEIR AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS
WILL BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
--------------
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 SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<TABLE>
<CAPTION>
===================================================================================================
Initial Rated Final
Certificate % of Initial Pass-Through Distribution Expected
Class Balances(1) Pool Balance(1) Rate Date(2) Rating(3)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A-1 .......... $311,042,000 27.3% November 21, 2028 AAA
Class A-2 .......... $130,587,000 11.5% November 21, 2028 AAA
Class A-3 .......... $343,805,000 30.2% November 21, 2028 AAA
Class B ............ $ 68,299,000 6.0% November 21, 2028 AA
Class C ............ $ 62,607,000 5.5% November 21, 2028 A
Class D ............ $ 56,915,000 5.0% November 21, 2028 BBB
Class E ............ $ 28,458,000 2.5% November 21, 2028 BBB-
Class IO ........... N/A N/A (4) November 21, 2028 AAA
===================================================================================================
</TABLE>
(1) Subject to a permitted variance of plus or minus 5%.
(2) The Rated Final Scheduled Distribution Date has been set to a date two
years after the Distribution Date (as defined herein) following the end of
the amortization term for the Mortgage Loan that, as of the Cut-off Date,
has the longest amortization term. See "Ratings" herein.
(3) By each of Fitch Investors Service, L.P., Duff & Phelps Credit Rating Co.
and, except with respect to the Class IO Certificates, Standard & Poor's
Ratings Services.
(4) The Class IO Certificates will not have a principal balance and will not be
entitled to receive distributions of principal, but will be entitled to
receive payments of interest equal to the sum of the interest accrued on
the notional amount of each of its Components, as described herein. See
"Description of the Certificates--Certificate Balances and Notional Amount"
and "--Pass-Through Rates" herein.
--------------
The Offered Certificates will be offered by Merrill Lynch, Pierce, Fenner &
Smith Incorporated and First Union Capital Markets Corp. (together, the
"Underwriters") from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. Proceeds to the Depositor
from the sale of the Offered Certificates, before deducting expenses payable by
the Depositor, will be approximately $___________, which includes accrued
interest. See "METHOD OF DISTRIBUTION" herein.
The Offered Certificates are offered by the Underwriters when, as and if
issued and delivered to and accepted by the Underwriters, subject to prior sale
and subject to the Underwriters' right to reject orders in whole or in part. It
is expected that the Offered Certificates will be delivered in book-entry form
through the Same-Day Funds Settlement System of The Depository Trust Company on
November 25, 1996.
--------------
Merrill Lynch & Co. First Union Capital Markets Corp.
--------------
The date of this Prospectus Supplement is November __, 1996.
<PAGE>
(cover continued)
The Depositor will acquire certain of the Mortgage Loans from Merrill Lynch
Mortgage Capital Inc. and certain of the Mortgage Loans from First Union
National Bank of North Carolina (each, a "Mortgage Loan Seller"). On or before
the date the Certificates are issued, the Depositor will transfer the Mortgage
Loans, without recourse, to State Street Bank and Trust Company, as trustee of
the Trust Fund (the "Trustee"), in exchange for the Certificates.
As and to the extent described herein, the Private Certificates will be
subordinate to the Offered Certificates; the Class B, Class C, Class D and Class
E Certificates will be subordinate to the Class A-1, Class A-2, Class A-3 and
Class IO Certificates; the Class C, Class D and Class E Certificates will be
subordinate to the Class B Certificates; the Class D and Class E Certificates
will be subordinate to the Class C Certificates; and the Class E Certificates
will be subordinate to the Class D Certificates. Distributions of interest on
and principal of the Certificates will be made, to the extent of available
funds, on the 21st day of each month or, if any such 21st day is not a business
day, then on the next succeeding business day, commencing December 23, 1996
(each, a "Distribution Date"). As described herein, distributions allocable to
interest accrued on each Class of Offered Certificates (other than the Class IO
Certificates) will be made on each Distribution Date based on the pass-through
rate (the "Pass-Through Rate") applicable to such Class and the principal amount
(the "Certificate Balance") of such Class outstanding immediately prior to such
Distribution Date. As described herein, distributions allocable to interest
accrued on the Class IO Certificates will be made on each Distribution Date in
an amount equal to the sum of the amount of interest which has accrued on each
of its components (each, a "Component" and, separately, the "Class IO-1
Component" and the "Class IO-2 Component"). Interest will accrue on the notional
amount of each Component based on its respective Pass-Through Rate and the
notional amount of such Component outstanding immediately prior to a
Distribution Date. The notional amount of the Class IO-1 Component will equal
the aggregate principal balance of the Mortgage Loans outstanding from time to
time. The notional amount of the Class IO-2 Component will equal the aggregate
Certificate Balance of the Class A-1 and Class A-2 Certificates outstanding from
time to time. The Pass-Through Rate applicable to the Class IO -1 Component for
each Distribution Date will equal the Weighted Average Net Mortgage Rate minus %
(but not less than zero), and the Pass-Through Rate applicable to the Class IO-2
Component for each Distribution Date will equal the weighted average of the
Class A-1 Strip Rate and the Class A-2 Strip Rate, weighted by the Certificate
Balances of the corresponding Classes. The Class A-1 Strip Rate will equal %,
and the Class A-2 Strip Rate will equal %. As described herein, distributions
allocable to principal of the Offered Certificates will be made sequentially to
the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D and Class E
Certificates, in that order, until the respective Certificates are retired. The
Class IO Certificates will not have Certificate Balances, nor will they entitle
the holders thereof to distributions of principal. The holders of the
Certificates may also receive portions of any Prepayment Premiums and Yield
Maintenance Charges (each as defined herein) to the extent described herein. See
"DESCRIPTION OF THE CERTIFICATES--Distributions" herein.
The yield to maturity on each Class of Offered Certificates will depend on,
among other things, the rate and timing of principal payments (including by
reason of prepayments, defaults and liquidations) on the Mortgage Loans that are
applied in reduction of the Certificate Balance of such Class. The yield to
maturity on the Class IO Certificates will be highly sensitive to the rate and
timing of principal payments (including by reason of prepayments, defaults and
liquidations) on the Mortgage Loans and investors in the Class IO Certificates
should fully consider the associated risks, including the risk that a rapid rate
of prepayment of the Mortgage Loans could result in the failure of such investor
to fully recoup their initial investments. The allocation to any Offered Class
of any Prepayment Premium or Yield Maintenance Charge may be insufficient to
offset fully the effects on the reduction to the anticipated yield to maturity
resulting from the corresponding principal prepayment. Any delay in collection
of a Balloon Payment (as defined herein) due at the maturity of a Mortgage Loan
will likely extend the weighted average life of the Class or Classes of Offered
Certificates entitled to distributions in respect of principal as of the date
such Balloon Payment was due. See "DESCRIPTION OF THE CERTIFICATES--Certificate
Balances and Notional Amounts" and "--Distributions," "YIELD AND MATURITY
CONSIDERATIONS" and "SERVICING OF THE MORTGAGE LOANS--Modifications, Waivers and
Amendments" herein, and "YIELD AND MATURITY CONSIDERATIONS" and "RISK
FACTORS--Prepayments; Average Life of Certificates; Yields" in the Prospectus.
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund for
federal income tax purposes (the REMICs formed thereby, "REMIC I," "REMIC II"
and "REMIC III"). The Offered Certificates will constitute the "regular
interests" in the related REMIC. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES"
herein and in the Prospectus.
There is currently no secondary market for the Offered Certificates. Each
of the Underwriters intends to make a secondary market in the Offered
Certificates, but has no obligation to do so. See "RISK FACTORS--The
Certificates--Limited Liquidity" herein.
THE PROSPECTUS THAT ACCOMPANIES THIS PROSPECTUS SUPPLEMENT CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL TO OBTAIN MATERIAL INFORMATION CONCERNING THE OFFERED
CERTIFICATES. SALES OF THE OFFERED CERTIFICATES MAY NOT BE CONSUMMATED UNLESS
THE PURCHASER HAS RECEIVED A PAPER COPY OF BOTH THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT REGARDLESS OF WHETHER THE PURCHASER HAS RECEIVED SUCH
DOCUMENTS ELECTRONICALLY.
UPON RECEIPT OF A REQUEST BY AN INVESTOR, OR HIS OR HER REPRESENTATIVE,
WITHIN THE PERIOD DURING WHICH THERE IS A PROSPECTUS DELIVERY OBLIGATION, THE
UNDERWRITERS WILL TRANSMIT OR CAUSE TO BE TRANSMITTED PROMPTLY, WITHOUT CHARGE
AND IN ADDITION TO ANY SUCH DELIVERY REQUIREMENTS, A PAPER COPY OF A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS OR A PROSPECTUS SUPPLEMENT AND A PROSPECTUS
ELECTRONICALLY.
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 DELIVERY REQUIREMENT 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.
S-2
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY OF PROSPECTUS SUPPLEMENT ........................................ S-5
RISK FACTORS ............................................................ S-24
The Certificates ...................................................... S-24
Limited Liquidity ................................................... S-24
Certain Yield and Maturity Considerations ........................... S-24
Potential Conflicts of Interest ..................................... S-25
The Mortgage Loans .................................................... S-25
Risks of Lending on Income-Producing Properties ..................... S-25
Nonrecourse Mortgage Loans .......................................... S-27
Environmental Law Considerations .................................... S-27
Balloon Payments .................................................... S-27
DESCRIPTION OF THE MORTGAGE POOL ........................................ S-28
General ............................................................... S-28
Certain Terms and Conditions of the Mortgage Loans .................... S-28
Mortgage Rates; Calculations of Interest ............................ S-28
Due Dates ........................................................... S-28
Amortization ........................................................ S-28
Prepayment Provisions ............................................... S-29
Nonrecourse Obligations ............................................. S-29
"Due-on-Sale" and "Due-on-Encumbrance" Provisions ................ S-29
Cross-Default and Cross-Collateralization
of Certain Mortgage Loans ......................................... S-29
Low Income Housing Tax Credits ...................................... S-29
Assessments of Property Condition ..................................... S-30
Property Inspection ................................................. S-30
Appraisals .......................................................... S-30
Environmental and Engineering Assessments ........................... S-30
Earthquake Analyses ................................................. S-30
Additional Mortgage Loan Information .................................. S-31
The Mortgage Pool ................................................... S-31
The Mortgage Loan Sellers ............................................. S-40
Assignment of the Mortgage Loans; Repurchases ......................... S-40
Representations and Warranties; Repurchases ........................... S-40
Changes in Mortgage Pool Characteristics .............................. S-41
SERVICING OF THE MORTGAGE LOANS ......................................... S-42
General ............................................................... S-42
The Master Servicer and Special Servicer .............................. S-42
Replacement of the Special Servicer ................................... S-43
Servicing and other Compensation and Payment of Expenses .............. S-44
Modifications, Waivers and Amendments ................................. S-46
The Extension Adviser ................................................. S-46
Election of the Extension Adviser ................................... S-46
Duties of the Extension Adviser .................................... S-46
Limitation on Liability of Extension Adviser ........................ S-47
REO Properties ........................................................ S-47
Inspections; Collection of Operating Information ...................... S-48
S-3
<PAGE>
Page
----
DESCRIPTION OF THE CERTIFICATES ......................................... S-48
General ............................................................... S-48
Registration and Denominations ........................................ S-48
Certificate Balances and Notional Amounts ............................. S-49
Pass-Through Rates .................................................... S-50
Distributions ......................................................... S-50
General ............................................................. S-50
The Available Distribution Amount ................................... S-50
Application of the Available Distribution Amount .................... S-51
Distributable Certificate Interest .................................. S-53
Principal Distribution Amount ....................................... S-53
Treatment of REO Properties ......................................... S-54
Allocation of Prepayment Premiums and Yield Maintenance Charges ..... S-54
Subordination; Allocation of Losses and Certain Expenses .............. S-55
P&I Advances .......................................................... S-56
Appraisal Reductions .................................................. S-57
Reports to Certificateholders; Available Information .................. S-58
Voting Rights ......................................................... S-59
Termination ........................................................... S-59
The Trustee ........................................................... S-60
YIELD AND MATURITY CONSIDERATIONS ....................................... S-60
Yield Considerations .................................................. S-60
General ............................................................. S-60
Rate and Timing of Principal Payment ................................ S-60
Losses and Shortfalls ............................................... S-61
Pass-Through Rates .................................................. S-61
Certain Relevant Factors ............................................ S-62
Delay in Payment of Distributions ................................... S-62
Unpaid Distributable Certificate Interest ........................... S-62
Yield Sensitivity of the Class IO Certificates ...................... S-62
Weighted Average Life ................................................. S-64
USE OF PROCEEDS ......................................................... S-67
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ................................. S-67
ERISA CONSIDERATIONS .................................................... S-68
LEGAL INVESTMENT ........................................................ S-70
METHOD OF DISTRIBUTION .................................................. S-71
LEGAL MATTERS ........................................................... S-71
RATINGS ................................................................. S-72
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS ........................... A-1
FORM OF DISTRIBUTION DATE STATEMENT ..................................... B-1
S-4
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms used in this Summary may
be defined elsewhere in this Prospectus Supplement or in the Prospectus. An
"Index of Principal Definitions" is included at the end of both this Prospectus
Supplement and the Prospectus. Terms that are used but not defined in this
Prospectus Supplement have the meanings specified in the Prospectus.
<TABLE>
<CAPTION>
Weighted Cash Flow
S&P/Fitch Initial Percent of Approximate Pass- Average or
/DCR Certificate Initial Pool Credit Through Life Principal
Class Rating(1) Balances(2) Balances(2) Support Description Rate (years)(3) Window(3)
----- --------- ----------- ----------- ------- ----------- ---- ---------- ---------
Offered Certificates
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A-1 AAA $311,042,000 27.3% 31.0% Fixed Coupon 4.9 12/96-9/03
Class A-2 AAA $130,587,000 11.5% 31.0% Fixed Coupon 7.5 9/03-4/06
Class A-3 AAA $343,805,000 30.2% 31.0% Fixed Coupon 9.7 4/06-10/06
Class B AA $ 68,299,000 6.0% 25.0% Fixed Coupon 9.9 10/06-11/06
Class C A $ 62,607,000 5.5% 19.5% Fixed Coupon 10.0 11/06-11/06
Class D BBB $ 56,915,000 5.0% 14.5% Fixed Coupon 11.6 11/06-12/09
Class E BBB- $ 28,458,000 2.5% 12.0% Fixed Coupon 13.8 12/09-5/11
Class IO NR/AAA/AAA (4) N/A N/A I/O Strip (5)
Private Certificates (6)
Class F BB/BB-/BB- $ 62,607,000 5.5% 6.5% Fixed Coupon 15.5 5/11-4/14
Class G B/B-/B- $ 39,841,000 3.5% 3.0% Fixed Coupon 18.7 4/14-9/16
Class H NR $ 34,149,834 3.0% 0 Fixed Coupon 22.5 9/16-10/26
</TABLE>
- ----------
(1) Rating to be received by all three Rating Agencies, except as indicated.
(2) Subject to a permitted variance of plus or minus 5%.
(3) Based on Scenario (1) set forth under "Yield and Maturity
Considerations--Weighted Average Life" herein.
(4) The Class IO Certificates will not have a principal balance and will not be
entitled to receive distributions of principal. See "--Description of the
Certificates--Certificate Balances and Notional Amount" herein.
(5) The Class IO Certificates will receive the sum of the interest accrued on
the notional amount of each of its Components, as described herein. See
"--Description of the Certificates--Pass-Through Rates" herein.
(6) The Private Certificates are not being offered hereby. Accordingly, any
information herein regarding the terms of the Private Certificates is
provided solely because of its potential relevance to a prospective
purchaser of an Offered Certificate.
- --------------------------------------------------------------------------------
S-5
<PAGE>
- --------------------------------------------------------------------------------
Title of Certificates ................ Merrill Lynch Mortgage Investors, Inc.,
Mortgage Pass-Through Certificates,
Series 1996-C2 (the "Certificates"),
to be issued in fourteen classes
(each, a "Class") to be designated as:
(i) the Class A-1, Class A-2, Class
A-3, Class B, Class C, Class D, Class
E, Class F, Class G, Class H and Class
IO Certificates (collectively, the
"REMIC Regular Certificates"); and
(ii) the Class R-I, Class R-II and
Class R-III Certificates
(collectively, the "REMIC Residual
Certificates"). Only the Class A-1,
Class A-2, Class A-3, Class B, Class
C, Class D, Class E and Class IO
Certificates (collectively, the
"Offered Certificates") are offered
hereby. The Class F, Class G, Class H
and REMIC Residual Certificates
(collectively, the "Private
Certificates") have not been
registered under the Securities Act of
1933, as amended (the "Securities
Act"), and are not offered hereby.
Depositor ............................ Merrill Lynch Mortgage Investors, Inc.,
a Delaware corporation. The Depositor
is a wholly owned, limited purpose
finance subsidiary of one of the
Mortgage Loan Sellers and an affiliate
of Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"),
one of the Underwriters. Neither the
Depositor nor any of its affiliates
has insured or guaranteed the Offered
Certificates. See "THE DEPOSITOR" in
the Prospectus.
Master Servicer ...................... First Union National Bank of North
Carolina ("FUNB"), a national banking
association. The Master Servicer is an
affiliate of First Union Capital
Markets Corp. ("First Union
Capital"), one of the Underwriters.
See "SERVICING OF THE MORTGAGE
LOANS--The Master Servicer and Special
Servicer" and "--Servicing and Other
Compensation and Payment of Expenses"
herein.
Special Servicer ..................... CRIIMI MAE Services Limited Partnership,
a Maryland limited partnership, will
be the initial Special Servicer,
responsible for performing certain
servicing functions with respect to
the Mortgage Loans that, in general,
are in default or as to which default
is imminent, for administering any REO
Property (as defined herein) and for
performing certain other servicing
functions with respect to the Mortgage
Pool under the Pooling and Servicing
Agreement. The majority holder (or
holders) of the Class of Sequential
Pay Certificates (as defined herein)
having the latest alphabetical Class
designation will have the right,
subject to certain conditions
described herein, to replace the
Special Servicer. It is anticipated
that the Special Servicer or an
affiliate of the Special Servicer will
purchase all or a significant portion
of the Class F, Class G and Class H
Certificates on or about the Closing
Date. See = "SERVICING OF THE MORTGAGE
LOANS--The Master Servicer and Special
Servicer," "--Replacement of the
Special Servicer" and "--Servicing and
Other Compensation and Payment of
Expenses" herein.
Trustee .............................. State Street Bank and Trust Company, a
banking corporation chartered under
the laws of the Commonwealth of
Massachusetts.
- --------------------------------------------------------------------------------
S-6
<PAGE>
- --------------------------------------------------------------------------------
Mortgage Loan Sellers ................ Merrill Lynch Mortgage Capital Inc.
("MLMCI"), the Depositor's corporate
parent and an affiliate of Merrill
Lynch, one of the Underwriters, and
FUNB, which is also the Master
Servicer and an affiliate of First
Union Capital, one of the
Underwriters. See "DESCRIPTION OF THE
MORTGAGE POOL--The Mortgage Loan
Sellers" herein.
Cut-off Date ......................... November 1, 1996.
Closing Date ......................... On or about November 25, 1996.
Registration of the Offered
Certificates ....................... The Offered Certificates of each Class
will initially be represented by one
or more global Certificates registered
in the name of Cede & Co., as nominee
of The Depository Trust Company
("DTC"). No person acquiring an
interest in any Offered Certificate
(any such person, a "Certificate
Owner") will be entitled to receive
such Certificate in fully registered,
certificated form (a "Definitive
Offered Certificate"), except under
the limited circumstances described
under "DESCRIPTION OF THE
CERTIFICATES--Registration and
Denominations" herein. Instead, DTC
will effect payments and transfers in
respect of the Offered Certificates by
means of its electronic recordkeeping
services, acting through certain
participating organizations (
"Participants"). This may result in
certain delays in receipt of payments
by an investor and may restrict an
investor's ability to pledge its
Certificates. Unless and until
Definitive Offered Certificates of any
Class are issued to the related
Certificate Owners, all references
herein to the rights of holders of
such Class of Offered Certificates are
to the rights of those Certificate
Owners as such rights may be exercised
through DTC and its Participants,
except as otherwise specified herein.
Denominations ........................ The Offered Certificates of each Class
will be issued, maintained and
transferred on the book-entry records
of DTC and its Participants in
denominations of $1,000 actual or
notional principal amount and in
integral multiples of $1 in excess
thereof.
The Mortgage Pool .................... The Mortgage Pool will consist of 300
conventional, fixed rate Mortgage
Loans with an Initial Pool Balance of
$1,138,310,835, equal to the aggregate
unpaid principal balance of each
Mortgage Loan as of the Cut-off Date,
after application of all payments of
principal due on or before such date,
whether or not received (with respect
to each Mortgage Loan, the "Cut-off
Date Balance"). The Cut-off Date
Balances of the Mortgage Loans range
from $257,059 to $38,500,000 and the
Mortgage Loans have an average Cut-off
Date Balance of $3,794,369. All
percentages of the Mortgage Loans, or
of any specified group of Mortgage
Loans, referred to herein without
further description are approximate
percentages by aggregate Cut-off Date
Balance. References to percentages of
Mortgaged Properties referred to
herein without further description are
references to the percentages of the
Initial Pool Balance represented by
the aggregate Cut-off Date Balance of
the related Mortgage Loans. For
purposes of calculations herein, as
shown on Annex A hereto, two of the
Mortgage Loans are each deemed to be
secured
- --------------------------------------------------------------------------------
S-7
<PAGE>
- --------------------------------------------------------------------------------
by two Mortgaged Properties. All of
the remaining Mortgage Loans are each
deemed to be secured by one Mortgaged
Property, whether or not such
Mortgaged Property is comprised of
more than one parcel. As a result, the
Mortgage Loans in the aggregate will
be secured by a total of 302 Mortgaged
Properties. All numerical information
provided herein with respect to the
Mortgage Loans is provided on an
approximate basis.
Generally, all of the Mortgage Loans are
non-recourse obligations of the
related borrowers. No Mortgage Loan
will be insured or guaranteed by any
governmental entity or private
insurer.
Each Mortgage Loan is secured by a first
mortgage lien on the borrower's fee
simple estate (or, with respect to six
(6) Mortgage Loans, or 2%, on the
borrower's leasehold estate) in an
income producing real property (each,
a "Mortgaged Property"). One hundred
fifty-one (151) of the Mortgaged
Properties, or 44%, are multifamily
rental properties (including 11
Mortgaged Properties, or 2%, which are
eligible to receive low-income housing
tax credits pursuant to Section 42 of
the Internal Revenue Code of 1986 (the
"Code" and such properties, the
"Section 42 Properties")); seventy-six
(76) of the Mortgaged Properties, or
25%, are retail properties (including
42 anchored retail, or 19%, and 34
unanchored retail, or 7%);
twenty-three (23) of the Mortgaged
Properties, or 10%, are hospitality
properties (all but one of which are
affiliated with recognized hotel/motel
franchisors); sixteen (16) of the
Mortgaged Properties, or 7%, are
industrial properties; eighteen (18)
of the Mortgaged Properties, or 7%,
are office properties; seven (7) of
the Mortgaged Properties, or 3%, are
residential health care facilities
(including 3 assisted living
facilities, or 1%, and 4 congregate
care facilities, or 2%); five (5) of
the Mortgaged Properties, or 2% are
mixed use multifamily/retail
properties; and six (6) of the
Mortgaged Properties, or 2%, are
mobile home parks.
The Mortgaged Properties are located
throughout 36 states, with the largest
concentrations in Texas (66 Mortgaged
Properties, or 15%); California (29
Mortgaged Properties, or 13%); and
Florida (33 Mortgaged Properties, or
11%). No other state has a
concentration of Mortgaged Properties
equal to or greater than 6%. No
Mortgage Loan or group of Mortgage
Loans to one borrower or group of
related borrowers exceed 5% of the
Initial Pool Balance. See "DESCRIPTION
OF THE MORTGAGE POOL--Additional
Mortgage Loan Information" herein.
All of the Mortgage Loans bear interest
at annualized rates ("Mortgage
Rates") that will remain fixed for
their respective remaining loan terms,
except as described herein. Scheduled
payments of principal and interest on
the mortgage loans ("Monthly
Payments") are due monthly on the
first day of each month. See
"DESCRIPTION OF THE MORTGAGE
POOL--Certain Terms and Conditions of
the Mortgage Loans--Due Dates" and
"--Mortgage Rates; Calculations of
Interest" herein.
- --------------------------------------------------------------------------------
S-8
<PAGE>
- --------------------------------------------------------------------------------
Two hundred forty-five (245) of the
Mortgage Loans, or 80%, provide for
Monthly Payments based on amortization
schedules significantly longer than
their terms to maturity. As a result,
such Mortgage Loans ("Balloon
Loans"), will have substantial
principal amounts due and payable
(each such amount, a "Balloon
Payment") on their respective
scheduled maturity dates, unless
prepaid prior thereto. Three of the
Balloon Loans, or 2%, provide for the
extension of payments past their
respective scheduled maturity dates
pursuant to the terms thereto. See
"DESCRIPTION OF THE MORTGAGE
POOL--Amortization" herein. The
remaining 55 Mortgage Loans, or 20%,
are self-amortizing. See "RISK
FACTORS--The Mortgage Loans--Balloon
Payments" herein and "RISK
FACTORS--Balloon Payments; Borrower
Default" in the Prospectus.
As of the Cut-off Date, all of the
Mortgage Loans restrict or prohibit
voluntary principal prepayments. In
general, the Mortgage Loans: (i)
currently prohibit voluntary
prepayments of principal for a period
(a "Lockout Period") ending on a date
specified in the related Mortgage Note
(as defined herein) and, in general,
thereafter impose a Yield Maintenance
Charge and/or Prepayment Premium (each
as defined herein) for most of their
respective remaining terms to maturity
(two hundred ninety (290) Mortgage
Loans, or 98.1%); (ii) currently
prohibit voluntary prepayments of
principal for a Lockout Period and
thereafter permit voluntary principal
prepayments in whole without material
restrictions (nine (9) Mortgage Loans,
or 1.8%); or (iii) currently permit
voluntary principal prepayments
provided that the prepayment is
accompanied by a Yield Maintenance
Charge, then a Prepayment Premium in
excess of the amount prepaid for most
of their respective remaining terms to
maturity (one Mortgage Loan, or 0.1%).
With respect to the Mortgage Loans
which contain Yield Maintenance
Charges, 154 of such Mortgage Loans,
or 58%, calculate the Yield
Maintenance Charge using a discount
rate equal to the applicable Treasury
Rate (as set forth in the related
Mortgage), and 118 of such Mortgage
Loans, or 35%, calculate the Yield
Maintenance Charge using a discount
rate equal to the Treasury Rate plus
0.50%. See "DESCRIPTION OF THE
MORTGAGE POOL--Certain Terms and
Conditions of the Mortgage Loans" and
"--Additional Mortgage Loan
Information" herein. The ability of
the Master Servicer or the Special
Servicer to waive or modify the terms
of any Mortgage Loan relating to the
payment of a Prepayment Premium or
Yield Maintenance Charge is limited as
described herein. See "SERVICING OF
THE MORTGAGE LOANS--Modifications,
Waivers and Amendments" herein. The
Depositor makes no representation as
to the enforceability of the provision
of any Mortgage Note requiring the
payment of a Prepayment Premium or
Yield Maintenance Charge, or of the
collectability of any Prepayment
Premium or Yield Maintenance Charge.
- --------------------------------------------------------------------------------
S-9
<PAGE>
- --------------------------------------------------------------------------------
All of the Mortgage Loans were
originated during the calendar year
1996.
As of the Cut-off Date, the Mortgage
Loans will have the following
additional characteristics (all
weighted averages set forth below are
based on the Cut-off Date Balances of
the respective Mortgage Loans):
(i) Mortgage Rates ranging from
8.313% per annum to 10.375% per
annum, and a weighted average
Mortgage Rate of 9.121% per
annum;
(ii) remaining terms to scheduled
maturity ranging from 34 months
to 359 months, and a weighted
average remaining term to
scheduled maturity of 135 months;
(iii) remaining amortization terms
ranging from 175 months to 360
months, and a weighted average
remaining amortization term of
309 months (see "DESCRIPTION OF
THE MORTGAGE POOL--Certain Terms
and Conditions of the Mortgage
Loans--Amortization," herein);
(iv) Cut-off Date LTV Ratios (the
loan-to-value ratio of each
Mortgage Loan equals to the ratio
of (a) the Cut-off Date Balance
of such Mortgage Loan to (b) the
appraised value of the related
Mortgaged Property based upon the
most recent third-party appraisal
available to the applicable
Mortgage Loan Seller), ranging
from 35.38% to 84.93%, and a
weighted average Cut-off Date LTV
Ratio of 69.72%;
(v) Scheduled Maturity LTV Ratios
(the loan-to-value ratio of each
Mortgage Loan on its scheduled
maturity date, equal to the ratio
of (a) the principal payments of
such Mortgage Loan due on or
after such date to (b) the
appraised value of the related
Mortgaged Property based upon the
most recent third-party appraisal
available to the applicable
Mortgage Loan Seller), ranging
from 14.40% to 76.69% (not
including the fully amortizing
Mortgage Loans), and a weighted
average Scheduled Maturity LTV
Ratios of 49.16% (including the
fully amortizing Mortgage Loans)
and of 61.48% (not including the
fully amortizing Mortgage Loans);
and
(vi) Debt Service Coverage Ratios
(calculated as described under
"DESCRIPTION OF THE MORTGAGE
POOL--Additional Mortgage Loan
Information" herein) ranging from
1.15x to 2.15x, and a weighted
average Debt Service Coverage
Ratio of 1.32x.
One hundred forty-two (142) of the
Mortgage Loans, or 49% (the "MLMCI
Loans"), were acquired by the
Depositor from MLMCI, which acquired
such Mortgage Loans from one of the
participants in its commercial and
multifamily mortgage loan conduit
program concurrently with or shortly
after origination. One hundred
fifty-eight (158) of the Mortgage
Loans, or 51% (the "FUNB Loans") were
acquired by the Depositor from FUNB,
which originated or acquired such
Mortgage Loans
- --------------------------------------------------------------------------------
S-10
<PAGE>
- --------------------------------------------------------------------------------
concurrently with or shortly after
origination. See "DESCRIPTION OF THE
MORTGAGE POOL" herein.
On or prior to the Closing Date, the
Depositor will cause the Mortgage Loan
Sellers to assign the Mortgage Loans,
without recourse, to the Trustee for
the benefit of the holders of the
Certificates (the
"Certificateholders"). In connection
with such assignment, each Mortgage
Loan Seller will make certain
representations and warranties
regarding the characteristics of the
Mortgage Loans assigned by such
Mortgage Loan Seller and, as more
particularly described herein, will
agree to cure any material breach
thereof or, in the absence of such a
cure, to repurchase the affected
Mortgage Loan. See "DESCRIPTION OF THE
MORTGAGE POOL--Representations and
Warranties; Repurchases" herein.
Description of the Certificates ...... The Certificates will be issued pursuant
to a Pooling and Servicing Agreement,
to be dated as of November 1, 1996,
among the Depositor, the Master
Servicer, the Special Servicer and the
Trustee (the "Pooling and Servicing
Agreement"), and will represent in the
aggregate the entire beneficial
ownership interest in a trust fund
(the "Trust Fund") consisting of the
Mortgage Pool and certain related
assets.
A. Certificate Balances and
Notional Amount .................... Upon initial issuance, and in each case
subject to a permitted variance of
plus or minus 5%, the Offered
Certificates (other than the Class IO
Certificates) will have the
Certificate Balances representing the
approximate percentage of the Initial
Pool Balance set forth in the table at
the beginning of this Summary.
The "Certificate Balance" of any Class
of Certificates (other than the Class
IO Certificates) outstanding at any
time represents the maximum amount
that the holders thereof are entitled
to receive as distributions allocable
to principal from the cash flow on the
Mortgage Loans and other assets in the
Trust Fund. As more particularly
described herein, the Certificate
Balance of a Class of Certificates
will be reduced on each Distribution
Date by any distributions of principal
actually made on such Class of
Certificates on such Distribution
Date, and further by any losses on the
Mortgage Loans (herein referred to as
"Realized Losses") and certain Trust
Fund expenses (herein referred to as
"Additional Trust Fund Expenses")
actually allocated to such Class of
Certificates on such Distribution
Date.
The Class IO Certificates will not have
a Certificate Balance, but will
represent the right to receive
distributions of interest accrued on
the notional amount of the Class IO-1
Component and the Class IO-2 Component
(each a "Component"), as described
herein. The Class IO-1 Component will
have a notional amount equal to the
aggregate Stated Principal Balance of
the Mortgage Loans and the Class IO-2
Component will have a notional amount
equal to the aggregate Certificate
Balance of the Class A-1 Certificates
and the Class A-2 Certificates. Each
Component will accrue interest at its
applicable Pass-Through Rate on its
related notional amount. The Class
IO-1 Component and the
- --------------------------------------------------------------------------------
S-11
<PAGE>
- --------------------------------------------------------------------------------
Class IO-2 Component do not represent
separate Classes of Certificates, but
rather separate components each deemed
to be a part of the Class IO
Certificates. The notional amount of
the Class IO Certificates will equal
the sum of the notional amount of each
of its Components, initially
$1,579,939,834. See "DESCRIPTION OF
THE CERTIFICATES--Certificate Balances
and Notional Amounts" herein.
The REMIC Residual Certificates will not
have Certificate Balances, but will
represent the right to receive certain
limited amounts not otherwise payable
on the REMIC Regular Certificates.
B. Pass-Through Rates ................ The Pass-Through Rates applicable to
each Class of Certificates (other than
the Class IO Certificates) for each
Distribution Date are set forth in the
table at the beginning of this
Summary. The REMIC Residual
Certificates will not bear interest.
The Pass-Through Rate applicable to the
Class IO-1 Component for each
Distribution Date will equal the
Weighted Average Net Mortgage Rate
minus ____% (but not less than zero),
and the Pass-Through Rate applicable
to the Class IO-2 Component for each
Distribution Date will equal the
weighted average of the Class A-1
Strip Rate and the Class A-2 Strip
Rate, weighted by the Certificate
Balances of the corresponding Classes.
The Class A-1 Strip Rate will equal %,
and the Class A-2 Strip Rate will
equal %.
The "Weighted Average Net Mortgage Rate"
for each Distribution Date is the
weighted average of the Net Mortgage
Rates for the Mortgage Loans, weighted
on the basis of their respective
Stated Principal Balances outstanding
immediately prior to such Distribution
Date. The "Net Mortgage Rate" for each
Mortgage Loan will generally equal the
Mortgage Rate in effect for such
Mortgage Loan as of the Cut-off Date,
minus the applicable Master Servicing
Fee Rate, the Additional Servicing Fee
Rate and the Trustee Fee Rate (each as
defined herein). The "Stated Principal
Balance" of each Mortgage Loan
outstanding at any time represents the
principal balance of such Mortgage
Loan ultimately due and payable
thereon and will generally equal the
Cut-off Date Balance thereof, reduced
(to not less than zero) on each
Distribution Date by (i) any payments
or other collections (or advances in
lieu thereof) of principal of such
Mortgage Loan that are due or
received, as the case may be, during
the related Collection Period (as
defined herein) and distributed on the
Certificates on such date and (ii) the
principal portion of any Realized Loss
and Additional Trust Fund Expenses
incurred in respect of such Mortgage
Loan during the related Collection
Period for such Distribution Date. See
"DESCRIPTION OF THE
CERTIFICATES--Pass-Through Rates"
herein.
C. Distributions ..................... Distributions on the Certificates will
be made by the Trustee, to the extent
of available funds, on the 21st day of
each month or, if any such 21st day is
not a business day, then on the next
succeeding business day, commencing
December 23, 1996 (each, a
"Distribution Date"). The total of all
payments or other collections
- --------------------------------------------------------------------------------
S-12
<PAGE>
- --------------------------------------------------------------------------------
(or advances in lieu thereof) on or in
respect of the Mortgage Loans (other
than Prepayment Premiums and Yield
Maintenance Charges, which are
separately distributable in respect of
the Certificates) that are available
for distribution to Certificateholders
on any Distribution Date (less certain
fees and expenses set forth in the
Pooling and Servicing Agreement) is
herein referred to as the "Available
Distribution Amount" for such date.
See "DESCRIPTION OF THE
CERTIFICATES--Distributions--The
Available Distribution Amount" herein.
On each Distribution Date, for so long
as the aggregate Certificate Balance
of the Classes of Offered Certificates
are greater than zero, the Trustee
will (except as otherwise described
under "DESCRIPTION OF THE
CERTIFICATES--Termination" herein)
apply the Available Distribution
Amount for such date for the following
purposes and in the following order of
priority, in each case to the extent
of remaining available funds:
(1) to distributions of interest to
the holders of the Class A-1,
Class A-2, Class A-3 and Class IO
Certificates (in each case, so
long as any such Class remains
outstanding), pro rata, in
accordance with the respective
amounts of Distributable
Certificate Interest (as defined
herein) on such Classes of
Certificates on such Distribution
Date, in an amount equal to all
Distributable Certificate
Interest in respect of each such
Class of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(2) to distributions of principal to
the holders of the Class A-1
Certificates in an amount (not to
exceed the then outstanding
Certificate Balance of such Class
of Certificates) equal to the
Principal Distribution Amount for
such Distribution Date;
(3) after the Class A-1 Certificates
have been retired, to
distributions of principal to the
holders of the Class A-2
Certificates in an amount (not to
exceed the then outstanding
Certificate Balance of such Class
of Certificates) equal to the
Principal Distribution Amount (as
defined herein) for such
Distribution Date, less any
portion thereof distributed in
respect of the Class A-1
Certificates;
(4) after the Class A-1 and Class A-2
Certificates have been retired,
to distributions of principal to
the holders of the Class A-3
Certificates in an amount (not to
exceed the then outstanding
Certificate Balance of such Class
of Certificates) equal to the
Principal Distribution Amount for
such Distribution Date, less any
portion thereof distributed in
respect of the Class A-1 and/or
Class A-2 Certificates;
(5) to distributions to the holders
of the Class A-1, Class A-2 and
Class A-3 Certificates, pro rata,
in accordance with the amount of
Realized Losses and Additional
Trust Fund Expenses, if any,
previously allocated to such
Classes of Certificates for which
no reimbursement has previously
- --------------------------------------------------------------------------------
S-13
<PAGE>
- --------------------------------------------------------------------------------
been received, to reimburse such
holders for such Realized Losses
and Additional Trust Fund
Expenses, if any;
(6) to distributions of interest to
the holders of the Class B
Certificates in an amount equal
to all Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(7) after the Class A-1, Class A-2
and Class A-3 Certificates have
been retired, to distributions of
principal to the holders of the
Class B Certificates in an amount
(not to exceed the then
outstanding Certificate Balance
of such Class of Certificates)
equal to the Principal
Distribution Amount for such
Distribution Date, less any
portion thereof distributed in
respect of the Class A-1, Class
A-2 and/or Class A-3
Certificates;
(8) to distributions to the holders
of the Class B Certificates to
reimburse such holders for all
Appraisal Reduction Amount
Shortfalls and Realized Losses
and Additional Trust Fund
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously been
received;
(9) to distributions of interest to
the holders of the Class C
Certificates in an amount equal
to all Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(10) after the Class A-1, Class A-2,
Class A-3 and Class B
Certificates have been retired,
to distributions of principal to
the holders of the Class C
Certificates in an amount (not to
exceed the then outstanding
Certificate Balance of such Class
of Certificates) equal to the
Principal Distribution Amount for
such Distribution Date, less any
portion thereof distributed in
respect of the Class A-1, Class
A-2, Class A-3 and/or Class B
Certificates;
(11) to distributions to the holders
of the Class C Certificates to
reimburse such holders for all
Appraisal Reduction Amount
Shortfalls and Realized Losses
and Additional Trust Fund
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously been
received;
(12) to distributions of interest to
the holders of the Class D
Certificates in an amount equal
to all Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(13) after the Class A-1, Class A-2,
Class A-3, Class B and Class C
Certificates have been retired,
to distributions of principal to
the holders of the Class D
Certificates in an amount (not to
exceed the then outstanding
Certificate
- --------------------------------------------------------------------------------
S-14
<PAGE>
- --------------------------------------------------------------------------------
Balance of such Class of
Certificates) equal to the
Principal Distribution Amount for
such Distribution Date, less any
portion thereof distributed in
respect of the Class A-1, Class
A-2, Class A-3, Class B and/or
Class C Certificates;
(14) to distributions to the holders
of the Class D Certificates to
reimburse such holders for all
Appraisal Reduction Amount
Shortfalls and Realized Losses
and Additional Trust Fund
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously been
received;
(15) to distributions of interest to
the holders of the Class E
Certificates in an amount equal
to all Distributable Certificate
Interest in respect of such Class
of Certificates for such
Distribution Date and, to the
extent not previously paid, for
all prior Distribution Dates;
(16) after the Class A-1, Class A-2,
Class A-3, Class B, Class C and
Class D Certificates have been
retired, to distributions of
principal to the holders of the
Class E Certificates in an amount
(not to exceed the then
outstanding Certificate Balance
of such Class of Certificates)
equal to the Principal
Distribution Amount for such
Distribution Date, less any
portion thereof distributed in
respect of the Class A-1, Class
A-2, Class A-3, Class B, Class C
and/or Class D Certificates;
(17) to distributions to the holders
of the Class E Certificates to
reimburse such holders for all
Appraisal Reduction Amount
Shortfalls and Realized Losses
and Additional Trust Fund
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously been
received; and
(18) to distributions to the holders
of the respective Classes of
Private Certificates (other than
the REMIC Residual Certificates)
as described herein (provided
that no distributions of
principal will be made in respect
of any Class of Private
Certificates until the aggregate
Certificate Balance of the Class
A-1, Class A-2, Class A-3, Class
B, Class C, Class D and Class E
Certificates has been reduced to
zero). See "DESCRIPTION OF THE
CERTIFICATES--Distributions--
Application of the Available
Distribution Amount" herein.
The "Distributable Certificate Interest"
in respect of any Class of the
Certificates (other than the Class IO
Certificates) for any Distribution
Date will generally equal one month's
interest at the applicable
Pass-Through Rate accrued on the
Certificate Balance of such Class of
Certificates, as adjusted by any
Appraisal Reduction Amounts,
outstanding immediately prior to such
Distribution Date, reduced (to not
less than zero) by such Class's
allocable share (in each case,
calculated as described herein) of any
Net Aggregate Prepayment Interest
Shortfall (as described
- --------------------------------------------------------------------------------
S-15
<PAGE>
- --------------------------------------------------------------------------------
herein) for such Distribution Date.
The "Distributable Certificate
Interest" in respect of the Class IO
Certificates will equal the sum of the
interest due on each of the
Components. Interest payable on such
Certificates will be calculated on a
30/360 basis (as defined herein). See
"SERVICING OF THE MORTGAGE
LOANS--Servicing and Other
Compensation and Payment of Expenses"
and "DESCRIPTION OF THE
CERTIFICATES--Distributions--
Distributable Certificate Interest"
herein.
The "Principal Distribution Amount" for
any Distribution Date will generally
equal the aggregate of the following:
(a) the aggregate of the principal
portions of all Scheduled Payments
(other than Balloon Payments) and the
principal portion of any Assumed
Scheduled Payments (as defined herein)
due or deemed due on or in respect of
the Mortgage Loans for their
respective Due Dates (as defined
herein) occurring during the related
Collection Period; (b) the aggregate
of all principal prepayments received
on the Mortgage Loans during the
related Collection Period; (c) with
respect to any Mortgage Loan as to
which the related stated maturity date
occurred during or prior to the
related Collection Period, any payment
of principal made by or on behalf of
the related borrower during the
related Collection Period (including
any Balloon Payment), net of any
portion of such payment that
represents a recovery of the principal
portion of any Scheduled Payment
(other than a Balloon Payment) due or
the principal portion of any Assumed
Scheduled Payment deemed due, in
respect of such Mortgage Loan on a Due
Date during or prior to the related
Collection Period and not previously
recovered; (d) the aggregate of all
liquidation proceeds, insurance
proceeds, condemnation awards and
proceeds of Mortgage Loan repurchases
that were received on or in respect of
Mortgage Loans during the related
Collection Period and that were
identified and applied by the Master
Servicer as recoveries of principal,
in each case net of any portion of
such amounts that represents a
recovery of the principal portion of
any Scheduled Payment (other than a
Balloon Payment) due or of the
principal portion of any Assumed
Scheduled Payment deemed due, in
respect of the related Mortgage Loan
on a Due Date during or prior to the
related Collection Period and not
previously recovered; (e) for each
Distribution Date after the initial
Distribution Date, the excess, if any,
of the Principal Distribution Amount
for the immediately preceding
Distribution Date, over the aggregate
distributions of principal made on the
Certificates on such immediately
preceding Distribution Date; and (f)
any amounts received but not otherwise
distributed as interest on any Class
of Certificates in respect of an
Appraisal Reduction Amount.
The "Scheduled Payment" due on any
Mortgage Loan on any related Due Date
is the amount of the Monthly Payment
that would have been due thereon on
such date, without regard to any
waiver, modification or amendment
granted or agreed to by the Master
Servicer or the Special Servicer in
connection with a bankruptcy or
similar proceeding involving the
related bor-
- --------------------------------------------------------------------------------
S-16
<PAGE>
- --------------------------------------------------------------------------------
rower, and assuming that each prior
Scheduled Payment has been timely
made. The "Assumed Scheduled Payment"
is an amount deemed due in respect of
a Balloon Loan that is delinquent in
respect of its Balloon Payment beyond
the first Determination Date (as
defined herein) after its stated
maturity date. The Assumed Scheduled
Payment deemed due on any such Balloon
Loan on its stated maturity date and
on each successive related Due Date
that it remains or is deemed to remain
outstanding will equal the Scheduled
Payment that would have been due
thereon on such date if the related
Balloon Payment had not come due but
rather such Mortgage Loan had
continued to amortize in accordance
with such loan's amortization
schedule, if any, in effect prior to
its stated maturity date. The
"Determination Date" will be the 12th
day of each month (or, if not a
business day, the next preceding
business day). See "DESCRIPTION OF THE
CERTIFICATES--Distributions--Principal
Distribution Amount" herein.
Reimbursements of previously allocated
Realized Losses and Additional Trust
Fund Expenses will not constitute
distributions of principal for any
purpose and will not result in an
additional reduction in the
Certificate Balance of the Class of
Certificates in respect of which any
such reimbursement is made.
The holders of the Certificates may also
receive portions of any Prepayment
Premiums and Yield Maintenance Charges
to the extent described under
"DESCRIPTION OF THE
CERTIFICATES--Distributions--
Allocation of Prepayment Premiums and
Yield Maintenance Charges" herein.
Such distributions will be in addition
to the distributions of interest, if
any, made to such holders from the
Available Distribution Amount (as
defined herein) on each Distribution
Date.
P&I Advances ......................... Subject to a recoverability
determination, as described herein,
and further subject to the reduced
advancing obligations in respect of
certain Required Appraisal Loans, the
Master Servicer will be required to
make advances (each, a "P&I Advance")
with respect to each Distribution Date
in an amount that is generally equal
to the aggregate of all Scheduled
Payments (other than Balloon Payments)
and any Assumed Scheduled Payments,
net of related Master Servicing Fees
and any related Principal Recovery
Fees (each as defined herein), due or
deemed due, as the case may be, on or
in respect of the Mortgage Loans
during the related Collection Period,
in each case to the extent that such
amount was not paid by or on behalf of
the related borrower or otherwise
collected as of the close of business
on the last day of the related
Collection Period. If the Master
Servicer fails to make a P&I Advance
required to be made, the Trustee shall
then be required to make such P&I
Advance pursuant to the terms of the
Pooling and Servicing Agreement.
As more fully described herein, the
Master Servicer (or the Trustee, as
applicable) will be entitled to
interest on any P&I Advance made by
it, and each of the Master Servicer
and any Special Servicer will be
entitled to interest on certain
reimbursable
- --------------------------------------------------------------------------------
S-17
<PAGE>
- --------------------------------------------------------------------------------
servicing expenses incurred by either
of them. Such interest will accrue
from the date any such P&I Advance is
made or such servicing expense is
incurred at a rate per annum equal to
the "prime rate" published in the
"Money Rates" section of The Wall
Street Journal, as such "prime rate"
may change from time to time (the
"Reimbursement Rate"), will be
compounded annually and will be paid,
contemporaneously with the
reimbursement of such P&I Advance or
servicing expense, out of general
collections on the Mortgage Pool then
on deposit in the Certificate Account.
See "DESCRIPTION OF THE
CERTIFICATES--P&I Advances" herein and
"DESCRIPTION OF THE
CERTIFICATES--Advances in Respect of
Delinquencies" and "DESCRIPTION OF THE
POOLING AGREEMENTS--Certificate
Account" in the Prospectus.
Compensating Interest Payments ....... To the extent of its servicing
compensation for the related
Collection Period, including
Prepayment Interest Excesses (as
defined herein) received during such
Collection Period, the Master Servicer
is required to make a non-reimbursable
payment (a "Compensating Interest
Payment") with respect to each
Distribution Date to cover the
aggregate of any Prepayment Interest
Shortfalls incurred during such
Collection Period. A "Prepayment
Interest Shortfall" is a shortfall in
the collection of a full month's
interest (net of related Master
Servicing Fee, Additional Servicing
Fee and the Trustee Fee) on any
Mortgage Loan by reason of a full or
partial principal prepayment made
prior to its Due Date in any
Collection Period. A "Prepayment
Interest Excess" is a payment of
interest (net of the related Master
Servicing Fee, Additional Servicing
Fee and Trustee Fee) made in
connection with any full or partial
prepayment of a Mortgage Loan after
its Due Date in any Collection Period,
which payment of interest is intended
to cover the period on and after such
Due Date. The "Net Aggregate
Prepayment Interest Shortfall" for any
Distribution Date will be the amount,
if any, by which (a) the aggregate of
any Prepayment Interest Shortfalls
incurred during the related Collection
Period exceeds (b) any Compensating
Interest Payment made by the
MasterServicer with respect to such
Distribution Date. See "SERVICING OF
THE MORTGAGE LOANS--Servicing and
Other Compensation and Payment of
Expenses" and "DESCRIPTION OF THE
CERTIFICATES--Distributions--
Distributable Certificate Interest"
herein.
Subordination; Allocation of Losses
and Certain Expenses ................ The rights of holders of the Class B,
Class C, Class D, Class E and the
Private Certificates (collectively,
the "Subordinate Certificates"), to
receive distributions of amounts
collected or advanced on the Mortgage
Loans will, in each case, be
subordinated, to the extent described
herein, to the rights of holders of
the Class A-1, Class A-2, Class A-3
and Class IO Certificates
(collectively, the "Senior
Certificates") and each other such
Class of Subordinate Certificates, if
any, with an earlier alphabetical
class designation. This subordination
is intended to enhance the likelihood
of timely receipt by the
- --------------------------------------------------------------------------------
S-18
<PAGE>
- --------------------------------------------------------------------------------
holders of the Senior Certificates of
the full amount of Distributable
Certificate Interest payable in
respect of such Classes of
Certificates on each Distribution
Date, and the ultimate receipt by the
holders of the Senior Certificates
(other than the Class IO Certificates)
of principal equal to the entire
respective Certificate Balances of the
Class A-1, Class A-2 and Class A-3
Certificates. Similarly, but to
decreasing degrees, this subordination
is also intended to enhance the
likelihood of timely receipt by the
holders of the Class B, Class C, Class
D and Class E Certificates of the full
amount of Distributable Certificate
Interest payable in respect of such
Classes of Certificates on each
Distribution Date, and the ultimate
receipt by the holders of such
Certificates of principal equal to the
entire respective Certificate Balances
of those Classes of Certificates. The
protection afforded to the holders of
the Offered Certificates by means of
the subordination referred to above
will be accomplished by (i) the
application of the Available
Distribution Amount on each
Distribution Date in the order
described above in this Summary under
"--Description of the
Certificates--Distributions" and (ii)
by the allocation of Realized Losses
and Additional Trust Fund Expenses as
described below. No other form of
Credit Support will be available for
the benefit of the holders of the
Offered Certificates.
On each Distribution Date, following
all distributions on the Certificates
to be made on such date, the aggregate
of all Realized Losses and Additional
Trust Fund Expenses that have been
incurred since the Cut-off Date
through the end of the related
Collection Period and that have not
previously been so allocated will be
allocated first to the Private
Certificates in the order described in
the Pooling and Servicing Agreement,
and then to the Class E, Class D,
Class C and Class B Certificates, in
that order, until the Certificate
Balance of each such Class has been
reduced to zero. Thereafter any
additional Realized Losses and
Additional Trust Fund Expenses will be
allocated to the Class A-1, Class A-2
and Class A-3 Certificates, pro rata,
in proportion to their outstanding
Certificate Balances (in each case in
reduction of their respective
Certificate Balances), but in the
aggregate only to the extent that the
aggregate Certificate Balance of such
Classes of Certificates remaining
outstanding after giving effect to the
distributions on such Distribution
Date exceeds the aggregate Stated
Principal Balance of the Mortgage Pool
that will be outstanding immediately
following such Distribution Date. See
"DESCRIPTION OF THE
CERTIFICATES--Subordination;
Allocation of Losses and Certain
Expenses" herein.
Any Realized Loss or Additional Trust
Fund Expenses allocated in reduction
of the Certificate Balance of any
Class of Certificate will result in a
corresponding reduction in the
notional amount of the Class IO-1
Component, and any Realized Loss or
Additional Trust Fund Expenses
allocated in reduction of the
Certificate Balance of the Class A-1
or Class A-2 Certificates will also
result
- --------------------------------------------------------------------------------
S-19
<PAGE>
- --------------------------------------------------------------------------------
in a corresponding reduction in the
notional amount of the Class IO-2
Component.
Treatment of REO Properties .......... Notwithstanding that a Mortgaged
Property may be acquired on behalf of
the Certificateholders through
foreclosure, deed in lieu of
foreclosure or otherwise (upon
acquisition, an "REO Property"), the
related Mortgage Loan will be treated,
for purposes of (i) determining
distributions on the Certificates,
(ii) allocations of Realized Losses
and Additional Trust Fund Expenses to
the Certificates and (iii) the amount
of fees payable to the Trustee, the
Master Servicer and the Special
Servicer under the Pooling and
Servicing Agreement, as having
remained outstanding until such REO
Property is liquidated. In connection
therewith, operating revenues and
other proceeds derived from such REO
Property (net of related operating
costs, including certain
reimbursements payable to the Master
Servicer or any separate Special
Servicer in connection with the
operation and disposition of such REO
Property) will be "applied" by the
Master Servicer as principal, interest
and other amounts that would have been
"due" on such Mortgage Loan, and the
Master Servicer will make P&I Advances
in respect of such Mortgage Loan, in
all cases as if such Mortgage Loan had
remained outstanding.
Optional Termination ................. Each of the Depositor and the Master
Servicer will have an option to
purchase all of the Mortgage Loans and
all REO Properties, if any, and
thereby effect termination of the
Trust Fund and early retirement of the
then outstanding Certificates, on any
Distribution Date on which the
aggregate Stated Principal Balance of
the Mortgage Pool is less than 1% of
the Initial Pool Balance. See
"DESCRIPTION OF THE
CERTIFICATES--Termination" herein and
in the Prospectus.
Certain Investment Considerations .... The yield to maturity of a Class A-1,
Class A-2, Class A-3, Class B, Class
C, Class D and Class E Certificate
purchased at a discount or premium
will be affected by the rate of
prepayments and other unscheduled
collections of principal on or in
respect of the Mortgage Loans and the
allocation thereof to reduce the
principal balance of such Certificate.
An investor should consider, in the
case of any such Certificate purchased
at a discount, the risk that a slower
than anticipated rate of prepayments
could result in a lower than
anticipated yield and, in the case of
any such Certificate purchased at a
premium, the risk that a faster than
anticipated rate of prepayments could
result in a lower than anticipated
yield. In addition, the yield to
maturity of the Class IO Certificates
will be highly sensitive to the rate
and timing of principal payments
(including by reason of prepayments,
defaults and liquidations) on the
Mortgage Loans, and investors in the
Class IO Certificates should fully
consider the associated risks,
including the risk that a rapid rate
of prepayments and/or liquidations in
respect of the Mortgage Loans could
result in the failure of such
investors to fully recoup their
initial investments. See "YIELD AND
MATURITY CONSIDERATIONS" herein and in
the Prospectus. The allocation to any
Offered Class of any Prepayment
- --------------------------------------------------------------------------------
S-20
<PAGE>
- --------------------------------------------------------------------------------
Premium or Yield Maintenance Charge
may be insufficient to offset fully
the effects on the reduction to the
anticipated yield to maturity
resulting from the corresponding
principal prepayment. See "DESCRIPTION
OF CERTIFICATES--Distributions--
Allocation of Prepayment Premiums and
Yield Maintenance Charges" herein.
In addition, insofar as an investor's
initial investment in any Offered
Certificate is returned in the form of
payments of principal thereon, there
can be no assurance that such amounts
can be reinvested in comparable
alternative investments with
comparable yields. Investors in the
Offered Certificates should consider
that, as of the Cut-off Date, certain
of the Mortgage Loans may be prepaid
at any time and the remainder may be
prepaid at any time after the
expiration of the applicable Lock-Out
Period (as defined herein), subject,
in most cases, to the payment of a
Prepayment Premium or Yield
Maintenance Charge. See "DESCRIPTION
OF THE MORTGAGE POOL--Prepayment
Provisions" herein. Accordingly, the
rate of prepayments on the Mortgage
Loans is likely to be inversely
related to the level of prevailing
market interest rates (and,
presumably, to the yields on
comparable alternative investments).
Certain Federal Income Tax
Consequences ........................ Three (3) separate "real estate
mortgage investment conduit" (
"REMIC") elections will be made with
respect to the Trust Fund for federal
income tax purposes with the resulting
REMICs being herein referred to as
"REMIC I," "REMIC II" and "REMIC III."
The assets of REMIC I will consist of
the Mortgage Loans, any REO Properties
acquired on behalf of the
Certificateholders and the Certificate
Account (see "DESCRIPTION OF THE
POOLING AGREEMENTS--Certificate
Account" in the Prospectus). For
federal income tax purposes, (a) the
separate noncertificated regular
interests in REMIC I will be the
"regular interests" in REMIC I and
will constitute the assets of REMIC
II, (b) the Class R-I Certificates
will be the sole class of "residual
interests" in REMIC I, (c) the
separate noncertificated regular
interests in REMIC II will be the
"regular interests" in REMIC II and
will constitute the assets of REMIC
III, (d) the Class R-II Certificates
will be sole class of "residual
interests" in REMIC II, (e) the REMIC
Regular Certificates will be the
"regular interests" in REMIC III and
generally will be treated as debt
instruments of REMIC III, and (f) the
Class R-III Certificates will be the
sole class of "residual interests" in
REMIC III.
The Class A-1, Class A-2, Class A-3,
Class B and Class C Certificates will
not, the Class D Certificate may, and
the ClassE and IO Certificates will,
be treated as having been issued with
original issue discount for federal
income tax reporting purposes. The
prepayment assumption that will be
used for purposes of computing the
accrual of original issue discount,
market discount and premium, if any,
for federal income tax purposes will
be equal to a CPR of 0%. However, no
representation is
- --------------------------------------------------------------------------------
S-21
<PAGE>
- --------------------------------------------------------------------------------
made that the Mortgage Loans will
prepay at that rate or at any other
rate.
The Offered Certificates will be
treated as "real estate assets" within
the meaning of Section 856(c)(5)(A) of
the Code. In addition, interest
(including original issue discount) on
the Offered Certificates will be
interest described in Section
856(c)(3)(B) of the Code. However, the
Offered Certificates will generally
only be considered assets described in
Section 7701(a)(19)(C) of the Code to
the extent that the Mortgage Loans are
secured by residential property and,
accordingly, an investment in the
Offered Certificates may not be
suitable for certain thrift
institutions.
For further information regarding the
federal income tax consequences of
investing in the Offered Certificates,
see "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" herein and in the
Prospectus.
ERISA Considerations ................. A fiduciary of any employee benefit
plan or other retirement arrangement
subject to the Employee Retirement
Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of
the Code (a "Plan") should review
carefully with its legal advisors
whether the purchase or holding of
Offered Certificates could give rise
to a transaction that is prohibited or
is not otherwise permitted either
under ERISA or Section 4975 of the
Code or whether there exists any
statutory or administrative exemption
applicable to an investment therein.
The U.S. Department of Labor has
issued to Merrill Lynch an individual
exemption, Prohibited Transaction
Exemption 90-29, which generally
exempts from the application of
certain of the prohibited transaction
provisions of Section 406 of ERISA and
the excise taxes imposed on such
prohibited transactions by Sections
4975(a) and (b) of the Code and
Section 502(i) of ERISA, transactions
relating to the purchase, sale and
holding of pass-through certificates
underwritten by Merrill Lynch and the
servicing and operation of related
asset pools, provided that certain
conditions are satisfied.
The Depositor expects that the
Prohibited Transaction Exemption will
generally apply to the Class A-1,
Class A-2, Class A-3 and Class IO
Certificates, but it will not apply to
the other Classes of Offered
Certificates. Accordingly, except as
described herein, the Class B, Class
C, Class D and Class E Certificates
should not be acquired by a Plan. See
"ERISA CONSIDERATIONS" herein and in
the Prospectus.
Ratings .............................. It is a condition of their issuance
that the Offered Certificates receive
the ratings from each of Fitch
Investors Service, L.P. ("Fitch"),
Duff & Phelps Credit Rating Co. (
"DCR") and, except with respect to the
Class IO Certificates, Standard &
Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. (
"Standard & Poor's," and together with
Fitch and DCR, the "Rating Agencies")
set forth on the cover page of this
Prospectus Supplement. A security
rating is not a recom-
- --------------------------------------------------------------------------------
S-22
<PAGE>
- --------------------------------------------------------------------------------
mendation to buy, sell or hold
securities and may be subject to
revision or withdrawal at any time by
the assigning rating organization. A
security rating does not represent any
assessment of (i) the likelihood or
frequency of principal prepayments or
default interest on the Mortgage
Loans, (ii) the degree to which such
prepayments might differ from those
originally anticipated or (iii)
whether and to what extent Prepayment
Premiums and Yield Maintenance Charges
will be received. Also, a security
rating does not represent any
assessment of the yield to maturity
that investors may experience or the
possibility that the holders of the
Class IO Certificates might not fully
recover their investment in the event
of rapid prepayments of the Mortgage
Loans (including both voluntary and
involuntary prepayments). As described
herein, the amounts payable with
respect to the Class IO Certificates
consist only of interest. If the
entire pool were to prepay in the
initial month, with the result that
the Class IO Certificateholders
receive only a single month's interest
and thus suffer a nearly complete loss
of their investment, all amounts "due"
to such Certificateholders will
nevertheless have been paid, and such
result is consistent with the ratings
received on the Class IO Certificates.
The rating does not address the timing
or magnitude of reductions of the
notional amounts of the Components of
the Class IO Certificates, but only
the obligation to pay interest timely
on the Notional Amount as reduced from
time to time. Accordingly, the ratings
of the Class IO Certificates should be
evaluated independently from similar
ratings on other types of securities.
See "RATINGS" herein and "RISK
FACTORS--Limited Nature of Ratings" in
theProspectus.
Legal Investment ..................... The Offered Certificates will not
constitute "mortgage related
securities" for purposes of the
Secondary Mortgage Market Enhancement
Act of 1984. As a result, the
appropriate characterization of the
Offered Certificates under various
legal investment restrictions, and
thus the ability of investors subject
to these restrictions to purchase the
Offered Certificates of any Class, may
be subject to significant
interpretative uncertainties. In
addition, institutions whose
investment activities are subject to
review by federal or state regulatory
authorities may be or may become
subject to restrictions on the
investment by such institutions in
certain forms of mortgage backed
securities. Investors should consult
their own legal advisors to determine
whether and to what extent the Offered
Certificates constitute legal
investments for them. See "LEGAL
INVESTMENT" herein and in the
Prospectus.
- --------------------------------------------------------------------------------
S-23
<PAGE>
RISK FACTORS
Prospective purchasers of the Offered Certificates of any Class should
consider, among other things, the following risk factors (as well as the risk
factors set forth under "RISK FACTORS" in the Prospectus) in connection with an
investment therein.
The Certificates
Limited Liquidity. There is currently no secondary market for the Offered
Certificates. While each of Merrill Lynch and First Union currently intends to
make a secondary market in the Offered Certificates, neither is under any
obligation to do so. Accordingly, there can be no assurance that a secondary
market for the Offered Certificates will develop. Moreover, if a secondary
market does develop, there can be no assurance that it will provide holders of
the Offered Certificates with liquidity of investment or that it will continue
for the life of the Offered Certificates. Any such secondary market may provide
less liquidity to investors than any comparable market for securities that
evidence, for example, interests solely in single-family mortgage loans. The
Certificates will not be listed on any securities exchange.
Certain Yield and Maturity Considerations. The yield on any Offered
Certificate that is purchased at a discount or premium will be affected by the
rate and timing of principal payments applied in reduction of the actual
principal amount of such Certificate (or, in the case of the Class IO
Certificates, the notional amount of its Components), which in turn will be
affected by (i) the rate and timing of principal payments and collections on the
Mortgage Loans, particularly unscheduled payments or collections in the form of
voluntary prepayments of principal or unscheduled recoveries of principal due to
defaults, casualties or condemnations whether before or after the scheduled
maturity date of the related Mortgage Loans, and (ii) the order of priority of
distributions of principal in respect of the Certificates. The rate and timing
of unscheduled payments and collections of principal on the Mortgage Loans is
impossible to accurately predict and will be affected by a variety of factors,
including, without limitation, the level of prevailing interest rates,
restrictions on voluntary prepayments contained in the Mortgage Notes, the
availability of mortgage credit and other economic, demographic, geographic, tax
and legal factors. In general, however, if prevailing interest rates fall
significantly below the Mortgage Rates on the Mortgage Loans, the Mortgage Loans
are likely to prepay at a higher rate than if prevailing rates remain at or
above those Mortgage Rates. As described herein, the Principal Distribution
Amount for each Distribution Date will be distributable entirely in reduction of
the Certificate Balance of the Class A-1 Certificates until the Certificate
Balance thereof is reduced to zero, and will thereafter be distributable in its
entirety in respect of each remaining Class of Certificates (except for the
Class IO Certificates), sequentially in alphabetical and numerical order of
Class designation, until the Certificate Balance of each such Class is, in turn,
reduced to zero (the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E and Private Certificates, collectively, the "Sequential Pay
Certificates"). See "DESCRIPTION OF THE CERTIFICATES--Distributions--Application
of the Available Distribution Amount" herein. Accordingly, the actual rate of
principal payments on the Mortgage Loans may have different effects on the
yields of the respective Classes of Offered Certificates. Any payment of
principal in reduction of the principal balance of any Mortgage Loan will result
in a corresponding reduction in the notional amount of the Class IO-1 Component,
and any payment of principal in reduction of the Certificate Balance of the
Class A-1 or Class A-2 Certificates will also result in a corresponding
reduction in the notional amount of the Class IO-2 Component. Thus, the yield on
the Class IO Certificates will be extremely sensitive to the rate and timing of
principal payments on the Mortgage Loans, and the more quickly the notional
amounts of the Components are reduced, the greater will be the negative effect
on their yields, to the extent such effect is not offset by distributions of a
portion of any applicable Prepayment Premiums or Yield Maintenance Charges to
the holders thereof, as described under "DESCRIPTION OF THE
CERTIFICATES--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges" herein. In addition, the Mortgage Loans may not require the
payment of Prepayment Premiums or Yield Maintenance Charges in the event of
involuntary prepayments resulting from casualty or condemnation. Accordingly,
prospective investors in the Class IO Certificates should consider the
associated risks, including the risk that a rapid rate of prepayments on the
Mortgage Loans could result in the failure of such investors to recoup their
initial investments.
The yield on any Offered Certificate also will be affected by the rate and
timing of losses attributable to defaults on the Mortgage Loans, the severity of
such losses and the extent to which such losses and related expenses are applied
in reduction of the actual or notional principal amount of such Certificate or
otherwise reduce the amount of funds available for distribution to the holder of
such Certificate. To the extent described herein, the Private Certificates are
subordinate in right and time of payment to the Offered Certificates and will
bear shortfalls in collections and losses incurred in respect of the Mortgage
Loans prior to the Offered Certificates; and the Class B, Class C, Class D and
Class
S-24
<PAGE>
E Certificates are subordinate in right and time of payment to the Class
A-1, Class A-2, Class A-3, and Class IO Certificates and will bear such
shortfalls and losses prior to the Class A-1, Class A-2, Class A-3 and Class IO
Certificates, in reverse alphabetical order of Class designation. Even though
(i) the Class A-3 Certificates will receive principal payments only after the
Certificate Balances of the Class A-2 and Class A-1 Certificates have been
reduced to zero and (ii) the Class A-2 Certificates will receive principal
payment only after the Certificate Balance of the Class A-1 Certificates has
been reduced to zero, the Class A-1, Class A-2 and Class A-3 Certificates will
bear shortfalls in collections and losses incurred in respect of the Mortgage
Loans pro rata, in proportion to their outstanding Certificate Balances. Any
Realized Loss or Additional Trust Fund Expenses allocated in reduction of the
Certificate Balance of any Class of Certificate will result in a corresponding
reduction in the notional amount of the Class IO-1 Component, and any Realized
Loss or Additional Trust Fund Expenses allocated in reduction of the Certificate
Balance of the Class A-1 or Class A-2 Certificates will also result in a
corresponding reduction in the notional amount for the Class IO-2 Component. See
"DESCRIPTION OF THE CERTIFICATES--Distributions" and "--Subordination;
Allocation of Losses and Certain Expenses" herein and "YIELD AND MATURITY
CONSIDERATIONS" herein and in the Prospectus.
The Pass-Through Rate applicable to the Class IO-1 Component will be
variable on any Distribution Date and will be equal to the Weighted Average Net
Mortgage Rate minus ____%, and the Pass-Through-Rate applicable to the Class
IO-2 Component will be equal to the weighted average of the Class A-1 Strip Rate
and the Class A-2 Strip Rate. Accordingly, the Pass-Through Rate on the
Components and, correspondingly, the yield on the Class IO Certificates will be
sensitive to changes in the relative composition of the Mortgage Pool as a
result of scheduled amortization, voluntary prepayments and liquidations. See
"DESCRIPTION OF THE CERTIFICATES--Distributions" and "Subordination; Allocation
of Losses and Certain Expenses" herein and "YIELD AND MATURITY CONSIDERATIONS"
herein and in the Prospectus.
Potential Conflicts of Interest. Subject to certain conditions described
herein, the Pooling and Servicing Agreement will permit the holder (or holders)
of the majority of the Voting Rights allocated to the Class of Sequential Pay
Certificates that has the latest alphabetical Class designation and that has a
Certificate Balance that is greater than 20% of its original Certificate Balance
(or, if no Class of Sequential Pay Certificates has a Certificate Balance that
is greater than 20% of its original Certificate Balance, the Class of Sequential
Pay Certificates with the latest alphabetical Class designation) to replace the
Special Servicer or any successor thereafter appointed. An appointing
Certificateholder will not be prohibited from appointing itself or an affiliate.
As described herein, any such Special Servicer will have considerable latitude
in determining to liquidate or modify defaulted Mortgage Loans. In addition, the
Special Servicer will perform certain servicing functions with respect to the
Mortgage Loans, pursuant to the Pooling and Servicing Agreement. See "SERVICING
OF THE MORTGAGE LOANS-- Modifications, Waivers and Amendments" herein. Although
the Special Servicer will be obligated to observe the terms of the Pooling and
Servicing Agreement and will be governed by the servicing standard described
herein, it may, especially if it is itself a Certificateholder, have interests
when dealing with defaulted Mortgage Loans that are in conflict with those of
holders of Offered Certificates. For instance, a Special Servicer that is a
Certificateholder could seek to mitigate the potential for loss to its Class
from a troubled Mortgage Loan by deferring enforcement in the hope of maximizing
future proceeds. However, such action could result in less proceeds to the Trust
Fund than would have been realized if earlier action had been taken. The
Mortgage Loans
Risks of Lending on Income-Producing Properties. The Mortgaged Properties
consist entirely of income-producing real estate. Lending on the security of
income-producing real estate is generally viewed as exposing a lender to a
greater risk of loss than lending on the security of single-family residences.
Income property lending typically involves larger loans than single-family
lending. In addition, and unlike loans made on the security of single family
residences, repayment of loans made on the security of income-producing real
property depends upon the ability of the related real estate project (i) to
generate rental income sufficient to pay operating expenses and leasing
commissions, to make necessary repairs, tenant improvements and capital
improvements and to pay debt service and (ii) in the case of loans that do not
fully amortize over their terms, to retain sufficient value to permit the
borrower to pay off the loan at maturity by sale or refinancing. A number of
factors, many beyond the control of the property owner, can affect the ability
of an income-producing real estate project to generate sufficient net operating
income to pay debt service and/or to maintain its value. Among these factors are
economic conditions generally and in the area of the project, the age, quality
and design of the project and the degree to which it competes with other
projects in the area, changes or continued weakness in specific industry
segments, increases in operating costs, the willingness and ability of the owner
to provide capable property management and maintenance and, in the case of
Mortgaged Properties that are retail, industrial/warehouse or office properties,
the degree to which the project's revenue is dependent upon a single
S-25
<PAGE>
tenant or user, a small group of tenants, tenants concentrated in a particular
business or industry and the competition to any such tenants. If leases are not
renewed or replaced, if tenants default and/or if rental rates fall and/or if
operating expenses increase, the borrower's ability to repay the loan may be
impaired and the resale value of the property, which is substantially dependent
upon the property's ability to generate income, may decline. In addition, there
are other factors, including changes in zoning or tax laws, the availability of
credit for refinancing, and changes in interest rate levels that may adversely
affect the value of a project (and thus the borrower's ability to sell or
refinance) without necessarily affecting the ability to generate current income.
In addition, particular types of income properties are exposed to
particular risks. For instance, office properties may require their owners to
expend significant amounts of cash to pay for general capital improvements,
tenant improvements and costs of re-leasing space. Also, office properties that
are not equipped to accommodate the needs of modern businesses may become
functionally obsolete and thus non-competitive. Multifamily projects are part of
a market that, in general, is characterized by low barriers to entry. Thus, a
particular apartment market with historically low vacancies could experience
substantial new construction, and a resultant oversupply of units, in a
relatively short period of time. Since multifamily apartment units are typically
leased on a short-term basis, the tenants who reside in a particular project
within such a market may easily move to alternative projects with more desirable
amenities or locations. The rent limitations imposed on Section 42 Properties
may adversely affect the ability of the applicable borrowers to increase rents
to maintain such Mortgaged Properties in proper condition during periods of
rapid inflation or declining market value of such Mortgaged Properties. In
addition, the income restrictions on tenants imposed by Section 42 of the Code
may reduce the number of eligible tenants in such Mortgaged Properties and
result in a reduction in occupancy rates applicable thereto. See "DESCRIPTION OF
THE MORTGAGE POOL--Certain Terms and Conditions of the Mortgage Loans--Low
Income Housing Tax Credits" herein. Shopping centers, in general, are affected
by the health of the retail industry, which is currently undergoing a
consolidation and is experiencing changes due to the growing market share of
"off-price" retailing, and a particular shopping center may be adversely
affected by the bankruptcy or decline in drawing power of an anchor tenant, a
shift in consumer demand due to demographic changes (for example, population
decreases or changes in average age or income) and/or changes in consumer
preference (for example, to discount retailers). See "DESCRIPTION OF THE
MORTGAGE POOL--Additional Mortgage Loan Information--Certain Lease Matters"
herein. Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment (for
example, a decline in defense spending), and a particular industrial property
that suited the needs of its original tenant may be difficult to relet to
another tenant or may become functionally obsolete relative to newer properties.
The successful operation of a hospitality property with a franchise affiliation
may depend in part upon the strength of the franchisor, the public perception of
the franchise service mark and the continued existence of the franchise license
agreement. The transferability of a franchise license agreement may be
restricted, and a lender or other person that acquires title to a hotel property
as a result of foreclosure may be unable to succeed to the borrower's rights
under the franchise license agreement. Moreover, the transferability of a
hotel's operating, liquor and other licenses upon a transfer of the hotel,
whether through purchase or foreclosure, is subject to local law requirements.
See "RISK FACTORS--Risks Associated with Certain Mortgage Loans and Mortgaged
Properties" in the Prospectus.
Mortgage Loans secured by liens on residential health care facilities pose
risks not associated with loans secured by liens on other types of
income-producing real estate. Providers of long-term nursing care, assisted
living and other medical services are subject to federal and state laws that
relate to the adequacy of medical care, distribution of pharmaceuticals, rate
setting, equipment, personnel, operating policies and additions to facilities
and services and, to the extent dependent on patients whose fees are reimbursed
by private insurers, to the reimbursement policies of such insurers. The failure
of any of such borrower to maintain or renew any required license or regulatory
approval could prevent it from continuing operations at a Mortgaged Property (in
which case no revenues would be received from such property or portion thereof
requiring licensing) or, if applicable, bar it from participation in government
reimbursement programs. Furthermore, in the event of foreclosure, there can be
no assurance that the Trustee or any other purchaser at a foreclosure sale would
be entitled to the rights under such licenses and such party may have to apply
in its own right for such a license. There can be no assurance that a new
license could be obtained or that the related Mortgage Property would be
adaptable to other uses. To the extent any nursing home receives a significant
portion of its revenues from government reimbursement programs, primarily
Medicaid and Medicare, such revenue may be subject to statutory and regulatory
changes, retroactive rate adjustments, administrative rulings, policy
interpretations, delays by fiscal intermediaries and government funding
restrictions. Moreover, governmental payors have employed cost-containment
measures that limit payments to health care providers, and there are currently
under consideration various proposals in the United States Congress that could
materially change or curtail those payments.
S-26
<PAGE>
Accordingly, there can be no assurance that payments under government
reimbursement programs will, in the future, be sufficient to fully reimburse the
cost of caring for program beneficiaries. If not, net operating income of the
Mortgaged Properties that receive substantial revenues from those sources, and
consequently the ability of the related borrowers to meet their Mortgage Loan
obligations, could be adversely affected. Under applicable federal and state
laws and regulations, including those that govern Medicare and Medicaid
programs, only the provider who actually furnished the related medical goods and
services may sue for or enforce its rights to reimbursement. Accordingly, in the
event of foreclosure, none of the Trustee, the Master Servicer, the Special
Servicer or a subsequent lessee or operator of the property would generally be
entitled to obtain from federal or state governments any outstanding
reimbursement payments relating to services furnished at the respective
properties prior to such foreclosure.
Nonrecourse Mortgage Loans. The Mortgage Loans are generally not insured or
guaranteed by any governmental entity or private mortgage insurer. The Depositor
has not undertaken any evaluation of the significance of the recourse provisions
of Mortgage Loans for recourse against the related borrower or another person in
the event of a default. Accordingly, investors should consider all of the
Mortgage Loans to be nonrecourse loans as to which recourse in the case of
default will be limited to the related Mortgaged Property.
Environmental Law Considerations. Contamination of real property may give
rise to a lien on that property to assure payment of the cost of clean-up or, in
certain circumstances, may result in liability to the lender for that cost. Such
contamination may also reduce the value of a property. A "Phase I" environmental
site assessment was performed at each of the Mortgaged Properties and no such
assessment or additional assessments (including any "Phase II" environmental
site assessments) revealed any environmental condition or circumstance
considered material and adverse to the interests of the holders of the Offered
Certificates. See "DESCRIPTION OF THE MORTGAGE POOL--Assessments of Property
Condition--Environmental and Engineering Assessments" herein.
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a Mortgaged Property prior to
acquiring title thereto or assuming its operation. Such requirement effectively
precludes enforcement of the security for the related Mortgage Note until a
satisfactory environmental site assessment is obtained (or until any required
remedial action is thereafter taken), but will decrease the likelihood that the
Trust Fund will become liable for a material adverse environmental condition at
the Mortgaged Property. However, there can be no assurance that the requirements
of the Pooling and Servicing Agreement will effectively insulate the Trust Fund
from potential liability for a materially adverse environmental condition at any
Mortgaged Property. See "DESCRIPTION OF THE POOLING AGREEMENTS--Realization Upon
Defaulted Mortgage Loans", "RISK FACTORS--Environmental Risks" and "CERTAIN
LEGAL ASPECTS OF MORTGAGE LOANS--Environmental Considerations" in the
Prospectus.
Balloon Payments. Two hundred forty-five (245) of the Mortgage Loans, or
80%, do not fully amortize over their terms to maturity and, except for three of
such Mortgage Loans, will have Balloon Payments due on their respective stated
maturity dates unless prepaid prior thereto. Loans with Balloon Payments involve
a greater risk to a lender than fully-amortizing loans because the ability of a
borrower to make a Balloon Payment typically will depend upon its ability either
to fully refinance the loan or to sell the related mortgaged property at a price
sufficient to permit the borrower to make the Balloon Payment. Moreover, and
whether or not losses are ultimately sustained, any delay in the collection of a
Balloon Payment that would otherwise be distributable in respect of a Class of
Offered Certificates will likely extend the weighted average life of such Class.
The ability of a borrower to effect a refinancing or sale will be affected by a
number of factors, including the value of the related Mortgaged Property, the
level of available mortgage rates at the time of sale or refinancing, the
borrower's equity in the Mortgaged Property, the financial condition and
operating history of the borrower and the Mortgaged Property, tax laws,
prevailing general economic conditions and the availability of credit for loans
secured by multifamily or commercial, as the case may be, real properties
generally. See "RISK FACTORS--Balloon Payments; Borrower Default" in the
Prospectus.
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling
and Servicing Agreement permits the Master Servicer, or the Special Servicer, to
extend and modify Mortgage Loans that are in material default or as to which a
payment default (including the failure to make a Balloon Payment) is imminent;
subject, however, to the limitations described under "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments" herein. There can be no assurance,
however, that any such extension or modification will increase the present value
of recoveries in a given case. Any delay in collection of a Balloon Payment that
would otherwise be distributable in respect of a Class of Offered Certificates,
whether such delay is due to borrower default or to modification of the related
Mortgage Loan, will likely extend the weighted average life of such Class of
Offered Certificates. See "YIELD AND MATURITY CONSIDERATIONS" herein and in the
Prospectus.
S-27
<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
General
The Mortgage Pool will consist of 300 conventional, fixed rate Mortgage
Loans with an Initial Pool Balance of $1,138,310,835, equal to the aggregate
Cut-off Date Balance of such Mortgage Loans. The Cut-off Date Balances of the
Mortgage Loans range from $257,059 to $38,500,000 and the Mortgage Loans will
have an average Cut-off Date Balance of $3,794,369. All percentages of the
Mortgage Loans, or of any specified group of Mortgage Loans, referred to herein
without further description are approximate percentages by aggregate Cut-off
Date Balance. References to percentages of Mortgaged Properties referred to
herein without further description are references to the percentages of the
Initial Pool Balance represented by the aggregate Cut-off Date Balance of the
related Mortgage Loans. For purposes of calculations herein, as shown on Annex A
hereto, two of the Mortgage Loans are each deemed to be secured by two Mortgage
Properties. All of the remaining Mortgage Loans are each deemed to be secured by
one Mortgaged Property, whether or not such Mortgaged Property is comprised of
more than one parcel. As a result, the Mortgage Loans in the aggregate will be
secured by a total of 302 Mortgaged Properties. All numerical information
provided herein with respect to the Mortgage Loans is provided on an approximate
basis.
Each Mortgage Loan is evidenced by a promissory note (a "Mortgage Note")
and secured by a mortgage, deed of trust or other similar security instrument (a
"Mortgage") that creates a first mortgage lien on a fee simple estate (or with
respect to six (6) Mortgage Loans, or 2%, on the borrower's leasehold estate) in
an income-producing real property (each, a "Mortgaged Property"). One hundred
fifty-one (151) of the Mortgaged Properties, or 44%, are multifamily rental
properties (including 11 Mortgaged Properties, or 2%, which are Section 42
Properties); seventy-six (76) of the Mortgaged Properties, or 25%, are retail
properties (including 42 anchored retail or 19%, and 34 unanchored retail, or
7%, as indicated on Annex A hereto); twenty-three (23) of the Mortgaged
Properties, or 10%, are hospitality properties (all but one of which are
affiliated with recognized hotel/motel franchisors); sixteen (16) of the
Mortgaged Properties, or 7%, are industrial properties and eighteen (18) of the
Mortgaged Properties, or 7%, are office properties. No other type of property
accounts for more than 3% of the Mortgaged Properties. The Mortgaged Properties
are located throughout 36 states, including Texas (66 Mortgaged Properties, or
15%), California (29 Mortgaged Properties, or 13%) and Florida (33 Mortgaged
Properties, or 11%). No other state has a concentration of Mortgaged Properties
equal to or greater than 6%. No Mortgage Loan or group of Mortgage Loans to one
borrower or group of related borrowers exceed 5% of the Initial Pool Balance.
See "--Additional Mortgage Loan Information."
One hundred forty-two (142) of the Mortgage Loans, or 49% (the "MLMCI
Loans") were acquired by the Depositor from MLMCI, which acquired such Mortgage
Loans concurrently with or shortly after origination from one of the
participants in its commercial and multifamily mortgage loan conduit program.
One hundred fifty-eight (158) of the Mortgage Loans, or 51% (the "FUNB Loans")
were acquired by the Depositor from FUNB, which originated or acquired such
Mortgage Loans concurrently with or shortly after origination. All of the
Mortgage Loans were originated in 1996.
None of the Mortgage Loans will be 30 days or more delinquent as of the
Cut-off Date, and no Mortgage Loan has been more than 30 days delinquent during
the 12 months preceding the Cut-off Date.
Certain Terms and Conditions of the Mortgage Loans
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at Mortgage Rates that will remain fixed for their remaining terms,
except after the scheduled maturity date with respect to three of the Mortgage
Loans. All of the Mortgage Loans accrue interest on the basis (a "30/360 basis")
of a 360-day year consisting of twelve 30-day months.
Due Dates. All of the Mortgage Loans have Due Dates (that is, the dates
upon which the related Monthly Payments first become due) that occur on the
first day of each month.
Amortization. Two hundred forty-five (245) of the Mortgage Loans, or 80%,
provide for Monthly Payments based on amortization schedules significantly
longer than their terms to maturity, and, except for three of those Mortgage
Loans, will have Balloon Payments due and payable on their respective maturity
dates, unless prepaid prior thereto. With respect to three of the Mortgage
Loans, or 2%, which are considered Balloon Loans herein, the Balloon Payment is
not due on the scheduled maturity date. Under the terms of each such Mortgage
Loan, if the Balloon Payment is not repaid on or prior to its scheduled maturity
date, in addition to the Scheduled Payments due thereunder, the Mortgage Loan
will accrue additional interest at the rate set forth therein and the borrower
will be required to apply excess monthly cash flow on the Mortgaged Property
over certain permitted expenses set forth in the Mortgage Loan to the repayment
of principal thereon. With respect to such Mortgage Loans, no Prepayment
Premiums or Yield Main-
S-28
<PAGE>
tenance charges will be due in connection with any principal prepayment after
the scheduled maturity date. Fifty-five (55) of the Mortgage Loans, or 20%, are
self-amortizing. See "RISK FACTORS--Balloon Payments" herein.
Prepayment Provisions. As of the Cut-off Date, all of the Mortgage Loans
restrict or prohibit voluntary principal prepayment. In general, the Mortgage
Loans either (i) prohibit voluntary prepayments of principal for a period (a
"Lockout Period") ending on a date specified in the related Mortgage Note and
thereafter, in general, require that prepayments made for most of their
respective terms to maturity be accompanied by a Prepayment Premium and/or Yield
Maintenance Charge in excess of the amount prepaid (two hundred ninety (290)
Mortgage Loans, or 98.1%); (ii) prohibit voluntary payments of principal for a
Lockout Period and thereafter permit voluntary principal prepayments in whole
without material restrictions (nine (9) Mortgage Loans, or 1.8%) or (iii) permit
voluntary principal payments provided that the prepayment is accompanied by a
Yield Maintenance Charge, then a Prepayment Premium for most of their respective
terms to maturity (one (1) Mortgage Loan, or 0.1%). With respect to the Mortgage
Loans which contain Yield Maintenance Charges, 154 of such Mortgage Loans, or
58%, calculate the Yield Maintenance Charge using a discount rate equal to the
applicable Treasury Rate (as set forth in the related Mortgage), and 118 of such
Mortgage Loans, or 35%, calculate the Yield Maintenance Charge using a discount
rate equal to the Treasury Rate plus 0.50%. See "--Additional Mortgage Loan
Information" herein. Prepayment Premiums and Yield Maintenance Charges, if and
to the extent collected, will be distributed to the holders of the Offered
Certificates as described herein under "DESCRIPTION OF THE
CERTIFICATES--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges." The Depositor makes no representation as to the
collectability of any Prepayment Premium or Yield Maintenance Charge.
Neither the Master Servicer nor any Special Servicer will be permitted to
waive or modify the terms of any Mortgage Loan prohibiting voluntary prepayments
during a Lockout Period or requiring the payment of a Prepayment Premium or
Yield Maintenance Charge except under the circumstances described in "SERVICING
OF THE MORTGAGE LOANS--Modifications, Waivers and Amendments" herein.
Nonrecourse Obligations. The Mortgage Loans are generally nonrecourse
obligations of the related borrowers and, upon any such borrower's default in
the payment of any amount due under the related Mortgage Loan, the holder
thereof may look only to the related Mortgaged Property for satisfaction of the
borrower's obligations. In addition, in those cases where recourse to a borrower
or guarantor is purportedly permitted, the Depositor has not undertaken an
evaluation of the financial condition of any such person, and prospective
investors should thus consider all of the Mortgage Loans to be nonrecourse.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. All of the Mortgages
contain "due-on-sale" and "due-on-encumbrance" clauses that, in general, permit
the holder of the Mortgage to accelerate the maturity of the related Mortgage
Loan if the borrower sells or otherwise transfers or encumbers the related
Mortgaged Property or prohibit the borrower from doing so without the consent of
the holder of the Mortgage. As provided in the Pooling and Servicing Agreement,
the Master Servicer or the Special Servicer, on behalf of the Trust Fund, will
determine, in a manner consistent with the servicing standard described herein
under "SERVICING OF THE MORTGAGE LOANS--General," whether to exercise any right
the holder of any Mortgage may have under any such clause to accelerate payment
of the related Mortgage Loan upon, or to withhold its consent to, any transfer
or further encumbrance of the related Mortgaged Property.
Cross-Default and Cross-Collateralization of Certain Mortgage Loans.
Thirty-seven (37) of the Mortgage Loans, or 10%, are cross-collateralized and
cross-defaulted with one or more Mortgage Loans in the Mortgage Pool. Of such
Mortgage Loans, nineteen (19) Mortgage Loans, or 4.6% (control numbers 120, 121,
122, 125, 126, 127, 128, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140
and 141) are cross-collateralized with each other; three (3) Mortgage Loans, or
1.5% (control numbers 277, 273 and 274) are cross-collateralized with each
other; three (3) Mortgage Loans or 2.0% (control numbers 276, 278 and 275) are
cross-collateralized with each other; two (2) Mortgage Loans, or 0.7% (control
numbers 200 and 236) are cross-collateralized with each other; six (6) Mortgage
Loans, or 0.4% (control numbers 95, 96, 97, 100, 103 and 104) are
cross-collateralized with each other; two (2) Mortgage Loans, or 0.4% (control
numbers 148 and 150) are cross-collateralized with each other; and two (2)
Mortgage Loans or 0.3% (control numbers 43 and 44) are cross-collateralized with
each other. No Mortgage Loans are cross-collateralized with any loans which are
not included in the Mortgage Pool. The Master Servicer or the Special Servicer,
as the case may be, will determine whether to enforce the cross-default and
cross-collateralization rights upon a mortgage loan default with respect to any
of these Mortgage Loans. The Certificateholders will not have any right to
participate in or control any such determination. No other Mortgage Loans are
subject to cross-collateralization or cross-default provisions.
Low Income Housing Tax Credits. Eleven (11) of the Mortgaged Properties, or
2%, are eligible to receive low-income housing tax credits ("Tax Credits")
pursuant to Section 42 of the Code ("Section 42 Properties"). Section 42
S-29
<PAGE>
of the Code provides a Tax Credit for owners of residential rental property
meeting the definition of low-income housing who have received a tax credit
allocation from the state or local allocating agency.
At the time the project is "placed in service" (that is, when the first
unit is available for occupancy), the property owner must make an irrevocable
election of one of two set-aside rules, either (i) at least 20% of the units
must be rented to tenants with incomes of 50% or less of the median income (as
defined below), or (ii) at least 40% of the units must be rented to tenants with
incomes of 60% or less of the median income. The aggregate amount of Tax Credits
the owner is entitled to is based upon the percentage of total units made
available to qualified tenants. Median income is determined by the U.S.
Department of Housing and Urban Development ("HUD") for each metropolitan area
or county in the United States and is adjusted annually.
The Tax Credit provisions require that gross rent for each low-income unit
not exceed 30% of the annual HUD median income, adjusted for the household size
expected to occupy the particular unit. The gross rent charged for a unit must
take into account an allowance for utilities. If utilities are paid by the
tenant, then the maximum allowable Tax Credit rent is reduced according to
utility allowances, as provided in regulations of the Internal Revenue Service.
Under the Tax Credit provisions, a property owner must comply with the
tenant income restrictions and rental restrictions over a 15-year compliance
period, which provide for an annual adjustment of rent according to published
area median income statistics. In addition, agreements governing the property
may require an "extended use period" which has the effect of extending the
income and rental restrictions for an additional period (typically 15 years).
In the event a Tax Credit project does not maintain compliance with the Tax
Credit restrictions on tenant income or rental rates, the owners of the Tax
Credit project may lose the Tax Credits related to the period of the
noncompliance and face the partial recapture of previously taken Tax Credits.
The loss of Tax Credits, and the possibility of recapture of Tax Credits already
taken, may provide significant incentive for project owners to keep the Tax
Credit project in compliance and to fund property operating deficits.
Assessments of Property Condition
Property Inspection. All of the Mortgaged Properties were inspected within
the eight (8) months prior to the respective dates of origination or
acquisition, by or on behalf of the related Mortgage Loan Seller to assess their
general condition. No inspection revealed any patent structural deficiency or
any deferred maintenance considered material and adverse to the interests of the
holders of the Offered Certificates and for which adequate reserves have not
been established.
Appraisals. All of the Mortgaged Properties were appraised at the request
of the originator of the related Mortgage Loan by a state certified appraiser or
an appraiser belonging to the Appraisal Institute. The purpose of each appraisal
was to provide an opinion of the fair market value of the related Mortgaged
Property. None of the Depositor, the Underwriters, the Trustee, the Master
Servicer or any other entity has prepared or obtained a separate independent
appraisal or reappraisal. There can be no assurance that another appraiser would
have arrived at the same opinion of value.
Environmental and Engineering Assessments. A "Phase I" environmental site
assessment was performed with respect to all the Mortgaged Properties within
eight (8) months (or 15 months with respect to two of the Mortgaged Properties)
prior to the respective dates of origination. No "Phase I" assessment or
additional assessments (including any "Phase II" environmental site assessments)
revealed any environmental condition or circumstance that are considered
material and adverse to the interests of the holders of the Offered Certificates
and for which adequate reserves have not been established. In addition, in
connection with the origination of each Mortgage Loan, a licensed engineer
inspected the related Mortgaged Property to assess the structure, exterior
walls, roofing, interior structure and mechanical and electrical systems. The
resulting reports indicated certain deferred maintenance items or environmental
issues and recommended capital improvements or environmental corrections with
respect to certain of such Mortgaged Properties. Generally, with respect to such
Mortgaged Properties, the related borrowers were required to deposit at the
origination of the related Mortgage Loans an amount equal to at least 125% of
the licensed engineer's or environmental assessor's estimated cost of the
recommended substantial repairs, corrections or replacements to assure their
completion. The amount of such reserves are indicated on Annex A hereto.
Earthquake Analyses. An architectural and engineering consultant performed
an analysis on the 29 Mortgaged Properties located in the State of California in
order to evaluate the structural and seismic condition of the property and to
assess, based primarily on statistical information, the maximum probable loss or
bounded maximum loss for the property in an earthquake scenario. The resulting
reports, which were prepared not earlier than February 1996, concluded that in
the event of an earthquake, only one of those Mortgaged Properties may suffer a
maximum probable loss or bounded maximum loss in excess of 25% of the amount of
the estimated replacement cost of the
S-30
<PAGE>
improvements. The related report for each such Mortgaged Property concluded that
such Mortgaged Property is not likely to suffer a maximum probable loss or
bounded maximum loss in excess of 26% of the amount of the estimated replacement
cost of the improvements. However, such Mortgaged Property has been covered by
earthquake insurance since origination of the related Mortgage Loan and pursuant
to the terms of such Mortgage Loan is required to be covered by such insurance
through maturity. Additional Mortgage Loan Information
The Mortgage Pool. For a detailed presentation of certain of the
characteristics of the Mortgage Loans and the Mortgaged Properties, on an
individual basis, see Annex A hereto. Certain additional information regarding
the Mortgage Loans is contained herein under "--Assignment of the Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases," and in
the Prospectus under "DESCRIPTION OF THE TRUST FUNDS" and "CERTAIN LEGAL ASPECTS
OF MORTGAGE LOANS."
Each of the following tables sets forth certain characteristics of the
Mortgage Pool presented, where applicable, as of the Cut-off Date. For purposes
of the tables:
(i) References to "Remain Amort. Term" are references to the remaining
amortization terms.
(ii) References to "DSCR" are references to "Debt Service Coverage
Ratios." Debt service coverage ratios are used by income property lenders
to measure the ratio of (a) cash currently generated by a property that is
available for debt service (that is, cash that remains after payment of
non-capital expenses of operation, tenant improvements, leasing commissions
and replacement reserves) to (b) required debt service payments. However,
debt service coverage ratios only measure the current, or recent, ability
of a property to service mortgage debt. Typically, a debt service coverage
ratio may not adequately reflect the significant amounts of cash that a
property owner may be required to expend to pay for the costs of tenant
improvements and leasing commissions when expiring leases are replaced. As
a result, the Debt Service Coverage Ratios used herein are lower than they
would be if it did not reflect such assumptions. The "Debt Service Coverage
Ratio" for any Mortgage Loan is the ratio of "Net Cash Flow" produced by
the related Mortgaged Property to the annualized amount of debt service
that will be payable under that Mortgage Loan commencing after the
origination date. The Net Cash Flow for a Mortgaged Property is the "net
cash flow" of such Mortgaged Property as set forth in, or determined by the
Depositor on the basis of, Mortgaged Property operating statements,
generally unaudited, and certified rent rolls (as applicable) supplied by
the related borrower in the case of multifamily, mixed use, retail, mobile
home park, industrial and office properties (each a "Rental Property"). In
general, the applicable Mortgage Loan Seller relied on full year 1995
operating statements, rolling 12-month operating statements and/or 1996
year-to-date financial statements, if available, and on rent rolls for all
Rental Properties that were current as of a date not earlier than six
months prior to the respective date of origination in determining Net Cash
Flow for the Mortgaged Properties.
In general, "net cash flow" is the revenue derived from the use and
operation of a Mortgaged Property less operating expenses (such as
utilities, administrative expenses, repairs and maintenance, tenant
improvement costs, leasing commissions, management fees and advertising),
fixed expenses (such as insurance, real estate taxes and, if applicable,
ground lease payments) and replacement reserves. Net cash flow does not
reflect interest expenses and non-cash items such as depreciation and
amortization, and generally does not reflect capital expenditures, but does
reflect reserves for replacements.
In determining the "revenue" component of Net Cash Flow for each
Rental Property, the applicable Mortgage Loan Seller generally relied on
the most recent certified rent roll (as applicable) supplied and certified
by the related borrower and, where the actual vacancy shown thereon and the
market vacancy was less than 5%, assumed a 5% vacancy in determining
revenue from rents, except that in the case of certain anchored shopping
centers and certain single tenant properties, space occupied by such anchor
or single tenants may have been disregarded in performing the vacancy
adjustment due to the length of the related leases or creditworthiness of
such tenants, in accordance with the respective Mortgage Loan Seller's
underwriting standards. In determining rental revenue for multifamily
properties, the applicable Mortgage Loan Seller either reviewed rental
revenue shown on the certified rolling 12-month operating statements or
annualized the rental revenue and reimbursement of expenses shown on
certified rent rolls or operating statements with respect to the prior
three to twelve month periods. For the other Rental Properties, the
applicable Mortgage Loan Seller generally annualized rental revenue shown
on the most recent certified rent roll (as applicable), after applying the
vacancy factor, without further regard to the terms (including expiration
dates) of the leases shown thereon. In the case of hospitality properties,
gross receipts were determined on the basis of historical operating levels
shown on the
S-31
<PAGE>
borrower-supplied operating statements, but in no case in excess of
rolling 12-month operating statements. In the case of residential health
care facilities, receipts were based on historical occupancy levels,
historical operating revenues and the then current occupancy rates. Private
occupancy rates were within the then current market ranges and vacancy
levels were a minimum of 5%. In general, any non-recurring items and
non-property related revenue were eliminated from the calculation except in
the case of residential health care facilities.
In determining the "expense" component of Net Cash Flow for each
Mortgaged Property, the Mortgage Loan Seller generally relied on 1995
full-year or year-to-date financial statements, rolling 12-month operating
statements and/or 1996 year-to-date financial statements supplied by the
related borrower, except that (a) if tax or insurance expense information
more current than that reflected in the financial statements was available,
the newer information was used, (b) property management fees were assumed
to be 4% to 5% of effective gross revenue (except with respect to
hospitality properties, where a minimum of 4% of gross receipts was
assumed, and single tenant properties, where as low as 2% of gross receipts
was assumed) unless actual management fees were higher, in which case
actual management fees were used, (c) assumptions were made with respect to
reserves for leasing commissions, tenant improvement expenses and capital
expenditures and (d) expenses were assumed to include annual replacement
reserves equal to (1) in the case of retail, office, industrial and two
mixed use multifamily/retail properties, not less than $0.04 and not more
than $0.77 per square foot net rentable commercial area, (2) in the case of
multifamily and three mixed use multifamily/retail properties, not less
than $150 or more than $350 per residential unit per year, depending on the
condition of the property, (3) in the case of hospitality properties, 4% of
the gross revenues received by the property owner on an ongoing basis, (4)
in the case of residential healthcare facilities, $225 to $300 per bed per
year and (5) in the case of the mobile home parks, not less than $31 or
more than $79 per pad per year. In addition, in some instances, the
applicable Mortgage Loan Seller recharacterized as capital expenditures
those items reported by borrowers as operating expenses (thus increasing
"net cash flow") where such Mortgage Loan Seller determined appropriate.
The certified operating statements were in most cases unaudited, and
neither the Mortgage Loan Sellers nor the Depositor verified their
accuracy.
(iii) References to "Cut-off Date LTV" are references to the ratio,
expressed as a percentage, of the Cut-off Date Balance of a Mortgage Loan
to the appraised value of the related Mortgaged Property as shown on the
most recent third-party appraisal thereof available to the related Mortgage
Loan Seller.
(iv) References to "Scheduled Maturity LTV" are references to the
ratio, expressed as a percentage, of the expected balance of a Mortgage
Loan on its scheduled maturity date (prior to the payment of any Balloon
Payment) to the appraised value of the related Mortgaged Property as shown
on the most recent third-party appraisal thereof available to the related
Mortgage Loan Seller prior to the Cut-off Date. The weighted average
Scheduled Maturity LTV Ratio set forth in the tables includes fully
amortizing loans (each of which has a Scheduled Maturity LTV Ratio of
0.0%).
(v) References to "Loan per Sq ft, Unit, Bed, Key or Room" are, for
each Mortgage Loan secured by a lien on a multifamily property (including
the mobile home parks), hospitality property or residential healthcare
facility, respectively, references to the Cut-off Date Balance of such
Mortgage Loan divided by the number of dwelling units, pads, guest rooms or
beds, respectively in such Mortgaged Property, and, for each Mortgage Loan
secured by a lien on a retail, industrial/warehouse or office property,
references to the Cut-off Date Balance of such Mortgage Loan divided by the
net rentable square foot area of the related Mortgage Property.
(vi) References to "Year Built" are references to the year that a
Mortgaged Property was originally constructed. With respect to any
Mortgaged Property which was constructed in phases, the "Year Built" refers
to the year that the first phase was originally constructed.
(vii) References to "weighted averages" are references to averages
weighted on the basis of the Cut-off Date Balances of the related Mortgage
Loans.
(viii) References to "Mortgage Rate" are references to the interest
rate on a Mortgage Loan set forth in the related Mortgage Note.
(ix) References to "Initial Reserves at Closing" represent reserves
escrowed at closing for needed repairs and corrections of environmental
issues as outlined in the engineering and environmental reports. Such
amounts typically represent 125% of the costs of the work outlined in such
reports and not completed by closing. With respect to amounts considered
minimal and a part of ongoing maintenance, a reserve was not established.
S-32
<PAGE>
(x) References to "Underwriting Reserves" represent amounts
underwritten on an annual basis to cover capital costs, as used by the
applicable Mortgage Loan Seller in determining net cash flow.
(xi) References to "Other Reserves At Closing" represent amounts
reserved by the originator at the closing of a Mortgage Loan generally in
connection with future leasing commissions, tenant improvement expenses and
future capital expenditures.
(xii) References to "Servicing Fees" represent the sum of the Master
Servicing Fee and Additional Servicing Fee with respect to each Mortgage
Loan, but do not include the Trustee Fee of 0.005%.
The sum in any column of any of the following tables may not equal the
indicated total due to rounding.
S-33
<PAGE>
PROPERTY TYPES
<TABLE>
<CAPTION>
% of
Aggregate Agg. Average Highest
Cut-off Cut-off Cut-off Cut-off
Number Date Date Date Date %
Property Types of Properties Balance Balance Balance(A) Balance Balloons
- -------------- ------------- ------- ------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
MULTIFAMILY
Multifamily 140 $ 474,911,264 41.72% $3,392,223 $38,500,000 96.40%
Section 42 11 28,051,240 2.46% 2,550,113 4,291,528 62.02%
- ------------------ ---------------------------------------------------------------------------------------------
Subtotal 151 502,962,504 44.18% 3,330,878 38,500,000 94.48%
RETAIL
Anchored Retail 42 214,206,504 18.82% 5,100,155 17,246,478 79.91%
Unanchored Retail 34 74,220,293 6.52% 2,182,950 6,586,839 81.42%
- ------------------ ---------------------------------------------------------------------------------------------
Subtotal 76 288,426,797 25.34% 3,795,089 17,246,478 80.30%
HOSPITALITY 23 117,469,957 10.32% 5,107,389 21,000,000 5.74%
OFFICE 18 81,724,325 7.18% 4,540,240 16,975,344 67.71%
INDUSTRIAL 16 74,106,041 6.51% 4,631,628 18,365,222 93.61%
HEALTH CARE
Assisted Living 3 12,459,806 1.09% 4,153,269 9,226,041 87.61%
Congregate Care 4 21,135,318 1.86% 5,283,829 6,788,562 100.00%
- ------------------ ---------------------------------------------------------------------------------------------
Subtotal 7 33,595,124 2.95% 4,799,303 9,226,041 95.40%
MOBILE HOME
PARK 6 20,238,256 1.78% 3,373,043 8,415,069 100.00%
MIXED USE
Multifamily/Retai l 5 19,787,832 1.74% 3,957,566 6,996,152 100.00%
- ------------------ ---------------------------------------------------------------------------------------------
TOTALS: 302 $1,138,310,835 100.00% $3,769,241 $38,500,000 79.97%
<CAPTION>
Weighted Average
------------------------------------------------------------------------------
Stated Remain. Cut- Loan per
Remain. Amort. off Scheduled Occupancy Sq ft. Unit, Average
Mortgage Term Term Date Maturity Percent- Bed, Key Property
Property Types Rate (mo.) (mo.) DSCR LTV LTV age(B) or Room Size(C)
- -------------- ---- ------ ------ ---- --- --- ------ ------- -------
MULTIFAMILY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Multifamily 8.831% 103 338 1.30x 72.89% 63.78% 95.13% 29,767 286
Section 42 9.090% 314 351 1.20x 77.86% 18.62% 97.03% 31,641 100
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal 8.845% 115 338 1.29x 73.17% 61.26% 95.23% 29,872 275
RETAIL
Anchored Retail 9.119% 137 293 1.29x 66.20% 45.82% 97.71% 75 121,246
Unanchored Retail 9.377% 121 279 1.35x 62.68% 45.37% 98.88% 74 43,933
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal 9.185% 133 289 1.30x 65.30% 45.71% 98.01% 75 101,351
HOSPITALITY 9.736% 240 246 1.45x 66.68% 2.43% N/A 44,844 239
OFFICE 9.390% 150 279 1.29x 67.81% 37.63% 94.93% 56 158,280
INDUSTRIAL 9.218% 123 320 1.28x 71.68% 58.29% 98.81% 23 441,413
HEALTH CARE
Assisted Living 9.922% 133 291 1.43x 59.83% 44.95% 90.66% 36,242 195
Congregate Care 9.512% 118 298 1.38x 65.65% 55.17% 97.80% 46,995 126
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal 9.664% 123 295 1.40x 63.49% 51.38% 95.15% 43,007 151
MOBILE HOME
PARK 9.002% 92 328 1.31x 74.71% 66.39% 97.81% 16,795 287
MIXED USE
Multifamily/Retail 9.260% 118 329 1.37x 70.62% 61.50% 98.34% 96 55,938
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS: 9.121% 135 309 1.32x 69.72% 49.16% 96.36% 19,420 66,909
</TABLE>
- ----------------
(A) Computed based on 302 Mortgaged Properties.
(B) Weighted average of the occupancy percentages for the corresponding
property type determined on the basis of the individual occupancy
percentages set forth on Annex A.
(C) Average Property Size refers to total leasable square feet with respect to
retail, office and industrial properties, number of units with respect to
multifamily properties and the mobile home parks, number of guest rooms
with respect to each hospitality property and number of beds with respect
to residential health care facilities.
GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
% of Weighted Averages
Aggregate Agg. ------------------------------------------
Cut-off Cut-off Cut-off Stated
Number Date Date Date Maturity
State of Properties Balance Balance DSCR LTV LTV
----- ------------- ------- ------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Texas 66 $ 167,039,396 14.67% 1.29x 69.54% 54.19%
California 29 144,157,846 12.66% 1.31x 70.14% 54.74%
Florida 33 130,457,702 11.46% 1.34x 68.01% 43.99%
New York 14 67,389,392 5.92% 1.34x 72.56% 57.02%
New Jersey 11 58,723,259 5.16% 1.27x 68.55% 40.10%
Ohio 9 57,046,556 5.01% 1.27x 76.06% 67.30%
Pennsylvania 6 51,424,655 4.52% 1.28x 75.30% 66.94%
Oregon 7 49,938,347 4.39% 1.44x 64.91% 1.70%
Nevada 8 47,687,801 4.19% 1.26x 72.29% 52.17%
North Carolina 8 33,288,245 2.92% 1.33x 66.63% 46.03%
Connecticut 12 30,072,248 2.64% 1.28x 68.80% 54.82%
Washington 3 27,336,363 2.40% 1.39x 71.43% 33.61%
Colorado 10 26,311,450 2.31% 1.33x 72.20% 56.86%
Maryland 3 24,759,646 2.18% 1.34x 69.06% 61.40%
Indiana 9 22,298,039 1.96% 1.29x 63.97% 37.50%
Virginia 4 21,702,886 1.91% 1.31x 61.25% 39.10%
Georgia 13 21,406,393 1.88% 1.40x 72.56% 35.59%
Arizona 10 20,245,229 1.78% 1.33x 68.18% 46.27%
Massachusetts 6 20,167,338 1.77% 1.33x 68.35% 60.52%
Missouri 4 17,515,499 1.54% 1.34x 72.88% 65.78%
Tennessee 2 13,979,168 1.23% 1.27x 65.42% 48.74%
Wisconsin 4 13,041,471 1.15% 1.23x 76.45% 55.47%
Michigan 6 12,327,128 1.08% 1.29x 68.94% 36.45%
South Carolina 5 10,596,039 0.93% 1.39x 63.83% 24.83%
Iowa 1 8,962,951 0.79% 1.25x 72.87% 65.24%
New Mexico 3 5,678,765 0.50% 1.28x 69.49% 35.53%
Minnesota 3 5,659,520 0.50% 1.41x 65.10% 41.30%
Illinois 1 4,694,438 0.41% 1.39x 76.96% 68.90%
Louisiana 2 4,683,569 0.41% 1.28x 59.86% 31.65%
Delaware 2 4,130,405 0.36% 1.31x 53.15% 12.59%
District Of Columbia 1 3,497,649 0.31% 1.36x 72.87% 63.46%
Mississippi 2 3,335,733 0.29% 1.36x 63.70% 25.69%
Kansas 1 2,588,494 0.23% 1.48x 78.44% 70.23%
Alabama 1 2,440,917 0.21% 1.30x 73.97% 65.87%
Oklahoma 1 2,398,000 0.21% 1.25x 53.29% 0.00%
Kentucky 2 1,328,298 0.12% 1.88x 46.84% 34.09%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS (36 States) 302 $1,138,310,835 100.00% 1.32x 69.72% 49.16%
</TABLE>
S-34
<PAGE>
YEARS BUILT
<TABLE>
<CAPTION>
% of Weighted Averages
Aggregate Aggregate ----------------------------------------------------------------------
Cut-off Cut-off Stated Remaining Cut-off Scheduled
Range of Number Date Date Mortgage Remaining Amort. Date Maturity
Years Built of Properties Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- ----------- ------------- ------- ------- ---- ---------- ---------- ---- --- ---
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1887-1959 18 $ 95,199,710 8.36% 9.292% 130 320 1.32x 70.23% 54.01%
1960-1969 45 120,342,830 10.57% 9.195% 137 302 1.33x 67.71% 48.40%
1970-1979 87 305,407,057 26.83% 9.047% 125 312 1.31x 70.20% 52.15%
1980-1989 110 447,891,557 39.35% 9.070% 130 312 1.33x 70.67% 50.46%
1990-1996 42 169,469,681 14.89% 9.240% 169 298 1.29x 67.49% 38.18%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 302 $1,138,310,835 100.00% 9.121% 135 309 1.32x 69.72% 49.16%
</TABLE>
DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Range of Aggregate Aggregate % of -----------------------------------------------------------------
Debt Service Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
Coverage Number Date Date Date Mortgage Remaining Amort. Date Maturity
Ratios of Loans Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- ----------- ---------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.15x-1.19x(A) 7 $ 16,127,106 1.42% 1.42% 9.177% 311 357 1.18x 80.10% 24.04%
1.20x-1.24x 28 122,154,665 10.73% 12.15% 8.895% 139 330 1.22x 73.63% 51.72%
1.25x-1.29x 104 440,376,661 38.69% 50.83% 9.039% 124 315 1.26x 70.10% 54.08%
1.30x-1.34x 52 233,172,538 20.48% 71.32% 9.018% 104 328 1.32x 70.67% 61.25%
1.35x-1.39x 41 118,006,539 10.37% 81.69% 9.262% 144 289 1.36x 67.19% 42.88%
1.40x-1.44x 32 116,710,867 10.25% 91.94% 9.503% 163 284 1.41x 67.42% 35.04%
1.45x-1.49x 11 43,539,537 3.82% 95.76% 9.375% 205 257 1.48x 67.55% 16.97%
1.50x-1.54x 6 10,847,345 0.95% 96.72% 9.084% 159 233 1.51x 63.07% 24.36%
1.55x-1.59x 6 13,335,709 1.17% 97.89% 9.402% 148 293 1.58x 64.87% 41.12%
1.60x-1.69x 6 14,842,673 1.30% 99.19% 9.538% 189 263 1.62x 66.60% 20.42%
1.70x-1.79x 4 6,235,389 0.55% 99.74% 9.810% 191 253 1.71x 55.26% 14.90%
1.80x-2.15x 3 2,961,807 0.26% 100.00% 9.257% 135 246 1.93x 36.58% 20.19%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309 1.32x 69.72% 49.16%
</TABLE>
- ----------
(A) The only Mortgage Loans with Debt Service Coverage Ratios below 1.20x are
Mortgage Loans secured by Section 42 Properties.
CUT-OFF DATE LTV RATIOS
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Range Aggregate Aggregate % of -----------------------------------------------------------------
of Cut-off Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
Date LTV Number Date Date Date Mortgage Remaining Amort. Date Maturity
Ratios of Loans Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- ---------- -------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35.38%-50.00% 10 $ 16,713,763 1.47% 1.47% 9.458% 136 254 1.50x 45.07% 25.07%
50.01%-55.00% 21 62,266,540 5.47% 6.94% 9.352% 157 225 1.31x 53.50% 17.17%
55.01%-60.00% 18 59,081,684 5.19% 12.13% 9.262% 165 250 1.35x 57.64% 20.42%
60.01%-65.00% 23 72,421,793 6.36% 18.49% 9.365% 130 295 1.36x 62.65% 44.87%
65.01%-70.00% 71 273,264,376 24.01% 42.50% 9.342% 166 297 1.36x 67.90% 36.62%
70.01%-75.00% 104 413,545,434 36.33% 78.83% 9.056% 120 320 1.30x 72.75% 58.53%
75.01%-80.00% 47 224,027,505 19.68% 98.51% 8.766% 99 348 1.28x 77.25% 69.62%
80.01%-84.93%(A) 6 16,989,740 1.49% 100.00% 9.101% 325 348 1.21x 81.85% 12.25%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309 1.32x 69.72% 49.16%
</TABLE>
- ----------
(A) The only Mortgage Loans with Cut-off Date LTV Ratios in excess of 80.00%
are Mortgage Loans secured by Section 42 Properties.
S-35
<PAGE>
BALLOON LTV RATIOS
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Range Aggregate Aggregate % of -----------------------------------------------------------------
of Ballon Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
LTV Number Date Date Date Mortgage Remaining Amort. Date Maturity
Ratios of Loans Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- --------- ---------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fully Amortizing 55 $ 227,991,274 20.03% 20.03% 9.509% 232 232 1.36x 64.22% 0.00%
0.01%-50.00% 38 104,450,510 9.18% 29.20% 9.337% 177 300 1.35x 63.25% 39.92%
50.01%-55.00% 18 57,234,142 5.03% 34.23% 9.281% 107 306 1.36x 61.48% 53.11%
55.01%-60.00% 43 140,631,977 12.35% 46.59% 9.185% 120 314 1.32x 68.26% 57.95%
60.01%-65.00% 69 246,960,182 21.70% 68.28% 9.063% 113 328 1.31x 71.74% 62.69%
65.01%-70.00% 48 213,240,590 18.73% 87.02% 8.877% 100 345 1.28x 74.35% 67.31%
70.01%-75.00% 24 121,968,437 10.71% 97.73% 8.717% 73 347 1.28x 76.85% 72.10%
75.01%-76.69% 5 25,833,722 2.27% 100.00% 8.583% 53 355 1.27x 79.49% 76.40%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309 1.32x 69.72% 49.16%(A)
</TABLE>
- ----------
(A) Includes fully-amortizing Mortgage Loans. The weighted average Scheduled
Maturity LTV for the Balloon Loans is 61.48%.
MORTGAGE RATES
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Aggregate Aggregate % of -----------------------------------------------------------------
Range of Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
Mortgage Number Date Date Date Mortgage Remaining Amort. Date Maturity
Rates of Loans Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- --------- ---------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.313%- 8.499% 14 $ 70,068,631 6.16% 6.16% 8.396% 101 344 1.29x 75.33% 67.58%
8.500%- 8.749% 40 142,321,553 12.50% 18.66% 8.600% 77 340 1.27x 74.75% 68.62%
8.750%- 8.999% 46 165,604,713 14.55% 33.21% 8.858% 117 334 1.32x 72.29% 60.52%
9.000%- 9.249% 80 330,645,719 29.05% 62.25% 9.102% 123 332 1.30x 71.05% 59.78%
9.250%- 9.499% 61 197,383,615 17.34% 79.59% 9.320% 161 259 1.30x 62.86% 28.89%
9.500%- 9.749% 40 152,523,059 13.40% 92.99% 9.565% 184 278 1.38x 67.36% 29.40%
9.750%- 9.999% 10 53,070,666 4.66% 97.66% 9.873% 215 267 1.40x 67.46% 14.82%
10.000%-10.249% 4 16,068,331 1.41% 99.07% 10.044% 151 274 1.45x 63.55% 38.48%
10.250%-10.375% 5 10,624,549 0.93% 100.00% 10.315% 221 240 1.48x 65.82% 7.65%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309 1.32x 69.72% 49.16%
</TABLE>
ORIGINAL TERMS
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Aggregate Aggregate % of ---------------------------------------------------------------
Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
Original Number Date Date Date Mortgage Remaining Amort. Date Maturity
Terms of Loans Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- -------- -------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 Year Balloon 2 $ 19,677,228 1.73% 8.572% 34 319 2 1.30x 72.97% 70.67%
4 Year Balloon 2 7,915,955 0.70% 8.660% 45 357 3 1.24x 77.28% 74.89%
5 Year Balloon 15 62,049,964 5.45% 8.731% 56 349 4 1.27x 75.67% 72.45%
7 Year Balloon 58 200,133,625 17.58% 8.855% 81 330 3 1.31x 71.57% 65.87%
10 Year Balloon 148 546,864,500 48.04% 9.114% 118 326 2 1.31x 70.20% 60.67%
13-16 Year Balloon 8 40,913,741 3.59% 9.155% 174 322 3 1.29x 71.39% 52.06%
20 Year Balloon 3 14,308,087 1.26% 9.481% 239 311 1 1.30x 67.55% 31.71%
25 Year Balloon 9 18,456,461 1.62% 9.146% 296 354 4 1.20x 74.79% 29.12%
Fully Amortizing 55 227,991,274 20.03% 9.509% 232 232 1 1.36x 64.22% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 9.121% 135 309 2 1.32x 69.72% 49.16%
</TABLE>
- ----------------
(A) Number of months elapsed since the first Due Date following origination.
S-36
<PAGE>
STATED REMAINING TERMS TO MATURITY
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Aggregate Aggregate % of -----------------------------------------------------------------
Range of Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
Remaining Number Date Date Date Mortgage Remaining Amort. Date Maturity
Terms (mo.) of Loans Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- ----------- -------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
34- 59 19 $ 89,643,147 7.88% 7.88% 8.689% 50 343 1.28x 75.22% 72.27%
60- 83 54 176,711,625 15.52% 23.40% 8.838% 81 330 1.31x 72.29% 66.55%
84- 95 4 23,422,000 2.06% 25.46% 8.983% 84 329 1.34x 66.16% 60.76%
96-119 125 441,981,500 38.83% 64.28% 9.127% 117 325 1.32x 69.77% 60.36%
120-131 23 104,883,000 9.21% 73.50% 9.060% 120 332 1.30x 71.97% 62.00%
132-179 10 35,109,783 3.08% 76.58% 9.144% 171 299 1.29x 68.98% 44.59%
180-239 38 165,868,723 14.57% 91.15% 9.415% 214 230 1.34x 62.62% 6.14%
240-359 27 100,691,057 8.85% 100.00% 9.577% 271 282 1.35x 70.51% 5.34%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309 1.32x 69.72% 49.16%
</TABLE>
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Aggregate Aggregate % of -------------------------------
Range of Cut-off Cut-off Cut-off Stated Remaining
Cut-off Date Number Date Date Date Mortgage Remaining Amort.
Balance of Loans Balance Balance Balance Rate Term (mo.) Term (mo.)
------------ -------- ------- ------- ------- ---- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 257,059-$ 999,999 21 $ 15,446,358 1.36% 1.36% 9.178% 120 281
1,000,000- 1,999,999 91 135,477,554 11.90% 13.26% 9.139% 128 301
2,000,000- 2,999,999 76 189,137,838 16.62% 29.87% 9.180% 142 281
3,000,000- 3,999,999 32 110,023,530 9.67% 39.54% 9.101% 132 305
4,000,000- 4,999,999 20 87,504,860 7.69% 47.23% 9.042% 131 316
5,000,000- 5,999,999 9 49,511,625 4.35% 51.58% 9.316% 153 296
6,000,000- 6,999,999 10 66,453,347 5.84% 57.41% 9.188% 122 331
7,000,000- 7,999,999 3 23,263,823 2.04% 59.46% 9.550% 208 267
8,000,000- 8,999,999 9 76,089,388 6.68% 66.14% 8.916% 96 350
9,000,000- 9,999,999 10 95,416,909 8.38% 74.52% 9.159% 148 316
10,000,000- 14,999,999 12 143,731,552 12.63% 87.15% 8.937% 125 313
15,000,000- 19,999,999 5 86,754,052 7.62% 94.77% 9.033% 135 330
20,000,000- 24,999,999 1 21,000,000 1.84% 96.62% 9.890% 264 264
$35,000,000-$38,500,000 1 38,500,000 3.38% 100.00% 9.125% 120 360
- ----------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309
</TABLE>
<TABLE>
Weighted Averages
----------------------------
Range of Cut-off Scheduled
Cut-off Date Date Maturity
Balance DSCR LTV LTV
------------ ---- --- ---
<S> <C> <C> <C>
$ 257,059-$ 999,999 1.44x 65.79% 51.11%
1,000,000- 1,999,999 1.36x 67.92% 51.11%
2,000,000- 2,999,999 1.32x 67.25% 41.16%
3,000,000- 3,999,999 1.28x 69.51% 49.65%
4,000,000- 4,999,999 1.32x 70.07% 51.93%
5,000,000- 5,999,999 1.34x 69.75% 41.54%
6,000,000- 6,999,999 1.33x 70.88% 57.03%
7,000,000- 7,999,999 1.32x 68.86% 20.34%
8,000,000- 8,999,999 1.28x 72.45% 65.76%
9,000,000- 9,999,999 1.33x 71.11% 47.49%
10,000,000- 14,999,999 1.30x 68.47% 51.04%
15,000,000- 19,999,999 1.27x 73.41% 53.67%
20,000,000- 24,999,999 1.41x 70.00% 0.00%
$35,000,000-$38,500,000 1.27x 75.49% 67.76%
- ----------------------------------------------------------
TOTALS 1.32x 69.72% 49.16%
Average Cut-off Balance is $3,794,369.
</TABLE>
YEARS OF SCHEDULED MATURITY
<TABLE>
<CAPTION>
% of Cum. Weighted Averages
Aggregate Aggregate % of -----------------------------------------------------------------
Scheduled Cut-off Cut-off Cut-off Stated Remaining Cut-off Scheduled
Maturity Number of Date Date Date Mortgage Remaining Amort. Date Maturity
Year Properties Balance Balance Balance Rate Term (mo.) Term (mo.) DSCR LTV LTV
- --------- ---------- ------- ------- ------- ---- ---------- ---------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 2 $ 19,677,228 1.73% 1.73% 8.572% 34 319 1.30x 72.97% 70.67%
2000 2 7,915,955 0.70% 2.42% 8.660% 45 357 1.24x 77.28% 74.89%
2001 15 62,049,964 5.45% 7.88% 8.731% 56 349 1.27x 75.67% 72.45%
2003 58 200,133,625 17.58% 25.46% 8.855% 81 330 1.31x 71.57% 65.87%
2006 148 546,864,500 48.04% 73.50% 9.114% 118 326 1.31x 70.20% 60.67%
2009 1 6,628,003 0.58% 74.08% 9.188% 155 358 1.24x 69.77% 58.89%
2011 31 90,311,780 7.93% 82.01% 9.248% 179 215 1.29x 59.35% 13.86%
2012 1 8,216,327 0.72% 82.74% 9.188% 184 358 1.25x 75.38% 59.41%
2016 24 124,568,396 10.94% 93.68% 9.587% 239 247 1.39x 66.10% 3.64%
2017 1 5,750,000 0.51% 94.18% 9.650% 252 252 1.37x 67.65% 0.00%
2018 3 33,960,000 2.98% 97.17% 9.784% 264 264 1.40x 69.74% 0.00%
2019 1 1,080,422 0.09% 97.26% 9.310% 272 272 1.28x 74.00% 0.00%
2021 11 23,239,025 2.04% 99.30% 9.149% 296 342 1.24x 75.20% 23.13%
2026 2 7,915,610 0.70% 100.00% 8.930% 359 359 1.19x 82.03% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS 300 $1,138,310,835 100.00% 100.00% 9.121% 135 309 1.32x 69.72% 49.16%
</TABLE>
S-37
<PAGE>
PREPAYMENT RESTRICTIONS BY ORIGINAL TERM
<TABLE>
<CAPTION>
Percent
of
Aggregate
Number Aggregate Cut-off
of Cut-off Date Date
Original Term Prepayment Restriction (A) Loans Balance Balance
- ------------------- ---------------------------- ------- ------------- ---------
<S> <C> <C> <C> <C>
3 Year Balloon Lockout, then YM 2 $ 19,677,228 1.73%
4 Year Balloon Lockout, then YM 2 7,915,955 0.70%
5 Year Balloon Lockout, then PP 4 8,791,116 0.77%
5 Year Balloon Lockout, then YM 11 53,258,848 4.68%
- -----------------------------------------------------------------------------------------------
SUBTOTAL 15 62,049,964 5.45%
7 Year Balloon Lockout, then PP 3 13,821,405 1.21%
7 Year Balloon Lockout, then YM 55 186,312,220 16.37%
- -----------------------------------------------------------------------------------------------
SUBTOTAL 58 200,133,625 17.58%
10 Year Balloon Lockout, then PP 9 17,904,446 1.57%
10 Year Balloon Lockout, then YM 138 522,382,264 45.89%
10 Year Balloon Lockout, then YM, then PP 1 6,577,790 0.58%
- -----------------------------------------------------------------------------------------------
SUBTOTAL 148 546,864,500 48.04%
13-16 Year Balloon Lockout, then PP 1 1,791,971 0.16%
13-16 Year Balloon Lockout, then YM 4 20,342,757 1.79%
13-16 Year Balloon Lockout, then YM, then PP 3 18,779,013 1.65%
- -----------------------------------------------------------------------------------------------
SUBTOTAL 8 40,913,741 3.59%
20 Year Balloon Lockout, then YM 3 14,308,087 1.26%
25 Year Balloon Lockout Only 8 17,397,576 1.53%
25 Year Balloon YM, then PP 1 1,058,885 0.09%
- -----------------------------------------------------------------------------------------------
SUBTOTAL 9 18,456,461 1.62%
Fully Amortizing Lockout Only 1 2,738,054 0.24%
Fully Amortizing Lockout, then PP 2 11,624,635 1.02%
Fully Amortizing Lockout, then YM 31 148,188,270 13.02%
Fully Amortizing Lockout, then YM, then PP 21 65,440,315 5.75%
- -----------------------------------------------------------------------------------------------
SUBTOTAL 55 227,991,274 20.03%
- -----------------------------------------------------------------------------------------------
TOTAL 300 $1,138,310,835 100.00%
<CAPTION>
Weighted Average Term of
----------------------------------------------------------------
Months
Stated Months Months Months Open
Mortgage Remaining Locked Yield Prepay Prior to
Original Term Prepayment Restriction (A) Rate Term Out Maint Premium Maturity
- ------------------- ---------------------------- -------- ------- ------ ------ ------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
3 Year Balloon Lockout, then YM 8.57% 34 23 7 0 4
4 Year Balloon Lockout, then YM 8.66% 45 27 15 0 3
5 Year Balloon Lockout, then PP 8.98% 55 31 0 21 3
5 Year Balloon Lockout, then YM 8.69% 56 25 27 0 4
- ---------------------------------------------------------------------------------------- -----------------------------
SUBTOTAL 8.73% 56 26 23 3 4
7 Year Balloon Lockout, then PP 9.19% 81 45 0 31 5
7 Year Balloon Lockout, then YM 8.83% 81 35 40 0 6
- ---------------------------------------------------------------------------------------- -----------------------------
SUBTOTAL 8.85% 81 36 37 2 6
10 Year Balloon Lockout, then PP 9.28% 115 55 0 57 3
10 Year Balloon Lockout, then YM 9.11% 118 53 59 0 6
10 Year Balloon Lockout, then YM, then PP 9.00% 115 43 60 6 6
- ---------------------------------------------------------------------------------------- -----------------------------
SUBTOTAL 9.11% 118 53 57 2 6
13-16 Year Balloon Lockout, then PP 9.09% 175 91 0 81 3
13-16 Year Balloon Lockout, then YM 9.13% 176 92 81 0 3
13-16 Year Balloon Lockout, then YM, then PP 9.19% 171 58 60 41 12
- ---------------------------------------------------------------------------------------- -----------------------------
SUBTOTAL 9.16% 174 76 68 22 7
20 Year Balloon Lockout, then YM 9.48% 239 119 117 0 3
25 Year Balloon Lockout Only 9.14% 296 176 0 0 120
25 Year Balloon YM, then PP 9.29% 297 0 177 60 60
- ---------------------------------------------------------------------------------------- -----------------------------
SUBTOTAL 9.15% 296 166 10 3 117
Fully Amortizing Lockout Only 9.25% 295 175 0 0 120
Fully Amortizing Lockout, then PP 9.89% 234 114 0 117 3
Fully Amortizing Lockout, then YM 9.59% 249 109 126 0 14
Fully Amortizing Lockout, then YM, then PP 9.28% 189 15 89 61 24
- ---------------------------------------------------------------------------------------- -----------------------------
SUBTOTAL 9.51% 232 83 108 24 17
- ---------------------------------------------------------------------------------------- -----------------------------
TOTAL 9.12% 135 57 61 7 10
</TABLE>
- ----------------
(A) YM = Yield Maintenance, PP = Prepayment Premium.
PREPAYMENT PENALTY CATEGORIES
<TABLE>
<CAPTION>
Weighted
% of Average
Aggregate Aggregate Stated Weighted
Number Cut-off Cut-off Remaining Average
of Date Date Term Months
Prepayment Restriction (A) Loans Balance Balance (mo.) Locked Out
- --------------------------------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Lockout, then YM 246 972,385,629 85.42% 128 58
Lockout, then YM, then PP 25 90,797,119 7.98% 180 26
Lockout, then PP 19 53,933,572 4.74% 124 63
Lockout Only 9 20,135,630 1.77% 296 176
YM, then PP 1 1,058,885 0.09% 297 0
- -----------------------------------------------------------------------------------------------------------------
TOTAL 300 1,138,310,835 100.00% 135 57
</TABLE>
Weighted Weighted
Average Average # of
% of Stated Months Open to
Remaining Term Prepayment Prior
Prepayment Restriction (A) Locked Out to Maturity
- --------------------------------- -------------- --------------
Lockout, then YM 45% 7
Lockout, then YM, then PP 15% 20
Lockout, then PP 52% 4
Lockout Only 59% 120
YM, then PP 0% 60
- -------------------------------------------------------------------------------
TOTAL 43% 10
(A) YM = Yield Maintenance, PP = Prepayment Premium.
S-38
<PAGE>
PREPAYMENT LOCK-OUT/PREMIUM ANALYSIS(A)
<TABLE>
<CAPTION>
Percentage of Mortgage Pool by Prepayment
Restriction Assuming No Payment
-----------------------------------------------------------------------------------------------------------
Current 12 Mo. 24 Mo. 36 Mo. 48 Mo. 60 Mo. 72 Mo. 84 Mo. 96 Mo. 108 Mo.
Prepayment November November November November November November November November November November
Restrictions 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Locked Out 99.91% 91.23% 88.55% 77.02% 52.92% 19.24% 17.38% 21.45% 18.05% 17.91%
Yield Maintenance 0.09% 8.77% 11.45% 22.19% 44.15% 76.78% 75.48% 75.27% 77.93% 66.28%
Percentage Premium
5.00% and greater 0.00% 0.00% 0.00% 0.00% 0.88% 1.73% 0.00% 0.00% 0.21% 1.04%
4.00 to 4.99% 0.00% 0.00% 0.00% 0.68% 0.29% 0.92% 1.74% 0.00% 0.00% 0.00%
3.00 to 3.99% 0.00% 0.00% 0.00% 0.11% 0.96% 0.31% 0.91% 2.17% 0.00% 0.00%
2.00 to 2.99% 0.00% 0.00% 0.00% 0.00% 0.69% 1.02% 0.14% 1.11% 2.18% 0.00%
1.00 to 1.99% 0.00% 0.00% 0.00% 0.00% 0.11% 0.00% 1.19% 0.00% 1.10% 3.27%
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 3.16% 0.00% 0.52% 11.51%
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool
Balance
($ millions) 1,138.31 1,125.33 1,111.11 1,076.53 1,052.07 974.62 955.28 751.08 731.26 709.51
% of Initial
Pool Balance(B) 100.00% 98.86% 97.61% 94.57% 92.42% 85.62% 83.92% 65.98% 64.24% 62.33%
</TABLE>
Percentage of Mortgage Pool by Prepayment
Restriction Assuming No Payment
----------------------------------------------------------
120 Mo. 132 Mo. 144 Mo. 156 Mo. 168 Mo. 180 Mo.
Prepayment November November November November November November
Restrictions 2006 2007 2008 2009 2010 2011
------------ -------- -------- -------- -------- -------- --------
Locked Out 20.81% 8.96% 9.03% 9.96% 10.84% 0.00%
Yield Maintenance 51.10% 63.96% 65.16% 68.43% 70.09% 65.54%
Percentage Premium
5.00% and greater 15.82% 3.80% 3.78% 3.88% 0.00% 0.70%
4.00 to 4.99% 6.21% 10.70% 0.00% 0.00% 3.85% 0.00%
3.00 to 3.99% 0.00% 6.40% 9.78% 0.00% 0.00% 4.40%
2.00 to 2.99% 2.73% 0.00% 5.90% 9.82% 0.00% 0.00%
1.00 to 1.99% 0.00% 2.86% 0.00% 4.50% 9.57% 0.00%
Open 3.32% 3.31% 6.34% 3.41% 5.65% 29.36%
- --------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Mortgage Pool
Balance
($ millions) 217.06 203.37 188.33 166.24 148.23 111.34
% of Initial
Pool Balance(B) 19.07% 17.87% 16.54% 14.60% 13.02% 9.78%
- ----------
(A) This table sets forth an analysis of the percentage of the declining
balance of the Mortgage Pool that, on November 1 of each of the years
indicated, will be within a Lockout Period or in which Principal Prepayment
must be accompanied by the indicated Prepayment Premium or Yield
Maintenance Charge. The table was prepared generally on the basis of the
assumptions used in preparing the table set forth under "YIELD AND MATURITY
CONSIDERATIONS--Yield Considerations" herein, except that it was assumed in
preparing the table that no Mortgage Loan will be prepaid, voluntary or
involuntarily.
(B) Represents the percentage of the Initial Pool Balance that will remain
outstanding at the indicated date based upon the assumptions in preparing
this table.
S-39
<PAGE>
The Mortgage Loan Sellers
On or prior to the Closing Date, the Depositor will acquire the Mortgage
Loans from the Mortgage Loan Sellers pursuant to separate agreements (the
"Mortgage Loan Purchase Agreements"). The Mortgage Loan Sellers acquired or
originated the Mortgage Loans as described above under "--General."
Assignment of the Mortgage Loans; Repurchases
On or prior to the Closing Date, the Depositor will transfer the Mortgage
Loans, without recourse, to the Trustee for the benefit of the
Certificateholders. In connection with such transfer, the Depositor will require
each Mortgage Loan Seller to deliver to the Trustee or to a document custodian
appointed by the Trustee (a "Custodian"), among other things, the following
documents with respect to each Mortgage Loan (collectively, as to each Mortgage
Loan, the "Mortgage File"): (i) the original Mortgage Note, endorsed, without
recourse, to the order of the Trustee; (ii) the original or a copy of the
Mortgage, together with an original or copy of any intervening assignments of
the Mortgage, in each case with evidence of recording indicated thereon; (iii)
the original or a copy of any related assignment of leases (if such item is a
document separate from the Mortgage), with evidence of recording indicated
thereon; (iv) an original assignment of the Mortgage in favor of the Trustee and
in recordable form; (v) an original assignment of any related assignment of
leases (if such item is a document separate from the Mortgage) in favor of the
Trustee and in recordable form; (vi) originals or copies of all written
modification agreements in those instances in which the terms or provisions of
the Mortgage or Mortgage Note have been modified; (vii) the original or a copy
of the policy or certificate of lender's title insurance issued on the date of
the origination of such Mortgage Loan, or, if such policy has not been issued,
an irrevocable, binding commitment to issue such title insurance policy; and
(viii) any file copies of any UCC financing statements in the possession of the
applicable Mortgage Loan Seller.
The Trustee or a Custodian on its behalf will be required to review each
Mortgage File within a specified period following its receipt thereof. If any of
the above-described documents is found during the course of such review to be
missing from any Mortgage File or defective, and in either case such omission or
defect materially and adversely affects the interests of the Certificateholders,
the applicable Mortgage Loan Seller, if it cannot deliver the document or cure
the defect within a period of 90 days following its receipt of notice thereof,
will be obligated pursuant to the applicable Mortgage Loan Purchase Agreement
(the relevant rights under which will be assigned by the Depositor to the
Trustee) to repurchase the affected Mortgage Loan within such 90-day period at a
price (the "Purchase Price") generally equal to the sum of (i) the unpaid
principal balance of such Mortgage Loan, (ii) unpaid accrued interest on such
Mortgage Loan (calculated at the Mortgage Rate) to but not including the Due
Date in the Collection Period in which the purchase is to occur, and (iii)
certain servicing expenses that are reimbursable to the Master Servicer and any
separate Special Servicer; provided that such Mortgage Loan Seller will have an
additional 90-day period to deliver the document or cure the defect, as the case
may be, if it is diligently proceeding to effect such delivery or cure and has
delivered to the Trustee an officer's certificate that describes the reasons
that such delivery or cure was not effected within the first 90-day cure period
and the actions it proposes to take to effect such delivery or cure, and which
states that it anticipates such delivery or cure will be effected within the
additional 90-day period. The foregoing repurchase obligation will constitute
the sole remedy available to the Certificateholders and the Trustee for any
uncured failure to deliver, or any uncured defect in, a constituent Mortgage
Loan document. The applicable Mortgage Loan Seller will be solely responsible
for such repurchase obligation, and such obligation will not be the
responsibility of the Depositor or any of its other affiliates.
The Pooling and Servicing Agreement will require the Master Servicer
promptly (and in any event within 30 days after the Closing Date) to cause each
of the assignments described in clauses (iv) and (v) of the second preceding
paragraph to be submitted for recording in the real property records of the
jurisdiction in which the related Mortgaged Property is located. See
"DESCRIPTION OF THE POOLING AGREEMENTS--Assignment of Mortgage Loans;
Repurchases" in the Prospectus.
Representations and Warranties; Repurchases
In each Mortgage Loan Purchase Agreement, the applicable Mortgage Loan
Seller will represent and warrant with respect to each related Mortgage Loan, as
of the Closing Date, or as of such other date specifically provided in the
representation and warranty, among other things, generally that: (i) the
information set forth in the schedule of Mortgage Loans attached to the
applicable Mortgage Loan Purchase Agreement (which contains certain of the
information set forth in Annex A) is true and correct in all material respects
as of the Cut-off Date; (ii) the applicable
S-40
<PAGE>
Mortgage Loan Seller owns the Mortgage Loan and is transferring the Mortgage
Loan free and clear of any and all liens, pledges, charges or security
interests; (iii) the proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder; (iv) each of the related
Mortgage Note, related Mortgage and other agreements executed in connection
therewith is the legal, valid and binding obligation of the maker thereof
(subject to any non-recourse provisions contained in any of the foregoing
agreements and any applicable state anti-deficiency legislation), enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law); (v) the assignment of the related Mortgage to the Trustee on behalf
of the Certificateholders constitutes the legal, valid and binding assignment of
such Mortgage; (vi) the related Mortgage is a valid and enforceable first
priority mortgage lien on the related Mortgaged Property, having priority over
all other liens or encumbrances except for (A) the lien of current real estate
taxes and assessments not yet due and payable, and (B) covenants, conditions and
restrictions, rights of way, easements and other matters that are of public
record and/or are referred to in the related lender's title insurance policy;
(vii) prior to the Cut-off Date, any delinquent taxes that had become due and
owing in respect of the related Mortgaged Property were paid, or an escrow of
funds sufficient to cover such payment had been established; (viii) as of the
Cut-off Date, no scheduled payment of principal or interest was 30 days or more
past due; (ix) there is no proceeding known to the applicable Mortgage Loan
Seller to be pending for the total or partial condemnation of the related
Mortgaged Property, and the Mortgaged Property is free and clear of any damage
that would materially and adversely affect its value as security for the
Mortgage Loan; (x) the related Mortgaged Property is covered by a lender's title
insurance policy insuring that the related Mortgage is a valid first lien on
such Mortgaged Property, subject only to the exceptions stated therein; (xi)
each Mortgage Loan represents a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code; (xii) any Prepayment Premium constitutes a
"customary prepayment penalty" within the meaning of Treasury Regulation Section
1.860G-1(b)(2) and (xiii) the applicable Mortgage Loan Seller has no knowledge
of any material and adverse environmental condition or circumstance affecting
any Mortgaged Property that was not disclosed in the report of the related
environmental assessment performed by or on behalf of the applicable Mortgage
Loan Seller.
In the case of a breach of any of the foregoing representations and
warranties that materially and adversely affects the interests of the
Certificateholders, the applicable Mortgage Loan Seller, if it cannot cure such
breach within a period of 90 days following its receipt of notice thereof, will
be obligated pursuant to the applicable Mortgage Loan Purchase Agreement (the
relevant rights under which will be assigned by the Depositor to the Trustee) to
repurchase the affected Mortgage Loan within such 90-day period at the
applicable Purchase Price; provided that such Mortgage Loan Seller will have an
additional 90-day period to cure such breach if it is diligently proceeding with
such cure and has delivered to the Trustee an officer's certificate that
describes the reasons that a cure was not effected within the first 90-day cure
period and the actions it proposes to take to effect such cure, and which states
that it anticipates such cure will be effected within the additional 90-day
period.
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any uncured breach of
the applicable Mortgage Loan Seller's representations and warranties regarding
the applicable Mortgage Loans. The applicable Mortgage Loan Seller will be the
sole warranting party in respect of the Mortgage Loans sold by such Mortgage
Loan Seller to the Depositor, and neither the Depositor nor any of its other
affiliates will be obligated to repurchase any such affected Mortgage Loan in
connection with a breach of the applicable Mortgage Loan Seller's
representations and warranties if the applicable Mortgage Loan Seller defaults
on its obligation to do so. See "DESCRIPTION OF THE POOLING
AGREEMENTS--Representations and Warranties; Repurchases" in the Prospectus.
Changes in Mortgage Pool Characteristics
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued. Prior to the
issuance of the Offered Certificates, a Mortgage Loan may be removed from the
Mortgage Pool if the Depositor deems such removal necessary or appropriate or if
it is prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Certificates, unless
including such mortgage loans would materially alter the characteristics of the
Mortgage Pool as described herein. The Depositor believes that the information
set forth herein will be representative of the characteristics of the Mortgage
Pool as it will be constituted
S-41
<PAGE>
at the time the Offered Certificates are issued, although the range of Mortgage
Rates, maturities and certain other characteristics of the Mortgage Loans in the
Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. If Mortgage Loans are removed from or
added to the Mortgage Pool as described in the preceding paragraph, such removal
or addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
General
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans on
behalf of the Trustee and for the benefit of the Certificateholders, in
accordance with applicable law, the terms of the Pooling and Servicing
Agreement, the terms of the respective Mortgage Loans and, to the extent
consistent with the foregoing, (i) in the same manner as would prudent
institutional commercial mortgage lenders and loan servicers servicing mortgage
loans comparable to the Mortgage Loans or (ii) in the same manner in which it
administers comparable mortgage loans for its own account, whichever standard is
higher, and with a view to the timely collection of all scheduled payments of
principal and interest under the Mortgage Loans or, if a Mortgage Loan comes
into and continues in default and no satisfactory arrangements can be made for
the collection of the delinquent payment, the maximization of the recovery on
such Mortgage Loan to Certificateholders on a present value basis, but in any
case without regard to: (i) any relationship that it or any of its affiliates
may have with the related borrower; (ii) its ownership (or that of an affiliate)
of any Certificate; (iii) any obligation to make P&I Advances or advances to
cover certain servicing expenses; (iv) the adequacy of or the right to receive
their or their affiliates' compensation for its services or reimbursement of
costs under the Pooling and Servicing Agreement or with respect to any
particular transaction; (v) without regard to any obligation to cure a breach of
any representation or warranty under the Pooling and Servicing Agreement or to
repurchase any Mortgage Loan to cure a breach of any such representation or
warranty; and (vi) its ownership, or servicing or management for others of any
other mortgage loans or property.
Set forth below, following the subsection captioned "--The Master Servicer
and Special Servicer," is a description of certain pertinent provisions of the
Pooling and Servicing Agreement relating to the servicing of the Mortgage Loans.
Reference is also made to the Prospectus, in particular to the section captioned
"DESCRIPTION OF THE POOLING AGREEMENTS," for important information in addition
to that set forth herein regarding the terms and conditions of the Pooling and
Servicing Agreement as they relate to the rights and obligations of the Master
Servicer and Special Servicer thereunder.
The Master Servicer and Special Servicer
FUNB, in its capacity as master servicer under the Pooling and Servicing
Agreement (in such capacity, the "Master Servicer") will be responsible for
servicing the Mortgage Loans. Although the Master Servicer is authorized to
employ agents, including sub-servicers, to directly service the Mortgage Loans,
the Master Servicer will remain liable for its servicing obligations under the
Pooling and Servicing Agreement. The Master Servicer is a wholly-owned
subsidiary of First Union Corporation. The Master Servicer's principal servicing
offices are located at One First Union Center, TW9, 301 South College Street,
Charlotte, North Carolina 28288-1075.
At September 30, 1996, the Master Servicer and its affiliates serviced
approximately 579 commercial and multifamily loans, totaling approximately $2.0
billion in aggregate outstanding principal amounts, including loans securitized
in mortgage-backed securitization transactions.
The initial Special Servicer will be CRIIMI MAE Services Limited
Partnership, a Maryland limited partnership, the general partner of which is
CRIIMI MAE Management, Inc. The Special Servicer will be responsible for
performing certain servicing functions with respect to Mortgage Loans that, in
general, are in default or as to which default is imminent, for administering
any REO Property and for performing certain other functions with respect to all
Mortgage Loans, such as conducting property inspections, collecting financial
statements, rent-rolls and other financial data on the Mortgaged Properties, and
preparing related reports, as set forth in the Pooling and Servicing Agreement.
S-42
<PAGE>
As of August 31, 1996, the Special Servicer was responsible for the servicing of
approximately 1,000 commercial and multifamily loans with an aggregate principal
balance of approximately $3.8 billion, the collateral for which is located in 47
states. It is anticipated that the Special Servicer or an affiliate of the
Special Servicer will purchase all or a significant portion of the Class F,
Class G and Class H Certificates on or about the Closing Date. The Special
Servicer's principal offices are located at 11200 Rockville Pike, Rockville,
Maryland 20852.
The information set forth herein concerning the Master Servicer and the
Special Servicer has been provided by the Master Servicer and Special Servicer,
respectively, and none of the Depositor or either Underwriter makes any
representation or warranty as to the accuracy or completeness of such
information.
Replacement of the Special Servicer
The Pooling and Servicing Agreement will permit the holder (or holders) of
the majority of the Voting Rights allocated to the Controlling Class of
Sequential Pay Certificates to replace the Special Servicer. The "Controlling
Class of Sequential Pay Certificates" is the Class of Sequential Pay
Certificates that has the latest alphabetical Class designation and that has a
Certificate Balance that is greater than 25% of its original Certificate
Balance; provided that if no Class of Sequential Pay Certificates has a
Certificate Balance that is greater than 25% of its original Certificate
Balance, the Class of Sequential Pay Certificates with the latest alphabetical
Class designation will be the "Controlling Class of Sequential Pay
Certificates." The Class A-1, Class A-2 and Class A-3 Certificates will be
treated as one Class for determining the Controlling Class of Sequential Pay
Certificates. Any such replacement of a Special Servicer will be subject to,
among other things, (i) the delivery of notice of the proposed replacement to
the Rating Agencies and receipt of notice from the Rating Agencies that the
replacement will not result in a qualification, downgrade or withdrawal of any
of the then current ratings assigned to the Certificates, and (ii) the written
agreement of the Special Servicer to be bound by the terms and conditions of the
Pooling and Servicing Agreement. Subject to the foregoing, any Certificateholder
or affiliate thereof may be appointed as Special Servicer. See "DESCRIPTION OF
CERTIFICATES--Voting Rights" herein.
The Special Servicer will be responsible for servicing and administering
any Mortgage Loan as to which (a) any Monthly Payment shall be delinquent 45 or
more days (or, in the case of a Balloon Payment, if the Master Servicer
determines that the related borrower has obtained a commitment to refinance,
such longer period of delinquency (not to exceed 120 days) within which such
refinancing is expected to occur); (b) the Master Servicer shall have determined
that a default in making a Monthly Payment is likely to occur within 30 days and
is likely to remain unremedied for at least 60 days (or, in the case of a
Balloon Payment, if the Master Servicer determines that the related borrower has
obtained a commitment to refinance, such longer period of delinquency (not to
exceed 120 days) within which such refinancing is expected to occur); (c) there
shall have occurred a default (other than as described in clause (a) above) that
materially impairs the value of the Mortgaged Property as security for the
Mortgage Loan or otherwise materially adversely affects the interests of
Certificateholders and that continues unremedied for the applicable grace period
under the terms of the Mortgage Loan (or, if no grace period is specified, for
30 days); (d) a decree or order under any bankruptcy, insolvency or similar law
shall have been entered against the related borrower and such decree or order
shall have remained in force, undischarged or unstayed for a period of 60 days;
(e) the related borrower shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency or similar proceedings of or relating
to such related borrower or of or relating to all or substantially all of its
property; (f) the related borrower shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(g) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property.
In the event of any of the foregoing with respect to any Mortgage Loan, the
Master Servicer is required to use its reasonable efforts to permit the transfer
of its servicing responsibilities with respect thereto to the Special Servicer
within five business days. Notwithstanding such transfer, the Master Servicer
will continue to receive payments on such Mortgage Loan (including amounts
collected by the Special Servicer), to make certain calculations with respect to
such Mortgage Loan, and to make remittances (including, if necessary, P&I
Advances) and prepare certain reports to the Trustee with respect to such
Mortgage Loan. If title to the related Mortgaged Property is acquired by the
Trust Fund (upon acquisition, an "REO Property"), whether through foreclosure,
deed-in-lieu of foreclosure or otherwise, the Special Servicer will continue to
be responsible for the operation and management thereof. Mortgage Loans serv-
S-43
<PAGE>
iced by a Special Servicer are referred to herein as "Specially Serviced
Mortgage Loans" and, together with any REO Properties, constitute "Specially
Serviced Trust Fund Assets." If the Special Servicer is not the Master Servicer,
the Master Servicer will have no responsibility for the Special Servicer's
performance of its duties under the Pooling and Servicing Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities):
(w) with respect to the circumstances described in clause (a) of the
second preceding paragraph, when the related borrower has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to the circumstances described in clauses (b), (d),
(e) and (f) of the second preceding paragraph, when such circumstances
cease to exist in the good faith, reasonable judgment of the Special
Servicer, but, with respect to any bankruptcy or insolvency proceedings
described in clauses (d), (e) and (f), no later than the entry of an order
or decree dismissing such proceeding;
(y) with respect to the circumstances described in clause (c) of the
second preceding paragraph, when such default is cured; and
(z) with respect to the circumstances described in clause (g) of the
second preceding paragraph, when such proceedings are terminated;
so long as at that time no circumstance identified in such clauses (a) through
(g) exists that would cause the Mortgage Loan to continue to be characterized as
a Specially Serviced Mortgage Loan.
Servicing and Other Compensation and Payment of Expenses
The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the Master Servicing Fee. The "Master Servicing
Fee" will be payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan, will accrue at the related Master
Servicing Fee Rate and will be computed on the basis of the same principal
amount and for the same period respecting which any related interest payment due
on the Mortgage Loan is computed. The "Master Servicing Fee Rate" will be a per
annum rate equal to: 0.075%, in the case of 236 of the Mortgage Loans (or 70%),
0.095% in the case of 46 of the Mortgage Loans (or 20%), 0.110% in the case of
10 of the Mortgaged Loans (or 8%), 0.125% in the case of one of the Mortgage
Loans (or 1%), 0.160% in the case of six of the Mortgage Loans (or 1%) and
0.285% in the case of one of the Mortgage Loans. The weighted average Master
Servicing Fee Rate as of the Cut-off Date will be 0.084%. As additional
servicing compensation, the Master Servicer or the Special Servicer will be
entitled to retain all assumption and modification fees, late charges and
Prepayment Interest Excesses collected from borrowers on Mortgage Loans. In
addition, the Master Servicer is authorized to invest or direct the investment
of funds held in the Certificate Account in certain short-term United States
government securities and other investment grade obligations, and the Master
Servicer will be entitled to retain any interest or other income earned on such
funds, but shall be required to cover any losses from its own funds without any
right to reimbursement.
If borrower voluntarily prepays on a date that is prior to its Due Date in
such Collection Period, the amount of interest (net of related Servicing Fees)
that accrues on the Mortgage Loan during such Collection Period will be less
(such shortfall, a "Prepayment Interest Shortfall") than the amount of interest
(net of related Servicing Fees and the Trustee Fee) that would have accrued on
the Mortgage Loan through its Due Date. If such a principal prepayment occurs
during any Collection Period after the Due Date for such Mortgage Loan in such
Collection Period, the amount of interest (net of related Servicing Fees and the
Trustee Fee) that accrues and is collected on the Mortgage Loans during such
Collection Period will exceed (such excess, a "Prepayment Interest Excess") the
amount of interest (net of related Servicing Fees and the Trustee Fee) that
would have been collected on the Mortgage Loan during such Collection Period if
the borrower had not prepaid. Any Prepayment Interest Excesses collected will be
paid to the Master Servicer as additional servicing compensation. However, with
respect to each Distribution Date, the Master Servicer will be required to
deposit into the Certificate Account (such deposit, a "Compensating Interest
Payment"), without any right of reimbursement therefor, an amount equal to the
lesser of (i) its servicing compensation for the
S-44
<PAGE>
related Collection Period, including any Prepayment Interest Excesses received
during such Collection Period and (ii) the aggregate of any Prepayment Interest
Shortfalls experienced during the related Collection Period. Compensating
Interest Payments will not cover shortfalls in Mortgage Loan interest accruals
that result from any liquidation of a defaulted Mortgage Loan, or of any REO
Property acquired in respect thereof, that occurs during a Collection Period
prior to the related Due Date therein.
As and to the extent described herein under "DESCRIPTION OF THE
CERTIFICATES--P&I Advances," the Master Servicer will be entitled to receive
interest, at the Reimbursement Rate, on any P&I Advances made by it and on any
reimbursable servicing expenses incurred by it. Such interest will compound
annually and will be paid, contemporaneously with the reimbursement of the
related P&I Advance or servicing expense, from general collections on the
Mortgage Loans then on deposit in the Certificate Account.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Special Servicing Fee (together
with the Master Servicing Fee and the Additional Servicing Fee (as defined
below), the "Servicing Fees") and, under the circumstances described herein,
Principal Recovery Fees, each of which are payable on each Specially Serviced
Mortgage Loan in addition to the applicable Master Servicing Fee and Additional
Servicing Fee. The "Special Servicing Fee" will accrue at a rate (the "Special
Servicing Fee Rate") equal to 0.25% per annum and will be computed on the basis
of the same principal amount and for the same period respecting which any
related interest payment on the related Specially Serviced Mortgage Loan is
computed. However, earned Special Servicing Fees will be payable out of general
collections on the Mortgage Loans then on deposit in the Certificate Account.
The Special Servicing Fee with respect to any Specially Serviced Mortgage Loan
will cease to accrue if such loan is liquidated or becomes a Corrected Mortgage
Loan. The Special Servicer will be entitled to a "Principal Recovery Fee" with
respect to each Specially Serviced Trust Fund Asset and Corrected Mortgage Loan,
which Principal Recovery Fee generally will be in an amount equal to 0.25% of
all amounts received in respect thereof and allocable as a recovery of
principal. However, no Principal Recovery Fee will be payable in connection
with, or out of Liquidation Proceeds (as defined in the Prospectus) resulting
from, the purchase of any Specially Serviced Trust Fund Asset or Corrected
Mortgage Loan (i) by a Mortgage Loan Seller (as described herein under
"DESCRIPTION OF THE MORTGAGE POOL--Assignment of the Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases," (ii) by the
Master Servicer or the Depositor as described herein under "DESCRIPTION OF THE
CERTIFICATES--Termination" or (iii) in certain other limited circumstances. As
additional servicing compensation, the Special Servicer will be entitled to
retain (a) late payment charges received on or with respect to the Specially
Serviced Mortgage Loans, (b) one-half of all assumption fees with respect to all
Mortgage Loans and (c) all modification fees with respect to all Mortgage Loans.
The Special Servicer, in addition to its duties with respect to the
Specially Serviced Mortgage Loans, will be responsible for (i) conducting (or
retaining a third party to conduct) inspections of each Mortgaged Property and
(ii) collecting and making certain calculations based on annual and quarterly
operating statements and rent rolls with respect to each Mortgaged Property. The
Special Servicer will be entitled to a monthly fee (the "Additional Servicing
Fee") for performing the duties set forth in clauses (i) and (ii) above payable
monthly on a loan-by-loan basis at a rate equal to one-twelfth of the product of
(a) a per annum rate of 0.04% (the "Additional Servicing Fee Rate") and (b) the
Stated Principal Balance of the Mortgage Loans as of the Due Date from amounts
received in respect of interest on each Mortgage Loan, accrued at the related
Additional Servicing Fee Rate and computed on the basis of the same principal
amount and for the same period respecting which any related interest payment due
on the Mortgage Loan is computed. The Special Servicer will also be entitled to
any loan service charges, statement charges or other charges earned by it.
The Pooling and Servicing Agreement will provide that the Special Servicer
will comply with the REMIC Provisions.
Each of the Master Servicer and Special Servicer will, in general, each be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling and Servicing Agreement, including the
fees of any sub-servicers retained by it, and will not be entitled to
reimbursement therefor except as expressly provided in the Pooling and Servicing
Agreement. However, each of the Master Servicer and Special Servicer will be
permitted to pay certain of such expenses (including certain expenses incurred
as a result of a Mortgage Loan default) directly out of the Certificate Account
and at times without regard to the relationship between the expense and the
funds from which it is being paid. See "DESCRIPTION OF THE
CERTIFICATES--Distributions" herein and "DESCRIPTION OF THE POOLING
AGREEMENTS--Certificate Account" and "--Servicing Compensation and Payment of
Expenses" in the Prospectus.
S-45
<PAGE>
Modifications, Waivers and Amendments
The Pooling and Servicing Agreement will permit the Special Servicer to
modify, waive or amend any term of any Mortgage Loan if (a) it determines, in
accordance with the servicing standard described under "--General" above, that
it is appropriate to do so and (b) except as described in the following
paragraph, such modification, waiver or amendment will not (i) affect the amount
or timing of any scheduled payments of principal, interest or other amount
(including Prepayment Premiums and Yield Maintenance Charges) payable under the
Mortgage Loan, (ii) affect the obligation of the related borrower to pay a
Prepayment Premium or Yield Maintenance Charge or permit a principal prepayment
during the applicable Lockout Period, (iii) except as expressly provided by the
related Mortgage or in connection with a material adverse environmental
condition at the related Mortgaged Property, result in a release of the lien of
the related Mortgage on any material portion of such Mortgaged Property without
a corresponding principal prepayment or (iv) in its judgment, materially impair
the security for the Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph, the Special Servicer
may (i) reduce the amounts owing under any Specially Serviced Mortgage Loan by
forgiving principal, accrued interest and/or any Prepayment Premium or Yield
Maintenance Charge, (ii) reduce the amount of the Monthly Payment on any
Specially Serviced Mortgage Loan, including by way of a reduction in the related
Mortgage Rate, (iii) forbear in the enforcement of any right granted under any
Mortgage Note or Mortgage relating to a Specially Serviced Mortgage Loan, and/or
(iv) accept a principal prepayment during any Lockout Period; provided that (x)
the related borrower is in default with respect to the Specially Serviced
Mortgage Loan or, in the judgment of the Special Servicer, such default is
reasonably foreseeable, (y) in the sole, good faith judgment of the Special
Servicer, such modification, waiver or amendment would increase the recovery to
Certificateholders on a present value basis documented to the Trustee and (z)
such modification, waiver or amendment does not result in a tax imposed on the
Trust Fund or cause the REMIC created pursuant to the Pooling and Servicing
Agreement to fail to qualify as a REMIC at any time the Certificates are
outstanding. However, the Special Servicer will not be permitted to extend the
date on which any Balloon Payment is scheduled to be due for a period in excess
of 12 months per extension or 36 months in the aggregate, without the consent of
the Extension Adviser (as defined herein). See "SERVICING OF THE MORTGAGE
LOANS--The Extension Adviser."
The Special Servicer will be required to notify the Trustee and the Master
Servicer of any modification, waiver or amendment of any term of any Mortgage
Loan, and to deliver to the Trustee or the related Custodian, for deposit in the
related Mortgage File, an original counterpart of the agreement related to such
modification, waiver or amendment, promptly (and in any event within 10 business
days) following the execution thereof. Copies of each agreement whereby any such
modification, waiver or amendment of any term of any Mortgage Loan is effected
are required to be available for review during normal business hours at the
offices of the Trustee. See "DESCRIPTION OF THE CERTIFICATES--Reports to
Certificateholders; Available Information" herein.
The Extension Adviser
Election of the Extension Adviser. The initial Extension Advisor will be
State Street Bank and Trust Company, from whom the Special Servicer will seek
approval as described below. The responsibility of State Street Bank and Trust
Company as Extension Advisor shall be carried out by the Real Estate Division of
the Commercial Banking Services Area of such bank. Upon the resignation or
removal of the Extension Adviser, an election of a successor Extension Adviser
will be held as soon as practicable thereafter by the Certificateholder or
Certificateholders representing 51% or more of the Offered Certificates (other
than the Class IO Certificates). The Extension Adviser may be removed at any
time by the written vote of Certificateholders of 51% or more of the Offered
Certificates (other than the Class IO Certificates. In the event that at any
time an Extension Adviser shall have resigned or been removed and a successor
Extension Adviser shall not have been elected, there shall be no Extension
Adviser and the Special Servicer shall not have any right to extend the maturity
of any Specially Serviced Mortgage Loan which would require the approval of an
Extension Adviser during any such period that there is no Extension Adviser.
Duties of the Extension Adviser. The Special Servicer will not be permitted
to grant any extension of the maturity of a Specially Serviced Mortgage Loan
beyond the third anniversary of such Mortgage Loan's then stated maturity date,
unless the Extension Adviser has approved such action in writing within ten days
after receiving from the Special Servicer written notice thereof and sufficient
information to make an informed decision (provided that if a
S-46
<PAGE>
written objection to such extension from the Extension Adviser has not been
received by the Special Servicer within said ten day period, then the Extension
Adviser's approval will be deemed to have been given). In addition, the
Extension Adviser will confirm to its reasonable satisfaction that all
conditions precedent to granting any such extension set forth in the Pooling and
Servicing Agreement have been satisfied. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments" herein.
Limitation on Liability of Extension Adviser. The Extension Adviser will be
acting solely as a representative of the interests of the Certificateholders
that elected the Extension Adviser, and will have no liability to the Trust or
any Certificateholders for any action taken, or for refraining from taking of
any action, in good faith pursuant to the Pooling and Servicing Agreement, or
for errors in judgment; provided that the Extension Adviser will not be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties. By its acceptance of a
Certificate, each Certificateholder confirms its understanding that the
Extension Adviser may take actions that favor the interest of one or more
Classes of the Certificates over other Classes of the Certificates, and that the
Extension Adviser may have special relationships and interests that conflict
with those of Holders of some Classes of the Certificates and, absent willful
misfeasance, bad faith, negligence or reckless disregard of obligations or
duties on the part of the Extension Adviser, agree to take no action against the
Extension Adviser or any of its officers, directors, employees, principals or
agents as a result of such a special relationship or conflict.
REO Properties
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders, the Special Servicer, on behalf of such holders, will be
required to sell the Mortgaged Property within two years of acquisition, unless
(i) the Internal Revenue Service grants an extension of time to sell such
property (an "REO Extension") or (ii) it obtains an opinion of counsel generally
to the effect that the holding of the property for more than two years after its
acquisition will not result in the imposition of a tax on the Trust Fund or
cause either REMIC created pursuant to the Pooling and Servicing Agreement to
fail to qualify as a REMIC under the Code. Subject to the foregoing, the Special
Servicer will generally be required to solicit bids for any Mortgaged Property
so acquired in such a manner as will be reasonably likely to realize a fair
price for such property. The Special Servicer may retain an independent
contractor to operate and manage any REO Property; however, the retention of an
independent contractor will not relieve the Special Servicer of its obligations
with respect to such REO Property.
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially feasible, maximize the Trust Fund's net after-tax proceeds
from such property. After the Special Servicer reviews the operation of such
property and consults with the Trustee to determine the Trustee's federal income
tax reporting position with respect to the income it is anticipated that the
Trust Fund would derive from such property, the Special Servicer could determine
(particularly in the case of an REO Property that is a hospitality or
residential health care facility) that it would not be commercially feasible to
manage and operate such property in a manner that would avoid the imposition of
a tax on "net income from foreclosure property," within the meaning of Section
857(b)(4)(B) of the Code or a tax on "prohibited transactions" under Section
860F of the Code (either such tax referred to herein as an "REO Tax"). To the
extent that income the Trust Fund receives from an REO Property is subject to a
tax on (i) "net income from foreclosure property" such income would be subject
to federal tax at the highest marginal corporate tax rate (currently 35%) or
(ii) "prohibited transactions," such income would be subject to federal tax at a
100% rate. The determination as to whether income from an REO Property would be
subject to an REO Tax will depend on the specific facts and circumstances
relating to the management and operation of each REO Property. Generally, income
from an REO Property that is directly operated by the Special Servicer would be
apportioned and classified as "service" or "non-service" income. The "service"
portion of such income could be subject to federal tax either at the highest
marginal corporate tax rate or at the 100% rate on "prohibited transactions,"
and the "non-service" portion of such income could be subject to federal tax at
the highest marginal corporate tax rate or, although it appears unlikely, at the
100% rate applicable to "prohibited transactions." Any REO Tax imposed on the
Trust Fund's income from an REO Property would reduce the amount available for
distribution to Certificateholders. Certificateholders are advised to consult
their tax advisors regarding the possible imposition of REO Taxes in connection
with the operation of commercial REO Properties by REMICs. See "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES" herein and "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the Prospectus.
S-47
<PAGE>
Inspections; Collection of Operating Information
The Special Servicer will be required to perform a physical inspection of a
Mortgaged Property as soon as practicable after the related Mortgage Loan
becomes a Specially Serviced Mortgage Loan. In addition, the Special Servicer
will be required to inspect each Mortgaged Property at least once per calendar
year if, in a given calendar year, it has not already done so. The Special
Servicer will be required to prepare a written report of each such inspection
performed by it that describes the condition of the Mortgaged Property and that
specifies the existence with respect thereto of any sale, transfer or
abandonment or any material change in its condition or value.
The Special Servicer is also required to use reasonable efforts to collect
from the related borrower and review the annual operating statements of each
Mortgaged Property and to cause annual operating statements to be prepared for
each REO Property. Each of the Mortgages requires the related borrower to
deliver an annual property operating statement. However, there can be no
assurance that any operating statements required to be delivered will in fact be
delivered, nor is the Special Servicer likely to have any practical means of
compelling such delivery in the case of an otherwise performing Mortgage Loan.
Copies of the inspection reports and operating statements referred to above
are required to be available for review by Certificateholders during normal
business hours at the offices of the Special Servicer. See "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders; Available Information" herein.
DESCRIPTION OF THE CERTIFICATES
General
The Depositor's Mortgage Pass-Through Certificates, Series 1996-C2 (the
"Certificates") will be issued pursuant to a Pooling and Servicing Agreement, to
be dated as of November 1, 1996, among the Depositor, the Master Servicer, the
Special Servicer and the Trustee (the "Pooling and Servicing Agreement"). The
Certificates will represent in the aggregate the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of: (i) the
Mortgage Loans and all payments and other collections in respect of the Mortgage
Loans received or applicable to periods after the Cut-off Date (exclusive of
payments of principal and interest due on or before the Cut-off Date); (ii) any
REO Property acquired on behalf of the Trust Fund; (iii) such funds or assets as
from time to time are deposited in the Certificate Account (see "Description of
the Pooling Agreements--Certificate Account" in the Prospectus); and (iv)
certain rights of the Depositor under the Mortgage Loan Purchase Agreements
relating to Mortgage Loan document delivery requirements and the representations
and warranties of the Mortgage Loan Sellers regarding the Mortgage Loans.
The Certificates will consist of fourteen classes (each, a "Class") to be
designated as: (i) the Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class IO Certificates, the Class B Certificates, the
Class C Certificates, the Class D Certificates, the Class E Certificates, the
Class F Certificates, the Class G Certificates and the Class H Certificates
(collectively, the "REMIC Regular Certificates"); and (ii) the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates
(collectively, the "REMIC Residual Certificates").
Only the Class A-1, Class A-2, Class A-3, Class IO, Class B, Class C, Class
D and Class E Certificates (collectively, the "Offered Certificates") are
offered hereby. The Class F, Class G, Class H and the REMIC Residual
Certificates (collectively, the "Private Certificates") have not been registered
under the Securities Act, and are not offered hereby. Accordingly, information
herein regarding the terms of the Private Certificates is provided solely
because of its potential relevance to a prospective purchaser of an Offered
Certificate.
Registration and Denominations
The Offered Certificates will be issued in book-entry format through the
facilities of The Depository Trust Company ("DTC"). Each Class of Offered
Certificates will be issued in denominations of not less than $1,000 actual or
notional principal amount and in integral multiples of $1 in excess thereof.
S-48
<PAGE>
Each Class of Offered Certificates will initially be represented by one or
more global Certificates registered in the name of the nominee of DTC. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co. No
beneficial owner of an Offered Certificate (each, a "Certificate Owner") will be
entitled to receive a fully registered, certificated form of such Certificate (a
"Definitive Offered Certificate"), except under the limited circumstances
described in the Prospectus under "Description of the Certificates--Book-Entry
Registration and Definitive Certificates." Unless and until Definitive Offered
Certificates are issued in respect of a Class of Offered Certificates,
beneficial ownership interests in such Class will be recorded and transferred on
the book-entry records of DTC and its participating organizations (the
"Participants"), and all references to actions by holders of a Class of Offered
Certificates will refer to actions taken by DTC upon instructions received from
the related Certificate Owners through the Participants in accordance with DTC
procedures, and all references herein to payments, notices, reports and
statements to the holders of a Class of Offered Certificates will refer to
payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder thereof, for distribution to the related Certificate Owners
through the Participants in accordance with DTC procedures. The form of such
payments and transfers may result in certain delays in receipt of payments by an
investor and may restrict an investor's ability to pledge its securities. None
of the Depositor, the Master Servicer, the Special Servicer or the Trustee or
any of their respective affiliates will have any liability for any actions taken
by DTC or its nominee, including, without limitation, actions for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in Offered Certificates held by Cede & Co., as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. See "DESCRIPTION OF THE CERTIFICATES--Book-Entry
Registration and Definitive Certificates" and "RISK FACTORS--Book-Entry
Registration" in the Prospectus.
Certificate Balances and Notional Amount
Upon initial issuance, and in each case subject to a permitted variance of
plus or minus 5%, the Sequential Pay Certificates will have the Certificate
Balances representing the approximate percentage of the Initial Pool Balance as
set forth in the following table:
Initial Percent of
Certificate Initial Pool
Class of Certificates Balance Balance
- --------------------- --------- --------
Class A-1 Certificates ....................... $311,042,000 27.3%
Class A-2 Certificates ....................... $130,587,000 11.5%
Class A-3 Certificates ....................... $343,805,000 30.2%
Class B Certificates ......................... $ 68,299,000 6.0%
Class C Certificates ......................... $ 62,607,000 5.5%
Class D Certificates ......................... $ 56,915,000 5.0%
Class E Certificates ......................... $ 28,458,000 2.5%
Private Certificates
(other than the REMIC Residual Certificates) $136,597,835 12.0%
The "Certificate Balance" of any Class of Certificates (other than the
Class IO Certificates) outstanding at any time represents the maximum amount
that the holders thereof are entitled to receive as distributions allocable to
principal from the cash flow on the Mortgage Loans and the other assets in the
Trust Fund. The Certificate Balance of each Class of Sequential Pay Certificates
will be reduced on each Distribution Date by any distributions of principal
actually made on such Class of Certificates on such Distribution Date, and
further by any Realized Losses and Additional Trust Fund Expenses actually
allocated to such Class of Certificates on such Distribution Date.
The Class IO Certificates will not have Certificate Balances, but will
represent the right to receive the sum of the interest accrued on the notional
amount of each of its Components, as described herein. The Class IO-1 Component
will have a notional amount equal to the aggregate Stated Principal Balance of
the Mortgage Loans and the Class IO-2 Component will have a notional amount
equal to the aggregate Certificate Balance of the Class A-1 Certificates and the
Class A-2 Certificates (each of the Class IO-1 Component and the Class IO-2
Component, a "Component"). Each Component will accrue interest at its applicable
Pass-Through Rate. The Class IO-1 Component and the Class IO-2 Component do not
represent separate Classes of Certificates, but rather separate components each
deemed to be a part of the Class IO Certificates. The notional amount of the
Class IO Certificates will equal the sum of the notional amount of each of its
Components, initially $1,579,939,834.
S-49
<PAGE>
The REMIC Residual Certificates will not have Certificate Balances, but
will represent the right to receive on each Distribution Date any portion of the
Available Distribution Amount (as defined below) for such date that remains
after the required distributions have been made on all the other Classes of
Certificates.
Pass-Through Rates
The Pass-Through Rates applicable to each Class of Offered Certificates
(other than the Class IO Certificates) for each Distribution Date are set forth
in the table set forth on the cover page. The REMIC Residual Certificates will
not bear interest.
The Pass-Through Rate applicable to the Class IO-1 Component for each
Distribution Date will equal the Weighted Average Net Mortgage Rate minus % (but
not less than zero), and the Pass-Through Rate applicable to the Class IO-2
Component for each Distribution Date will equal the weighted average of the
Class A-1 Strip Rate and the Class A-2 Strip Rate, weighted by the Certificate
Balances of the corresponding Classes. The Class A-1 Strip Rate will equal %,
and the Class A-2 Strip Rate will equal %.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period, weighted on the basis of their
respective Stated Principal Balances outstanding immediately prior to such
Distribution Date. The "Net Mortgage Rate" for each Mortgage Loan will generally
equal the Mortgage Rate in effect for such Mortgage Loan as of the Cut-off Date,
minus the applicable Master Servicing Fee Rate, the Additional Servicing Fee
Rate and the Trustee Fee Rate. The "Stated Principal Balance" of each Mortgage
Loan outstanding at any time will generally be an amount equal to the Cut-off
Date Balance thereof, reduced (to not less than zero) on each Distribution Date
by (i) any payments or other collections (or advances in lieu thereof) of
principal of such Mortgage Loan that are due or received, as the case may be,
during the related Collection Period and are distributed on the Certificates on
such Distribution Date and (ii) the principal portion of any Realized Loss and
Additional Trust Fund Expenses incurred in respect of such Mortgage Loan during
the related Collection Period.
The "Collection Period" for each Distribution Date will be the period that
begins immediately following the Determination Date in the month preceding the
month in which such Distribution Date occurs (or, in the case of the initial
Distribution Date, immediately following the Cut-off Date) and ends on and
includes the Determination Date in the same month as such Distribution Date. The
"Determination Date" will be the 12th day of each month (or, if not a business
day, the next preceding business day).
Distributions
General. Distributions on the Certificates will be made by the Trustee, to
the extent of available funds, on the 21st day of each month or, if any such
21st day is not a business day, then on the next succeeding business day with
the same force and effect and no additional interest shall accrue, commencing
December 23, 1996 (each, a "Distribution Date"). Except as described below, all
such distributions will be made to the persons in whose names the Certificates
are registered (the "Certificateholders") at the close of business on the last
business day of the month preceding the month in which the related Distribution
Date occurs. The final distribution on any Certificate (determined without
regard to any possible future reimbursement of any Realized Loss or Additional
Trust Fund Expense previously allocated to such Certificate) will be made only
upon presentation and surrender of such Certificate at the location that will be
specified in a notice of the pendency of such final distribution. All
distributions made with respect to a Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class based on their respective
percentage interests in such Class.
The Available Distribution Amount. The aggregate amount available for
distribution to Certificateholders on each Distribution Date (the "Available
Distribution Amount") will, in general, equal the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties by the Master Servicer as of the
close of business on the related Determination Date, exclusive of any
portion thereof that represents one or more of the following:
(i) any Monthly Payments collected but due on a Due Date after
the related Collection Period,
S-50
<PAGE>
(ii) any Prepayment Premiums and Yield Maintenance Charges, and
(iii) all amounts in the Certificate Account that are payable or
reimbursable to any person other than the Certificateholders,
including any Servicing Fees and Trustee Fees;
(b) all P&I Advances made by the Master Servicer with respect to such
Distribution Date;
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Collection Period. See "SERVICING OF THE MORTGAGE
LOANS--Servicing and other Compensation and Payment of Expenses" and "--P&I
Advances" herein and "DESCRIPTION OF THE POOLING AGREEMENTS--Certificate
Account" in the Prospectus.
Any Prepayment Premiums and Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges" herein.
Application of the Available Distribution Amount. On each Distribution
Date, for so long as the aggregate Certificate Balance of the Classes of Offered
Certificates are greater than zero, the Trustee will (except as otherwise
described under "--Termination" below) apply amounts on deposit in the
Certificate Account, to the extent of the Available Distribution Amount, in the
following order of priority:
(1) to distributions of interest to the holders of the Class A-1,
Class A-2 and Class A-3 and Class IO Certificates (in each case, so long as
any such Class remains outstanding), pro rata, in accordance with the
respective amounts of interest distributable on such Classes of
Certificates on such Distribution Date in an amount equal to all
Distributable Certificate Interest in respect of each such Class of
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to
distributions of principal to the holders of the Class A-2 Certificates in
an amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates;
(4) after the Class A-1 and Class A-2 Certificates have been retired,
to distributions of principal to the holders of the Class A-3 Certificates
in an amount (not to exceed the then outstanding Certificate Balance of
such Class of Certificates) equal to the Principal Distribution Amount for
such Distribution Date, less any portion thereof distributed in respect of
the Class A-1 and/or Class A-2 Certificates;
(5) to distributions to the holders of the Class A-1, Class A-2 and
Class A-3 Certificates, pro rata, in accordance with the amount of Realized
Losses and Additional Trust Fund Expenses, if any, previously allocated to
such Classes of Certificates for which no reimbursement has previously been
received, to reimburse such holders for all Realized Losses and Additional
Trust Fund Expenses, if any;
(6) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(7) after the Class A-1, Class A-2 and Class A-3 Certificates have
been retired, to distributions of principal to the holders of the Class B
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of the Class B Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2 and/or Class A-3 Certificates on such
Distribution Date;
(8) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Appraisal Reduction Amount Shortfalls and
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been received;
S-51
<PAGE>
(9) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(10) after the Class A-1, Class A-2, Class A-3 and Class B
Certificates have been retired, to distributions of principal to the
holders of the Class C Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class C Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class A-2, Class A-3
and/or Class B Certificates on such Distribution Date;
(11) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Appraisal Reduction Amount Shortfalls and
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been received;
(12) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(13) after the Class A-1, Class A-2, Class A-3, Class B and Class C
Certificates have been retired, to distributions of principal to the
holders of the Class D Certificates in an amount (not to exceed the then
outstanding Certificate Balance of the Class D Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class A-2, Class A-3,
Class B and/or Class C Certificates on such Distribution Date;
(14) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Appraisal Reduction Amount Shortfalls and
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been received;
(15) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(16) after the Class A-1, Class A-2, Class A-3, Class B, Class C and
Class D Certificates have been retired, to distributions of principal to
the holders of the Class E Certificates in an amount (not to exceed the
then outstanding Certificate Balance of such Class of Certificates) equal
to the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1, Class A-2, Class
A-3, Class B, Class C and/or Class D Certificates;
(17) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Appraisal Reduction Amount Shortfalls and
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been received;
(18) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(19) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D and Class E Certificates have been retired, to distributions of
principal to the holders of the Class F Certificates in an amount (not to
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D and/or Class E
Certificates;
(20) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Appraisal Reduction Amount Shortfalls and
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been received;
(21) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(22) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E and Class F Certificates have been retired, to
distributions of principal to the holders of the Class G Certificates in an
amount (not to
S-52
<PAGE>
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E and/or
Class F Certificates;
(23) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Appraisal Reduction Amount Shortfalls and
Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Class of Certificates and for which no reimbursement has
previously been received;
(24) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(25) after the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F and Class G Certificates have been retired, to
distributions of principal to the holders of the Class H Certificates in an
amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class
F and/or Class G Certificates;
(26) to distributions to the holders of the Class H and Class IO
Certificates, in that order, to reimburse such holders for all Appraisal
Reduction Amount Shortfalls and Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received; and
(27) to distributions to the holders of the REMIC Residual
Certificates in an amount equal to the balance, if any, of the Available
Distribution Amount remaining after the distributions to be made on such
Distribution Date as described in clauses (1) through (23) above.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of any Class of the Certificates, other than Class IO
Certificates for each Distribution Date represents that portion of the Accrued
Certificate Interest in respect of such Class of Certificates, as adjusted by
any Appraisal Reduction Amounts, for such Distribution Date that is net of such
Class's allocable share (calculated as described below) of the aggregate of any
Prepayment Interest Shortfalls resulting from voluntary principal prepayments
made on the Mortgage Loans during the related Collection Period that are not
covered by the Master Servicer's Compensating Interest Payment for such
Distribution Date (the aggregate of such Prepayment Interest Shortfalls that are
not so covered, as to such Distribution Date, the "Net Aggregate Prepayment
Interest Shortfall"). The "Distributable Certificate Interest" in respect of the
Class IO Certificates will equal the sum of the interest due on the notional
amount of each of the Components.
The "Accrued Certificate Interest" in respect of each Class of REMIC
Regular Certificates (other than Class IO Certificates) for each Distribution
Date is equal to one month's interest at the Pass-Through Rate applicable to
such Class of Certificates for such Distribution Date accrued on the related
Certificate Balance or Notional Amount, as the case may be, outstanding
immediately prior to such Distribution Date. Accrued Certificate Interest will
be calculated on a 30/360 day basis.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of Sequential Pay Certificates
will equal the product of (a) such Net Aggregate Prepayment Interest Shortfall,
multiplied by (b) a fraction, the numerator of which is equal to the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, and the denominator of which is equal to the aggregate
Accrued Certificate Interest for all the REMIC Regular Certificates for such
Distribution Date.
Principal Distribution Amount. The "Principal Distribution Amount" for each
Distribution Date will generally equal the aggregate of the following:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) due and any principal portions of Assumed
Scheduled Payments deemed due on or in respect of the Mortgage Loans for
their respective Due Dates occurring during the related Collection Period;
(b) the aggregate of all principal prepayments received on the
Mortgage Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period,
any payment of principal made by or on behalf of the related borrower
during the
S-53
<PAGE>
related Collection Period (including any Balloon Payment), net of any
portion of such payment that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due or the
principal portion of any Assumed Scheduled Payment deemed due, in respect
of such Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds and Insurance Proceeds
(each as defined in the Prospectus) that were received on Mortgage Loans
during the related Collection Period and that were identified and applied
by the Master Servicer as recoveries of principal, in each case net of any
portion of such amounts that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due or of the
principal portion of any Assumed Scheduled Payment deemed due, in respect
of the related Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution Amount
for the immediately preceding Distribution Date, over the aggregate
distributions of principal made on the Certificates on such immediately
preceding Distribution Date; and
(f) any amounts received but not otherwise distributed as interest on
any Class of Certificates in respect of an Appraisal Reduction Amount.
The "Scheduled Payment" due on any Mortgage Loan on any related Due Date is
the amount of the Monthly Payment that would have been due thereon on such date,
without regard to any waiver, modification or amendment of such Mortgage Loan
granted or agreed to by the Special Servicer or otherwise resulting from a
bankruptcy or similar proceeding involving the related borrower, and assuming
that each prior Scheduled Payment has been made in a timely manner. The "Assumed
Scheduled Payment" is an amount deemed due in respect of any Balloon Loan that
is delinquent in respect of its Balloon Payment beyond the first Determination
Date that follows its stated maturity date. The Assumed Scheduled Payment deemed
due on any such Balloon Loan on its stated maturity date and on each successive
related Due Date that it remains or is deemed to remain outstanding will equal
the Scheduled Payment that would have been due thereon on such date if the
related Balloon Payment had not come due but rather such Mortgage Loan had
continued to amortize in accordance with such loan's amortization schedule, if
any, in effect prior to its stated maturity date.
Distributions of the Principal Distribution Amount will constitute the only
distributions of principal on the Certificates. Reimbursements of previously
allocated Realized Losses and Additional Trust Fund Expenses will not constitute
distributions of principal for any purpose and will not result in an additional
reduction in the Certificate Balance of the Class of Certificates in respect of
which any such reimbursement is made.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of (i) determining distributions on the Certificates, (ii) allocations
of Realized Losses and Additional Trust Fund Expenses to the Certificates, and
(iii) the amount of Trustee Fees and Master Servicing Fees payable under the
Pooling and Servicing Agreement, as having remained outstanding until such REO
Property is liquidated. In connection therewith, operating revenues and other
proceeds derived from such REO Property (net of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts that
would have been "due" on such Mortgage Loan, and the Master Servicer will make
P&I Advances in respect of such Mortgage Loan, in all cases as if such Mortgage
Loan had remained outstanding.
Allocation of Prepayment Premiums and Yield Maintenance Charges. In the
event a borrower is required to pay any Yield Maintenance Charge or any
Prepayment Premium, the amount of such payments actually collected will be
distributed in respect of the Offered Certificates and the Class IO Certificates
as set forth below. "Yield Maintenance Charges" are paid or payable, as the
context requires, on a Mortgage Loan as a result of a prepayment of Principal
not otherwise due thereon, which have been calculated (based on Scheduled
Payments on such Mortgage Loan) to compensate the holder of the Mortgage for
reinvestment losses based on the value of a discount rate at or near the time of
prepayment. Any other fees paid or payable, as the context requires, as a result
of a prepayment of principal on a Mortgage Loan which are calculated based upon
a specified percentage (which may decline over time) of the amount prepaid are
considered "Prepayment Premiums."
For any Distribution Date, with respect to any Prepayment Premiums actually
collected during the related Collection Period, the holders of the Class A-1,
Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class F,
S-54
<PAGE>
Class G and Class H Certificates are, in the case of each such Class, entitled
to distributions in an amount equal to the product of (a) the related Class
Prepayment Percentage for such Distribution Date and (b) 25% of the total amount
of each such Prepayment Premium collected. Any remaining portion of such
Prepayment Premiums collected will be distributed to the holders of the Class IO
Certificates. For any Distribution Date, the respective "Class Prepayment
Percentage" for each of the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D and Class E Certificates is computed in each case by dividing the total
of Principal Distribution Amount, if any, to be distributed to the holders of
each Class of Certificates on such date, by the total Principal Distribution
Amount to be distributed on such date.
For any Distribution Date, with respect to any Yield Maintenance Charge
actually collected in respect of a Mortgage Loan during the related Collection
Period, the holders of the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates are entitled to
distributions in the amount of the product of (a) a fraction (not greater than
one and not less than zero), the numerator of which is the applicable
Pass-Through Rate minus the discount rate used in calculating such Yield
Maintenance Charge and the denominator of which is the Mortgage Rate of the
applicable Mortgage Loan minus such discount rate, (b) the appropriate Class
Prepayment Percentage and (c) the amount of such Yield Maintenance Charge
collected. On each Distribution Date, the holders of the Class IO Certificates
are entitled to receive any remaining portion of such Yield Maintenance Charge
received.
Subordination; Allocation of Losses and Certain Expenses
The rights of holders of the Class B, Class C, Class D and Class E
Certificates and each Class of the Private Certificates (collectively, the
"Subordinate Certificates") to receive distributions of amounts collected or
advanced on the Mortgage Loans will be subordinated, to the extent described
herein, to the rights of holders of the Class A-1, Class A-2, Class A-3 and
Class IO Certificates (collectively, the "Senior Certificates") and each other
such Class of Subordinate Certificates, if any, with an earlier alphabetical
Class designation. This subordination is intended to enhance the likelihood of
timely receipt by the holders of the Senior Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of the Class A-1, Class A-2 and Class A-3 Certificates of principal in an amount
equal to the entire respective Certificate Balances of such Classes of
Certificates. Similarly, but to decreasing degrees, this subordination is also
intended to enhance the likelihood of timely receipt by the holders of the Class
B, the Class C, the Class D Certificates and the Class E Certificates of the
full amount of Distributable Certificate Interest payable in respect of such
Classes of Certificates on each Distribution Date, and the ultimate receipt by
the holders of such Certificates of principal equal to, in each case, the entire
Certificate Balance of the related Class. The protection afforded to the holders
of the Class E Certificates by means of the subordination of the Private
Certificates, to the holders of the Class D Certificates by means of the
subordination of the Class E and the Private Certificates, to the holders of the
Class C Certificates by means of the subordination of the Class D, the Class E
and the Private Certificates, to the holders of the Class B Certificates by
means of the subordination of the Class C, the Class D, the Class E and the
Private Certificates, and to the holders of the Senior Certificates by means of
the subordination of the Subordinate Certificates, will be accomplished by (i)
the application of the Available Distribution Amount on each Distribution Date
in accordance with the order of priority described under
"--Distributions--Application of the Available Distribution Amount" above and
(ii) by the allocation of Realized Losses and Additional Trust Fund Expenses as
described below. The Class A-3 Certificates will receive principal payments only
after the Certificate Balances of the Class A-2 and Class A-1 Certificates have
been reduced to zero and the Class A-2 Certificates will receive principal
payments only after the Certificate Balance of the Class A-1 Certificates has
been reduced to zero. However, the Class A-1, Class A-2, Class A-3 and Class IO
Certificates will bear shortfalls in collections and losses incurred in respect
of the Mortgage Loans concurrently. No other form of credit support will be
available for the benefit of the holders of the Offered Certificates.
On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses that have been incurred since the Cut-off Date through the
end of the related Collection Period and that have not previously been allocated
as described below will be allocated among the respective Classes of Sequential
Pay Certificates (in each case in reduction of their respective Certificate
Balances) as follows, but in the aggregate only to the extent that the aggregate
Certificate Balance of all Classes of Sequential Pay Certificates remaining
outstanding after giving effect to the distributions on such Distribution Date
exceeds the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following
S-55
<PAGE>
such Distribution Date: first, to the Class H Certificates, until the remaining
Certificate Balance of such Class of Certificates is reduced to zero; second, to
the Class G Certificates, until the remaining Certificate Balance of such Class
of Certificates is reduced to zero; third, to the Class F Certificates, until
the remaining Certificate Balance of such Class of Certificates is reduced to
zero; fourth, to the Class E Certificates, until the remaining Certificate
Balance of such Class of Certificates is reduced to zero; fifth, to the Class D
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; sixth, to the Class C Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero
and, seventh, to the Class B Certificates, until the Remaining Certificate
Balance of such Class of Certificates is reduced to zero. Thereafter, additional
Realized Losses and Additional Trust Fund Expenses will be allocated to the
Class A-1 Certificates, the Class A-2 Certificates and the Class A-3
Certificates, pro rata, in proportion to their outstanding Certificate Balances,
until the remaining Certificate Balances of such Classes of Certificates.
Any Realized Loss or Additional Trust Fund Expenses allocated in reduction
of the Certificate Balance of any Class of Certificate will result in a
corresponding reduction in the notional amount of the Class IO-1 Component, and
any Realized Loss or Additional Trust Fund Expenses allocated in reduction of
the Certificate Balance of the Class A-1 or Class A-2 Certificates will also
result in a corresponding reduction in the notional amount for the Class IO-2
Component.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any defaulted Mortgage Loan, including by reason of
the fraud or bankruptcy of the borrower or a casualty of any nature at the
related Mortgaged Property, to the extent not covered by insurance. The Realized
Loss in respect of a liquidated Mortgage Loan (or related REO Property) is an
amount generally equal to the excess, if any, of (a) the outstanding principal
balance of such Mortgage Loan as of the date of liquidation, together with (i)
all accrued and unpaid interest thereon at the related Mortgage Rate in effect
from time to time to but not including the Due Date in the Collection Period in
which the liquidation occurred and (ii) certain related unreimbursed servicing
expenses, over (b) the aggregate amount of Liquidation Proceeds, if any,
recovered in connection with such liquidation. If any portion of the debt due
under a Mortgage Loan is forgiven, whether in connection with a modification,
waiver or amendment granted or agreed to by the Special Servicer or in
connection with the bankruptcy or similar proceeding involving the related
borrower, the amount so forgiven also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" include, among other things, (i) any
Special Servicing Fees or Principal Recovery Fees paid to the Special Servicer,
(ii) any interest paid to the Master Servicer and/or a Special Servicer in
respect of unreimbursed Advances, and (iii) any of certain unanticipated,
non-Mortgage Loan specific expenses of the Trust Fund, including certain
reimbursements to the Trustee of the type described under "DESCRIPTION OF THE
POOLING AGREEMENTS--Certain Matters Regarding the Trustee" in the Prospectus,
certain reimbursements to the Master Servicer, any Special Servicer and the
Depositor of the type described under "DESCRIPTION OF THE POOLING
AGREEMENTS--Certain Matters Regarding the Master Servicer and the Depositor" in
the Prospectus, and certain federal, state and local taxes, and certain tax
related expenses, payable from the assets of the Trust Fund and described under
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES--Prohibited Transactions Tax and Other
Taxes" in the Prospectus. Additional Trust Fund Expenses will reduce amounts
payable to Certificateholders and, subject to the distribution priorities
described above, may result in a loss on one or more Classes of Offered
Certificates.
P&I Advances
On or about each Distribution Date, the Master Servicer will be obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling and Servicing Agreement, from
funds held in the Certificate Account that are not required to be distributed to
Certificateholders on such Distribution Date, in an amount that is generally
equal to the aggregate of all Scheduled Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Master Servicing Fees and any
related Principal Recovery Fees, due or deemed due, as the case may be, in
respect of the Mortgage Loans during the related Collection Period, in each case
to the extent such amount was not paid by or on behalf of the related borrower
or otherwise collected as of the close of business on the related Determination
Date. The Master Servicer's obligations to make P&I Advances in respect of any
Mortgage Loan will continue until liquidation of such Mortgage Loan or
disposition of any REO Property
S-56
<PAGE>
acquired in respect thereof. However, if the Monthly Payment on any Mortgage
Loan has been reduced in connection with a bankruptcy or similar proceeding or a
modification, waiver or amendment granted or agreed to by a Special Servicer,
the Master Servicer will be required to advance only the amount of the reduced
Monthly Payment (net of related Master Servicing Fees and Principal Recovery
Fees) in respect of subsequent delinquencies. In addition, if it is determined
that an Appraisal Reduction Amount exists with respect to any Required Appraisal
Loan (as defined below), then, with respect to the Distribution Date immediately
following the date of such determination and with respect to each subsequent
Distribution Date for so long as such Appraisal Reduction Amount exists, the
Master Servicer will be required in the event of subsequent delinquencies to
advance in respect of such Mortgage Loan only an amount equal to the product of
(i) the amount of the P&I Advance that would otherwise be required without
regard to this sentence, multiplied by (ii) a fraction, the numerator of which
is equal to the Stated Principal Balance of such Mortgage Loan, net of such
Appraisal Reduction Amount, and the denominator of which is equal to the Stated
Principal Balance of such Mortgage Loan. If the Master Servicer fails to make a
P&I Advance required to be made, the Trustee shall then be required to make such
P&I Advance pursuant to the terms of the Pooling and Servicing Agreement. See
"--Appraisal Reductions" below.
The Master Servicer (or the Trustee, as applicable) will be entitled to
recover any P&I Advance made out of its own funds from any amounts collected in
respect of the Mortgage Loan as to which such P&I Advance was made, whether such
amounts are collected in the form of late payments, Insurance Proceeds,
Liquidation Proceeds or otherwise ("Related Proceeds"). The Master Servicer will
not be obligated to make any P&I Advance that it determines in accordance with
the servicing standard described herein, would, if made, not be recoverable out
of Related Proceeds (a "Nonrecoverable P&I Advance"), and the Master Servicer
will be entitled to recover any P&I Advance made that it later determines to be
a Nonrecoverable P&I Advance out of general funds on deposit in the Certificate
Account. See "DESCRIPTION OF THE CERTIFICATES--Advances in Respect of
Delinquencies" and "DESCRIPTION OF THE POOLING AGREEMENTS--Certificate Account"
in the Prospectus.
In connection with the recovery by the Master Servicer or the Trustee of
any P&I Advance made by it or the recovery by either the Master Servicer or the
Special Servicer of any reimbursable servicing expense incurred by it (each such
P&I Advance or expense, an "Advance"), the Master Service, the Special Servicer
or the Trustee, as applicable, will be entitled to be paid, out of any amounts
then on deposit in the Certificate Account, interest compounded annually at a
per annum rate (the "Reimbursement Rate") equal to the "prime rate" published in
the "Money Rates" section of The Wall Street Journal, as such "prime rate" may
change from time to time, accrued on the amount of such Advance from the date
made to but not including the date of reimbursement. To the extent not offset or
covered by amounts otherwise payable on the Private Certificates, interest
accrued on outstanding Advances will result in a reduction in amounts payable on
the Offered Certificates, subject to the distribution priorities described
herein.
Appraisal Reductions
Upon the date (each such date, a "Required Appraisal Date") that (1) each
Mortgage Loan is sixty (60) days delinquent in respect of any Monthly Payments,
(2) each Mortgage Loan becomes an REO Mortgage Loan, and (3) each Mortgage Loan
has been modified by the Special Servicer to reduce the amount of any Monthly
Payment, other than a Balloon Payment (each such Mortgage Loan, including an REO
Mortgage Loan, a "Required Appraisal Loan"), the Special Servicer will be
required to obtain (within 60 days of the applicable Required Appraisal Date) an
appraisal of the related Mortgaged Property from an independent state certified
appraiser or an appraiser belonging to the Appraisal Institute, in either case
selected by the Special Servicer and approved by the Master Servicer, unless
such an appraisal had previously been obtained within the prior twelve months.
The cost of such appraisal will be borne by the Special Servicer, subject to the
Special Servicer's right to be reimbursed therefor out of Related Proceeds or,
if not reimbursable therefrom, out of general funds on deposit in the
Certificate Account. As a result of any such appraisal, it may be determined
that an "Appraisal Reduction Amount" exists with respect to the related Required
Appraisal Loan such determination to be made upon the later of 30 days after the
Required Appraisal Date if no new appraisal is required or upon receipt of a new
appraisal. The Appraisal Reduction Amount for any Required Appraisal Loan will
equal the excess, if any, of (a) the sum of, as of the Determination Date
immediately succeeding the date on which the appraisal is obtained, (i) the
Stated Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer or the Trustee, all
unpaid interest on the Required Appraisal Loan through the most recent Due Date
prior to such Determination Date at a per annum rate equal to the
S-57
<PAGE>
related Net Mortgage Rate, (iii) all accrued but unpaid Servicing Fees and any
Additional Trust Fund Expenses in respect of such Required Appraisal Loan, (iv)
all related unreimbursed Advances made by or on behalf of the Master Servicer,
the Special Servicer or the Trustee with respect to such Required Appraisal Loan
and (v) all currently due and unpaid real estate taxes and assessments,
insurance premiums, and, if applicable, ground rents in respect of the related
Mortgaged Property, over (b) an amount equal to 90% of the appraised value (net
of any prior liens) of the related Mortgaged Property as determined by such
appraisal. The aggregate Appraisal Reduction Amount will be allocated on each
Distribution Date, for purposes of determining distributions in respect of
interest on such Distribution Date, to the Certificate Principal Balance of the
most subordinated Class of Certificates that would otherwise receive
distributions of interest after allocation of Realized Losses and Additional
Trust Fund Expenses. On each Distribution Date, any distribution of interest to
a Class to which an Appraisal Reduction Amount has been allocated, will be
reduced by the product of such Appraisal Reduction Amount and the Pass-Through
Rate applicable to such Class of Certificates (an "Appraisal Reduction Amount
Shortfall"). See "--Subordination; Allocation of Losses and Certain Expenses"
herein.
Notwithstanding the foregoing, if any Required Appraisal Loan as to which
an Appraisal Reduction Amount has been established in accordance with the
preceding paragraph becomes a Corrected Mortgage Loan, then the Appraisal
Reduction Amount shall be deemed to be zero, subject to such Mortgage Loan again
becoming subject to the appraisal requirement described above; provided that, in
the case of any Required Appraisal Loan that has been modified as described in
the immediately preceding paragraph, the Appraisal Reduction Amount will be
deemed to exist for so long as the terms of the modification are in effect.
Reports to Certificateholders; Available Information
On each Distribution Date, the Trustee will be required to forward by mail
to (i) each holder of an Offered Certificate, (ii) the initial beneficial owners
of the Offered Certificates and (iii) subsequent beneficial owners of the
Offered Certificates upon their written request to the Trustee a statement (a
"Distribution Date Statement"), providing various items of information relating
to distributions made on such date with respect to the relevant Class and a
statement, similar in content to the form of Annex B, setting forth the recent
status of the Mortgage Pool based on information provided by the Master Servicer
and the Special Servicer. Although the form of the Distribution Date Statement
may change at the discretion of the Trustee, the content will be consistent with
the requirements of the Pooling and Servicing Agreement. For a more detailed
discussion of the particular items of information to be provided in each
Distribution Date Statement, as well as a discussion of certain annual
information reports to be furnished to persons who at any time during the prior
calendar year were holders of the Offered Certificates, see "DESCRIPTION OF THE
CERTIFICATES--Reports to Certificateholders" in the Prospectus. It is
anticipated that a portion of the Distribution Date Statement will be in the
form of a Mortgage Loan schedule to be prepared by the Master Servicer and the
Special Servicer that may include certain operating information for the
respective Mortgaged Properties. See "SERVICING OF THE MORTGAGE
LOANS--Inspections; Collection of Operating Information" herein. Such
information will generally be obtained from the related borrowers, and neither
the Master Servicer, the Special Servicer nor the Trustee will assume any
responsibility therefor.
Except as described above, until such time as Definitive Offered
Certificates are issued in respect of a Class of Offered Certificates, the
foregoing information will be available to the related Certificate Owners only
to the extent it is forwarded by or otherwise available through DTC and its
Participants. The manner in which notices and other communications are conveyed
by DTC to Participants, and by Participants to the Certificate Owners, will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. The Master Servicer, the
Trustee and the Depositor may recognize as owner of a Certificate the person in
whose name the Certificate is registered on the books and records of the
Trustee, as registrar in respect of the Certificates (in such capacity, the
"Certificate Registrar").
The Special Servicer will, promptly after a Mortgage Loan becomes a
Specially Serviced Mortgage Loan, give written notice to the Master Servicer and
the Trustee, and the Trustee will provide a copy to each Certificateholder, each
Rating Agency, the Depositor and the Underwriters, which notice will include an
explanation as to the reasons such Mortgage Loan became a Specially Serviced
Mortgage Loan and the Special Servicer's plan for servicing such Mortgage Loan.
S-58
<PAGE>
The Pooling and Servicing Agreement requires that the Master Servicer or
the Special Servicer make available at its offices primarily responsible for
administration of the Trust Fund, during normal business hours, for review by
any Certificate Owner owning an interest in an Offered Certificate or any person
identified to the Master Servicer as a prospective transferee of such an
interest, originals or copies of, among other things, the following items: (a)
the Pooling and Servicing Agreement and any amendments thereto, (b) all
Distribution Date Statements delivered to holders of the relevant Class of
Offered Certificates since the Closing Date, (c) all officer's certificates
delivered to the Master Servicer since the Closing Date as described under
"DESCRIPTION OF THE POOLING AGREEMENTS--Evidence as to Compliance" in the
Prospectus, (d) all accountants" reports delivered to the Master Servicer since
the Closing Date as described under "DESCRIPTION OF THE POOLING
AGREEMENTS--Evidence as to Compliance" in the Prospectus, (e) the most recent
property inspection report prepared by or on behalf of the Special Servicer in
respect of each Mortgaged Property and delivered to the Master Servicer, (f) the
most recent Mortgaged Property annual operating statements and rent roll, if
any, collected by or on behalf of the Special Servicer and delivered to the
Master Servicer, (g) any and all modifications, waivers and amendments of the
terms of a Mortgage Loan entered into by the Special Servicer, and (h) any and
all officers' certificates and other evidence delivered to the Master Servicer
to support the Master Servicer's or a Special Servicer's determination that any
Advance was or, if made, would not be recoverable from Related Proceeds. Copies
of any and all of the foregoing items will be available from the Master Servicer
upon request; however, the Master Servicer will be permitted to require payment
of a sum sufficient to cover the reasonable costs and expenses of providing such
information to the Certificate Owners, including, without limitation, copy
charges and reasonable fees for employee time and for space.
A Certificate Owner may obtain certain information contained in each
Distribution Date Statement by sending a written request, together with any fee
that State Street Bank and Trust Company may require, to State Street Bank and
Trust Company, Corporate Trust Department, 225 Franklin Street, Boston,
Massachusetts 02110, Attention: MLMI 1996-C2. Factor information may be obtained
by potential purchasers of the Offered Certificates, by calling (617) 664-5500.
In addition, if the Depositor so directs the Trustee and on terms agreeable to
the Trustee, the Trustee will make available certain Mortgage Loan information
as referenced in Annex B via automated medium by placing a telephone call to
(617) 664-5600 and requesting access to Street Fax, the Trustee's automated fax
back system. The Trustee may disclaim responsibility for any information therein
for which it is not the original source.
Upon written request of any Certificateholder of record made for purposes
of communicating with other Certificateholders with respect to their rights
under the Pooling and Servicing Agreement, the Certificate Registrar will
furnish such Certificateholder with a list of the other Certificateholders then
of record.
Voting Rights
At all times during the term of the Pooling and Servicing Agreement, 100%
of the voting rights for the series offered hereby (the "Voting Rights") will be
allocated among the respective Classes of Sequential Pay Certificates in
proportion to the Certificate Balances (as adjusted by treating any Appraisal
Reduction Amounts as Realized Losses solely for the purposes of adjusting Voting
Rights) of those Classes. Voting Rights allocated to a Class of Certificates
will be allocated among the related Certificateholders in proportion to the
percentage interests in such Class evidenced by their respective Certificates.
The Class A-1, Class A-2 and Class A-3 Certificates will be treated as one Class
for determining the Controlling Class of Sequential Pay Certificates. See
"DESCRIPTION OF THE CERTIFICATES--Voting Rights" in the Prospectus.
Termination
The obligations created by the Pooling and Servicing Agreement will
terminate following the earlier of (i) the final payment (or advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property subject
thereto, and (ii) the purchase of all of the Mortgage Loans and all of the REO
Properties remaining in the Trust Fund, if any, by the Depositor or the Master
Servicer. Written notice of termination of the Pooling and Servicing Agreement
will be given to each Certificateholder, and the final distribution will be made
only upon surrender and cancellation of the Certificates at the office of the
Trustee or other registrar for the Certificates or at such other location as may
be specified in such notice of termination.
Any such purchase by the Master Servicer or the Depositor of all the
Mortgage Loans and all of the REO Properties, if any, remaining in the Trust
Fund is required to be made at a price equal to (i) the aggregate Purchase Price
of all the Mortgage Loans then included in the Trust Fund, plus (ii) the fair
market value of all REO Properties then included in the Trust Fund, as
determined by an appraiser mutually agreed upon by the Master Servicer and the
S-59
<PAGE>
Trustee, minus (iii) if the Purchaser is the Master Servicer, the aggregate of
amounts payable or reimbursable to the Master Servicer under the Pooling and
Servicing Agreement. Such purchase will effect early retirement of the then
outstanding Offered Certificates, but the right of the Master Servicer or the
Depositor to effect such termination is subject to the requirement that the then
aggregate Stated Principal Balance of the Mortgage Pool be less than 1% of the
Initial Pool Balance.
Distributions on the final Distribution Date will be made generally as
described above under "--Distributions--Application of the Available
Distribution Amount" and "--Distributions--Allocation of Prepayment Premiums and
Yield Maintenance Charges," to the extent of available funds and subject to the
distribution priorities described herein.
The Trustee
State Street Bank and Trust Company, a banking corporation chartered under
the laws of the Commonwealth of Massachusetts, will act as Trustee on behalf of
the Certificateholders. The Corporate Trust Department of the Trustee is located
at 225 Franklin Street, Boston, Massachusetts 02110. See "Description of the
Pooling Agreements--the Trustee," "--Duties of the Trustee," "--Certain Matters
Regarding the Trustee" and "--Resignation and Removal of the Trustee" in the
Prospectus. As compensation for its services, the Trustee will be entitled to
receive, from general funds on deposit in the Certificate Account, the Trustee
Fee. The "Trustee Fee" will be computed monthly at a rate equal to one-twelfth
of the product of (a) the Trustee Fee Rate and (b) the aggregate Certificate
Balance of the Certificates, will accrue at the related Trustee Fee Rate and
will be computed on the basis of the same principal amount and for the same
period respecting which any related interest payment due on the Mortgage Loan or
deemed due on and REO Loan is computed. The "Trustee Fee Rate" will be a per
annum rate equal to 0.005%.
The Trustee will also have certain duties with respect to REMIC
administration (in such capacity the "REMIC Administrator"). See "Material
Federal Income Tax Consequences--REMICs--Reporting and Other Administrative
Matters" and "Description of the Pooling Agreements--Certain Matters Regarding
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Sponsor," "--Events of Default" and "--Rights Upon Event of Default" in the
Prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (i) the Pass-Through Rate for such Certificate, (ii) the rate and timing
of principal payments (including principal prepayments) and other principal
collections on the Mortgage Loans and the extent to which such amounts are to be
applied in reduction of the Certificate Balance or Notional Amount of the
related Class, (iii) the rate, timing and severity of Realized Losses and
Additional Trust Fund Expenses and the extent to which such losses and expenses
are allocable in reduction of the Certificate Balance or notional amount of the
related Class, and (iv) the timing and severity of any Net Aggregate Prepayment
Interest Shortfalls and the extent to which such shortfalls are allocable in
reduction of the Distributable Certificate Interest payable on the related
Class.
Rate and Timing of Principal Payment. The yield to holders of the Class IO
Certificates will be extremely sensitive to, and the yield to holders of any
other Offered Certificates purchased at a discount or premium will be affected
by, the rate and timing of principal payments made in reduction of the
Certificate Balance of such Certificates. As described herein, the Principal
Distribution Amount for each Distribution Date will be distributable first in
respect of the Class A-1 Certificates until the Certificate Balance thereof is
reduced to zero, and will thereafter be distributable entirely in respect of the
Class A-2 Certificates, the Class A-3 Certificates, the Class B Certificates,
the Class C Certificates, the Class D and the Class E Certificates, in that
order, in each case until the Certificate Balance of such Class of Certificates
is reduced to zero. Payments made in reduction of the principal balance of any
Mortgage Loan will result in a corresponding reduction in the notional amount of
the Class IO-1 Component and any reduction of the Certificate Balance of the
Class A-1 or Class A-2 Certificate will result in a corresponding reduction in
the notional amount of the Class IO-2 Component. Consequently, the rate and
timing of principal payments that are distributed or otherwise result in
reduction of the Certificate Balance, as the case may be, of each Class of
Offered Certificates will be directly related to the rate and timing of
principal payments on or in respect of the Mortgage Loans, which will in turn be
affected by the amortization schedules thereof, the dates on which Balloon
Payments are
S-60
<PAGE>
due and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Fund). Prepayments and, assuming the respective stated maturity dates
therefor have not occurred, liquidations and purchases of the Mortgage Loans,
will result in distributions on the Offered Certificates (other than the Class
IO Certificates) of amounts that would otherwise be distributed over the
remaining terms of the Mortgage Loans. Defaults on the Mortgage Loans,
particularly at or near their stated maturity dates, may result in significant
delays in payments of principal on the Mortgage Loans (and, accordingly, on the
Offered Certificates that are Sequential Pay Certificates) while work-outs are
negotiated or foreclosures are completed. See "SERVICING OF THE MORTGAGE
LOANS--Modifications, Waivers and Amendments" herein and "DESCRIPTION OF THE
POOLING AGREEMENTS--Realization Upon Defaulted Mortgage Loans" and "CERTAIN
LEGAL ASPECTS OF MORTGAGE LOANS--Foreclosure" in the Prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in turn are distributed
or otherwise result in reduction of the Certificate Balance or Notional Amount
of such Certificates. An investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans could result in an actual yield
to such investor that is lower than the anticipated yield and, in the case of a
Class IO Certificate or any other Offered Certificate purchased at a premium,
the risk that a faster than anticipated rate of principal payments could result
in an actual yield to such investor that is lower than the anticipated yield. In
general, the earlier a payment of principal on the Mortgage Loans is distributed
or otherwise results in reduction of the principal balance (or Notional Amount
of a Component) of an Offered Certificate purchased at a discount or premium,
the greater will be the effect on an investor's yield to maturity. As a result,
the effect on an investor's yield of principal payments on the Mortgage Loans
occurring at a rate higher (or lower) than the rate anticipated by the investor
during any particular period would not be fully offset by a subsequent like
reduction (or increase) in the rate of such principal payments. Investors in the
Class IO Certificates should fully consider the risk that a rapid rate of
principal payments on the Mortgage Loans could result in the failure of such
investors to recoup their initial investments. Because the rate of principal
payments on the Mortgage Loans will depend on future events and a variety of
factors (as described more fully below), no assurance can be given as to such
rate or the rate of principal prepayments in particular. The Depositor is not
aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne: by the holders of the
respective Classes of Sequential Pay Certificates, to the extent of amounts
otherwise distributable in respect of their Certificates, in reverse
alphabetical order of their Class designations. Realized Losses and Additional
Trust Fund Expenses will be allocated, as and to the extent described herein, to
the respective Classes of Sequential Pay Certificates (in reduction of the
Certificate Balance of each such Class), in reverse alphabetical order of their
Class designations. Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of any Class of Certificate
will result in a corresponding reduction in the notional amount of the Class
IO-1 Component, and any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of the Class A-1 or Class A-2
Certificates will also result in a corresponding reduction in the notional
amount for the Class IO-2 Component. As more fully described herein under
"DESCRIPTION OF THE CERTIFICATES--Distributions--Distributable Certificate
Interest," Net Aggregate Prepayment Interest Shortfalls will generally be borne
by the respective Classes of REMIC Regular Certificates on a pro rata basis.
Pass-Through Rates. The Pass -Through Rate applicable to the Class IO-1
Component will be variable and will be equal to the Weighted Average Net
Mortgage Rate minus % (but not less than zero) for such date and the
Pass-Through Rate applicable to the Class IO-2 Component will be equal to the
weighted average of the Class A-1 Strip Rate and the Class A-2 Strip Rate.
Accordingly, the Pass-Through Rates on the Components and, correspondingly, the
yield on the Class IO Certificates, will be sensitive to changes in the relative
composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and liquidations.
S-61
<PAGE>
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Lockout Periods, provisions requiring
the payment of Prepayment Premiums and Yield Maintenance Charges and
amortization terms that require Balloon Payments), the demographics and relative
economic vitality of the areas in which the Mortgaged Properties are located and
the general supply and demand for rental units, hotel/motel guest rooms,
residential health care facility beds or comparable commercial space, as
applicable, in such areas, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. See "RISK FACTORS--The Mortgage Loans"
and "DESCRIPTION OF THE MORTGAGE POOL" herein and "YIELD AND MATURITY
CONSIDERATIONS--Principal Prepayments" in the Prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
interest rate, the related borrower has an incentive to refinance its mortgage
loan. As of the Cut-off Date, all of the Mortgage Loans may be prepaid at any
time after the expiration of the applicable Lockout Period, subject, in most
cases, to the payment of a Prepayment Premium or a Yield Maintenance Charge. A
requirement that a prepayment be accompanied by a Prepayment Premium or Yield
Maintenance Charge may not provide a sufficient economic disincentive to deter a
borrower from refinancing at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to
whether a default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least 20
days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be lower than the yield that would otherwise be produced by
the applicable Pass-Through Rates and purchase prices (assuming such prices did
not account for such delay).
Unpaid Distributable Certificate Interest. As described under "DESCRIPTION
OF THE CERTIFICATES--Distributions--Application of the Available Distribution
Amount" herein, if the portion of the Available Distribution Amount
distributable in respect of interest on any Class of Offered Certificates on any
Distribution Date is less than the Distributable Certificate Interest then
payable for such Class, the shortfall will be distributable to holders of such
Class of Certificates on subsequent Distribution Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Certificates
for so long as it is outstanding.
Yield Sensitivity of the Class IO Certificates. The yield to maturity on
the Class IO Certificates will be extremely sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) on the Mortgage Loans. Accordingly, investors in the Class IO
Certificates should fully consider the associated risks, including the risk that
a rapid rate of prepayment of the Mortgage Loans could result in the failure of
such investors to fully recoup their initial investments. The allocation of a
portion of collected Prepayment Premiums and Yield Maintenance Charges to the
Class IO Certificates is intended to reduce those risks; however, such
allocation may be insufficient to offset fully the adverse effects on the yields
on such Classes of Certificates that the related prepayments may otherwise have.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of one or more mortgage loans. As used in the
following table, the column headed "0%" assumes that none of the Mortgage Loans
is prepaid in whole or in part before maturity. The columns headed "5%" and
"10%," respectively, assume that prepayments are made each month at those levels
of CPR on each Mortgage Loan whether or not it is then in its Lockout Period, if
any.
S-62
<PAGE>
The following table indicates the approximate pre-tax yields to maturity
(on a corporate bond equivalent basis ("CBE")) on the Class IO Certificates for
the specified CPRs. Such calculations are based on the following assumptions
("Table Assumptions"): (i) no Mortgage Loan prepays when any prepayment
restrictions would apply; otherwise each Mortgage Loan is assumed to prepay at
the indicated level of CPR, with the CPR in each case being applied on the first
day of each month to that portion of the scheduled principal amount of the
Mortgage Loan that is not assumed to be in default as described below, (ii) the
initial Certificate Balances of the Sequential Pay Certificates and the
Pass-Through Rates for the REMIC Regular Certificates are as described in the
Summary hereof, (iii) there are no delinquencies or Additional Trust Fund
Expenses, (iv) scheduled interest and principal payments on the Mortgage Loans
are timely received, except as described above, and prepayments are made on the
Mortgage Loans on their respective Due Dates (assumed in all cases to be the
first day of each month) at the indicated levels of CPR set forth in the tables,
(v) partial prepayments on the Mortgage Loans are permitted, but are assumed not
to affect the amortization schedules, (vi) no Prepayment Premiums or Yield
Maintenance Charges are collected, (vii) neither the Master Servicer nor the
Depositor exercises its right of optional termination of the Trust Fund
described herein, (viii) no Mortgage Loan is required to be purchased from the
Trust Fund, (ix) there are no Prepayment Interest Shortfalls or Appraisal
Reductions, (x) distributions on the Certificates are made on the twenty-first
day (each assumed to be a business day) of each month, commencing in December
1996, and (xi) the Certificates will be issued on the Closing Date.
It was further assumed that the aggregate purchase price of such Classes of
Certificates are as specified below, including accrued interest.
Pre-Tax Yield to Maturity (CBE) of the Class IO Certificates
0% CPR during lockout
or yld. maint.--otherwise
at indicated CPR
-------------------------
Assumed Purchase Price (0% CPR) (5% CPR) (10% CPR)
(including accrued interest) 1 5 6
---------------------------- -------- -------- ---------
The pre-tax yields set forth in the preceding table were calculated by
determining the monthly discount rates that, when applied to the assumed streams
of cash flow to be paid on the Class IO Certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed
aggregate purchase price of the Class IO Certificates, which includes accrued
interest, and by converting such monthly rates to corporate bond equivalent
rates. Such calculation does not take into account shortfalls in collection of
interest due to prepayments (or other liquidations) on the Mortgage Loans or the
interest rates at which investors may be able to reinvest funds received by them
as distributions on the Class IO Certificates (and consequently does not purport
to reflect the return on any investment in the Class IO Certificates when such
reinvestment rates are considered).
The characteristics of the Mortgage Loans differ in substantial respects
from those assumed in preparing the table above, and the table is presented for
illustrative purposes only. In particular, none of the Mortgage Loans permit
voluntary partial prepayments, and many of the Mortgage Loans are subject to
Lockout Periods disregarded in preparing the table. Thus neither the Mortgage
Pool nor any Mortgage Loan will prepay at any constant rate. In addition, there
can be no assurance that the Mortgage Loans will prepay at any particular rate,
that the actual pre-tax yields on the Class IO Certificates will correspond to
any of the pre-tax yields shown herein or that the aggregate purchase prices of
the Class IO Certificates will be assumed. Accordingly, investors must make
their own decisions as to the appropriate assumptions (including prepayment
assumptions) to be used in deciding whether to purchase the Class IO
Certificates.
S-63
<PAGE>
Weighted Average Life
The weighted average life of any Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D or Class E Certificate refers to the average amount of time
that will elapse from the date of its issuance until each dollar allocable to
principal of such Certificate is distributed to the investor. The weighted
average life of any such Offered Certificate will be influenced by, among other
things, the rate at which principal on the Mortgage Loans is paid or otherwise
collected or advanced and applied to pay principal of such Offered Certificate.
As described herein, the Principal Distribution Amount for each Distribution
Date will be distributable first in respect of the Class A-1 Certificates until
the Certificate Balance thereof is reduced to zero, and will thereafter be
distributable entirely in respect of the Class A-2 Certificates, the Class A-3
Certificates, the Class B Certificates, the Class C Certificates, the Class D
Certificates and the Class E Certificates, in that order, in each case until the
Certificate Balance of such Class of Certificates is reduced to zero.
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates (other than the Class IO
Certificates) that would be outstanding after each of the dates shown under each
of the designated scenarios (each, a "Scenario") and the corresponding weighted
average life of each such Class of Offered Certificates. The tables have been
prepared on the basis of, among others, the assumptions described below. To the
extent that the Mortgage Loans or the Certificates have characteristics that
differ from those assumed in preparing the tables, the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D and/or Class E Certificates may mature
earlier or later than indicated by the tables. In particular, partial
prepayments on the Mortgage Loans in fact are not permitted. Accordingly, the
Mortgage Loans will not prepay at any constant rate, and it is highly unlikely
that the Mortgage Loans will prepay in a manner consistent with the assumptions
underlying any of the Scenarios. In addition, variations in the actual
prepayment experience and the balance of the Mortgage Loans that prepay may
increase or decrease the percentages of initial Certificate Balances (and
shorten or extend the weighted average lives) shown in the following tables.
Investors are urged to conduct their own analyses of the rates at which the
Mortgage Loans may be expected to prepay.
The tables set forth below were prepared on the basis of the relevant Table
Assumptions, except that it was assumed that there are no prepayments on the
Mortgage Loans other than in accordance with the designated Scenario. The
Scenarios are as follows:
Scenario (1): No Mortgage Loan prepays; that is, the CPR
for the Mortgage Pool is 0%.
Scenarios (2), (3) and (4): No Mortgage Loan prepays during its Lockout
Period. Thereafter, each Mortgage Loan
prepays each month at the rate of 5% CPR in
the case ofScenario (2), 10% CPR in the case
of Scenario (3) and 15% CPR in the case of
Scenario (4).
Scenarios (5), (6) and (7): No Mortgage Loan prepays during a month in
which a Lockout Period is in effect or in
which prepayments on such Mortgage Loan are
required to be accompanied by a Yield
Maintenance Charge. All other Mortgage Loans
prepay each month at the rate of 5% CPR in
the case of Scenario (5), 10% CPR in the case
of Scenario (6) and 15% in the case of
Scenario (7).
Based on the above-referenced assumptions, the following six tables
indicate the resulting weighted average lives of each Class of Offered
Certificates (other than the Class IO Certificates) and sets forth the
percentages of the initial Certificate Balance of such Class of Offered
Certificates that would be outstanding after each of the dates shown under each
of the designated Scenarios. For purposes of the following tables, the weighted
average life of an Offered Certificate (other than the Class IO Certificates) is
determined by (i) multiplying the amount of each principal distribution thereon
by the number of years from the date of issuance of such Certificate to the
related Distribution Date, (ii) summing the results and (iii) dividing the sum
by the aggregate amount of the reductions in the principal balance of such
Certificate.
S-64
<PAGE>
Percentages of the Initial Certificate Balance of the
Class A-1 Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lockout
0% CPR during or yld. maint.-otherwise
lockout-otherwise at indicated CPR at indicated CPR
---------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 96 95 95 95 96 96 96
November 1998 ...................... 91 89 87 85 91 91 91
November 1999 ...................... 80 76 72 68 80 80 80
November 2000 ...................... 72 64 56 48 72 72 72
November 2001 ...................... 47 33 20 8 47 46 46
November 2002 ...................... 41 16 0 0 40 39 37
November 2003 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 4.9 4.3 3.9 3.6 4.9 4.8 4.8
</TABLE>
Percentages of the Initial Certificate Balance of the
Class A-2 Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lockout
0% CPR during or yld. maint.-otherwise
lockout-otherwise at indicated CPR at indicated CPR
---------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 100 100 100 100 100 100 100
November 1998 ...................... 100 100 100 100 100 100 100
November 1999 ...................... 100 100 100 100 100 100 100
November 2000 ...................... 100 100 100 100 100 100 100
November 2001 ...................... 100 100 100 100 100 100 100
November 2002 ...................... 100 100 82 31 100 100 100
November 2003 ...................... 42 0 0 0 39 37 35
November 2004 ...................... 26 0 0 0 23 20 18
November 2005 ...................... 10 0 0 0 5 1 0
November 2006 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 7.5 6.8 6.4 5.8 7.4 7.3 7.3
</TABLE>
Percentages of the Initial Certificate Balance of the
Class A-3 Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lockout
0% CPR during or yld. maint.-otherwise
lockout-otherwise at indicated CPR at indicated CPR
---------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 100 100 100 100 100 100 100
November 1998 ...................... 100 100 100 100 100 100 100
November 1999 ...................... 100 100 100 100 100 100 100
November 2000 ...................... 100 100 100 100 100 100 100
November 2001 ...................... 100 100 100 100 100 100 100
November 2002 ...................... 100 100 100 100 100 100 100
November 2003 ...................... 100 93 73 54 100 100 100
November 2004 ...................... 100 81 55 34 100 100 100
November 2005 ...................... 100 68 39 16 100 100 99
November 2006 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 9.7 9.0 8.3 7.6 9.7 9.7 9.7
</TABLE>
S-65
<PAGE>
Percentages of the Initial Certificate Balance of the
Class B Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lock-out
0% CPR during or yld. maint.-otherwise
lock-out-otherwise at indicated CPR at indicated CPR
----------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 100 100 100 100 100 100 100
November 1998 ...................... 100 100 100 100 100 100 100
November 1999 ...................... 100 100 100 100 100 100 100
November 2000 ...................... 100 100 100 100 100 100 100
November 2001 ...................... 100 100 100 100 100 100 100
November 2002 ...................... 100 100 100 100 100 100 100
November 2003 ...................... 100 100 100 100 100 100 100
November 2004 ...................... 100 100 100 100 100 100 100
November 2005 ...................... 100 100 100 100 100 100 100
November 2006 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 9.9 9.9 9.8 9.7 9.9 9.9 9.9
</TABLE>
Percentages of the Initial Certificate Balance of the
Class C Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lock-out
0% CPR during or yld. maint.-otherwise
lock-out-otherwise at indicated CPR at indicated CPR
----------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 100 100 100 100 100 100 100
November 1998 ...................... 100 100 100 100 100 100 100
November 1999 ...................... 100 100 100 100 100 100 100
November 2000 ...................... 100 100 100 100 100 100 100
November 2001 ...................... 100 100 100 100 100 100 100
November 2002 ...................... 100 100 100 100 100 100 100
November 2003 ...................... 100 100 100 100 100 100 100
November 2004 ...................... 100 100 100 100 100 100 100
November 2005 ...................... 100 100 100 100 100 100 100
November 2006 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 10.0 10.0 9.9 9.8 10.0 10.0 10.0
</TABLE>
Percentages of the Initial Certificate Balance of the
Class D Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lock-out
0% CPR during or yld. maint.-otherwise
lock-out-otherwise at indicated CPR at indicated CPR
----------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 100 100 100 100 100 100 100
November 1998 ...................... 100 100 100 100 100 100 100
November 1999 ...................... 100 100 100 100 100 100 100
November 2000 ...................... 100 100 100 100 100 100 100
November 2001 ...................... 100 100 100 100 100 100 100
November 2002 ...................... 100 100 100 100 100 100 100
November 2003 ...................... 100 100 100 100 100 100 100
November 2004 ...................... 100 100 100 100 100 100 100
November 2005 ...................... 100 100 100 100 100 100 100
November 2006 ...................... 91 48 16 0 86 81 77
November 2007 ...................... 67 16 0 0 58 49 42
November 2008 ...................... 41 0 0 0 29 18 9
November 2009 ...................... 2 0 0 0 0 0 0
November 2010 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 11.6 10.4 10.0 10.0 11.3 11.1 10.9
</TABLE>
S-66
<PAGE>
Percentages of the Initial Certificate Balance of the
Class E Certificates Under Each Designated Scenario
<TABLE>
<CAPTION>
0% CPR during lockout
0% CPR during or yld. maint.-otherwise
lockout-otherwise at indicated CPR at indicated CPR
---------------------------------- ---------------------------------
(0% CPR) (5% CPR) (10% CPR) (15% CPR) (5% CPR) (10% CPR) (15% CPR)
Distribution Date 1 2 3 4 5 6 7
- ----------------- -------- -------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Closing Date ....................... 100 100 100 100 100 100 100
November 1997 ...................... 100 100 100 100 100 100 100
November 1998 ...................... 100 100 100 100 100 100 100
November 1999 ...................... 100 100 100 100 100 100 100
November 2000 ...................... 100 100 100 100 100 100 100
November 2001 ...................... 100 100 100 100 100 100 100
November 2002 ...................... 100 100 100 100 100 100 100
November 2003 ...................... 100 100 100 100 100 100 100
November 2004 ...................... 100 100 100 100 100 100 100
November 2005 ...................... 100 100 100 100 100 100 100
November 2006 ...................... 100 100 100 83 100 100 100
November 2007 ...................... 100 100 55 0 100 100 100
November 2008 ...................... 100 65 0 0 100 100 100
November 2009 ...................... 100 0 0 0 79 60 43
November 2010 ...................... 41 0 0 0 17 0 0
November 2011 and thereafter ....... 0 0 0 0 0 0 0
Weighted Average Life (in years) ... 13.8 12.3 11.1 10.4 13.5 13.2 13.0
</TABLE>
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase the Mortgage Loans and to pay certain
expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the Offered Certificates, Willkie Farr & Gallagher,
counsel to the Depositor, will deliver its opinion generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing Agreement,
for federal income tax purposes, portions of the Trust Fund designated in the
Pooling and Servicing Agreement as "REMIC I," "REMIC II" and "REMIC III,",
respectively, will each qualify as a REMIC under the Code. For federal income
tax purposes, (a) the separate noncertificated regular interests in REMIC I will
be the "regular interests" in REMIC I and will constitute the assets of REMIC
II, (b) the Class R-I Certificates will be the sole class of "residual
interests" in REMIC I, (c) the separate noncertificated regular interests in
REMIC II will be the "regular interests" in REMIC II and will constitute the
assets of REMIC III, (d) the Class R-II Certificates will be the sole class of
"residual interest" in REMIC II, (e) the REMIC Regular Certificates will be the
"regular interests" in REMIC III and generally will be treated as debt
instruments of REMIC III, and (f) the Class R-III Certificates will be the sole
class of "residual interests" in REMIC III. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES --REMICs" in the Prospectus.
The Class A-1, Class A-2, Class A-3, Class B and Class C Certificates will
not, the Class D Certificates may, and the Class E and IO Certificates will, be
treated as having been issued with original issue discount for federal income
tax reporting purposes. The prepayment assumption that will be used in
determining the rate of accrual of original issue discount, market discount and
premium, if any, for federal income tax purposes will be based on the assumption
that subsequent to the date of any determination the Mortgage Loans will prepay
at a rate equal to a CPR of 0%. No representation is made that the Mortgage
Loans will prepay at that rate or at any other rate. See "CERTAIN FEDERAL INCOME
TAX CONSEQUENCES--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" in the Prospectus.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a
Certificateholder (in particular, the holder of a Class IO Certificate), the
amount of original issue discount allocable to such period would be zero and
such Certificateholder will be permitted to offset
S-67
<PAGE>
such negative amount only against future original issue discount (if any)
attributable to such Certificates. Although the matter is not free from doubt, a
holder of a Class IO Certificate may be permitted to deduct a loss to the extent
that his or her respective remaining basis in such Certificate exceeds the
maximum amount of future payments to which such Certificateholder is entitled,
assuming no further prepayments of the Mortgage Loans. Any such loss might be
treated as a capital loss.
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. The OID
Regulations in some circumstances permit the holder of a debt instrument to
recognize original issue discount under a method that differs from that used by
the issuer. Accordingly, it is possible that the holder of an Offered
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the Trustee in preparing reports to the
Certificateholders and the IRS. Prospective purchasers of Offered Certificates
are advised to consult their tax advisors concerning the tax treatment of such
Certificates.
The Offered Certificates will be treated as "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code. In addition, interest (including
original issue discount) on the Offered Certificates will be interest described
in Section 856(c)(3)(B) of the Code. However, the Offered Certificates will
generally only be considered assets described in Section 7701(a)(19)(C) of the
Code to the extent that the Mortgage Loans are secured by residential property
and, accordingly, investment in the Offered Certificates may not be suitable for
certain thrift institutions.
Prepayment Premiums and Yield Maintenance Charges actually collected will
be distributed to the holders of the Offered Certificates as described herein.
It is not entirely clear under the Code when the amount of a Prepayment Premium
or Yield Maintenance Charge should be taxed to the holder of an Offered
Certificate, but it is not expected, for federal income tax reporting purposes,
that Prepayment Premiums and Yield Maintenance Charges will be treated as giving
rise to any income to the holders of the Offered Certificates prior to the
Master Servicer's actual receipt of a Prepayment Premium or Yield Maintenance
Charge. It appears that Prepayment Premiums and Yield Maintenance Charges, if
any, will be treated as ordinary income rather than capital gain. However, that
is not entirely clear and Certificateholders should consult their own tax
advisors concerning the treatment of Prepayment Premiums and Yield Maintenance
Charges.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES--REMICs" in the Prospectus.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds, separate accounts and general accounts in which
such plans, accounts or arrangements are invested, that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each, a "Plan") should carefully review with its legal
advisors whether the purchase or holding of Offered Certificates could give rise
to a transaction that is prohibited or is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether there exists any statutory or
administrative exemption applicable thereto.
The U.S. Department of Labor issued to Merrill Lynch an individual
prohibited transaction exemption, Prohibited Transaction Exemption 90-29 (the
"Exemption"), which generally exempts from the application of the prohibited
transaction provisions of Section 406 of ERISA, and the excise taxes imposed on
such prohibited transactions pursuant to Sections 4975(a) and (b) of the Code
and Section 501(i) of ERISA, certain transactions, among others, relating to the
servicing and operation of mortgage pools, such as the Mortgage Pool, and the
purchase, sale and holding of mortgage pass-through certificates, such as the
Senior Certificates, underwritten by an "underwriter," provided that certain
conditions set forth in the Exemption are satisfied. For purposes of this
discussion, the term "underwriter" shall include (a) Merrill Lynch, (b) any
person directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with Merrill Lynch and (c) any member of
the underwriting syndicate or selling group of which a person described in (a)
or (b) is a manager or co-manager with respect to the Senior Certificates,
including First Union.
The Exemption sets forth six general conditions that must be satisfied for
a transaction involving the purchase, sale and holding of Class A-1, Class A-2,
Class A-3 and Class IO Certificates to be eligible for exemptive relief
S-68
<PAGE>
thereunder. First, the acquisition of the Certificates by a Plan must be on
terms that are at least as favorable to the Plan as they would be in an
arm's-length transaction with an unrelated party. Second, the rights and
interests evidenced by such Certificates must not be subordinated to the rights
and interests evidenced by the other certificates of the same trust. Third, such
Certificates at the time of acquisition by the Plan must be rated in one of the
three highest generic rating categories by Standard & Poor's, Duff & Phelps
Credit Rating Co. ("DCR"), Moody's Investors Service ("Moody's"), or Fitch.
Fourth, the Trustee cannot be an affiliate of any other member of the
"Restricted Group," which consists of either underwriter, the Depositor, the
Master Servicer, a Special Servicer, the Trustee, any sub-servicer, and any
borrower with respect to Mortgage Loans constituting more than 5% of the
aggregate unamortized principal balance of the Mortgage Loans as of the date of
initial issuance of such Certificates. Fifth, the sum of all payments made to
and retained by either underwriter must represent not more than reasonable
compensation for underwriting such Certificates; the sum of all payments made to
and retained by the Depositor pursuant to the assignment of the Mortgage Loans
to the Trust Fund must represent not more than the fair market value of such
obligations; and the sum of all payments made to and retained by the Master
Servicer, a Special Servicer or any sub-servicer must represent not more than
reasonable compensation for such person's services under the Pooling and
Servicing Agreement and reimbursement of such person's reasonable expenses in
connection therewith. Sixth, the investing Plan must be an accredited investor
as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act.
Because none of the Class A-1, Class A-2, Class A-3 and Class IO
Certificates are subordinated with respect to the allocation of Realized Losses
and Additional Trust Fund Expenses to any other Class of Certificates, the
second general condition set forth above is satisfied with respect to such
Certificates. It is a condition of the issuance of the Class A-1, Class A-2,
Class A-3 and Class IO Certificates that they be rated not lower than "AAA" by
each of DCR, Fitch and, except with respect to the Class IO Certificates,
Standard & Poor's; thus, the third general condition set forth above is
satisfied with respect to such Certificates as of the Closing Date. In addition,
the fourth general condition set forth above is also satisfied as of the Closing
Date. A fiduciary of a Plan contemplating purchasing any such Certificate in the
secondary market must make its own determination that, at the time of such
purchase, such Certificate continue to satisfy the third and fourth general
conditions set forth above. A fiduciary of a Plan contemplating the purchase of
any such Certificate must make its own determination that the first, fifth and
sixth general conditions set forth above will be satisfied with respect to such
Certificate as of the date of such purchase.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest categories of
Standard & Poor's, DCR, Moody's or Fitch for at least one year prior to the
Plan's acquisition of such Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of such Certificates. The
Depositor has confirmed to its satisfaction that such requirements have been
satisfied as of the date hereof.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of such Certificates
in the initial issuance of Certificates between the Depositor or an underwriter
and a Plan when the Depositor, an underwriter, Trustee, Master Servicer, Special
Servicer, sub-servicer or mortgagor is a "Party in Interest," as defined in the
Prospectus, with respect to the investing Plan, (ii) the direct or indirect
acquisition or disposition in the secondary market of Senior Certificates by a
Plan and (iii) the holding of Senior Certificates by a Plan. However, no
exemption is provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2)
and 407 of ERISA for the acquisition or holding of such Certificate on behalf of
an "Excluded Plan" by any person who has discretionary authority or renders
investment advice with respect to the assets of such Excluded Plan. For purposes
hereof, an Excluded Plan is a Plan sponsored by any member of the Restricted
Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Senior Certificates in the initial issuance of Certificates between
the Depositor or an underwriter and a Plan when the person who has discretionary
authority or renders investment advice with respect to the investment of such
Plan's assets in such Certificates is (a) a mortgagor with respect to 5% or less
of the fair market value of the Mortgage Loans or (b) an affiliate of such a
person,
S-69
<PAGE>
(2) the direct or indirect acquisition or disposition in the secondary market of
Senior Certificates by such Plan and (3) the holding of such Certificates by
such Plan.
Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code for transactions in
connection with the servicing, management and operation of the Mortgage Pool.
The Depositor expects that the specific conditions of the Exemption required for
this purpose will be satisfied with respect to such Certificates.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of
the Code if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan by
virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of such Certificates. A purchaser of any such Certificate should be
aware, however, that even if the conditions specified in one or more Exemptions
are satisfied, the scope of relief provided by an Exemption may not cover all
acts that may be considered prohibited transactions.
Before purchasing any such Certificate, a fiduciary of a Plan should itself
confirm that the specific and general conditions of the Exemption and the other
requirements set forth in the Exemption would be satisfied. In addition to
making its own determination as to the availability of the exemptive relief
provided in the Exemption, the Plan fiduciary should consider the availability
of any other prohibited transaction exemptions. See "ERISA CONSIDERATIONS" in
the Prospectus.
The characteristics of the Class B, Class C, Class D and Class E
Certificates do not meet the requirements of the Exemptions. Accordingly,
Certificates of those Classes may not be acquired by a Plan, other than an
insurance company general account, which may be able to rely on Section III of
PTE 95-60 (discussed below).
Section III of Prohibited Transaction Class Exemption 95-60 ("PTE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust Fund) in which an insurance company general account has
an interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase classes of
Certificates (such as the Class B, Class C, Class D and Class E Certificates)
which do not meet the requirements of the Exemptions solely because they (i) are
subordinated to other classes of Certificates in the Trust Fund and/or (ii) have
not received a rating at the time of the acquisition in one of the three highest
rating categories from Standard & Poor's, Moody's, DCR or Fitch. All other
conditions of the Exemption would have to be satisfied in order for PTE 95-60 to
be available. Before purchasing Class B, Class C, Class D or Class E
Certificates, an insurance company general account seeking to rely on Section
III of PTE 95-60 should itself confirm that all applicable conditions and other
requirements have been satisfied.
Insurance company general accounts purchasing any Class of Certificates may
also be able to rely on relief from certain fiduciary provisions of ERISA
provided under Section 401(c) of ERISA. Insurance companies seeking to rely on
such relief should independently determine whether, and the extent to which,
such relief is available.
LEGAL INVESTMENT
As of the Closing Date, the Offered Certificates will not constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). As a result, the appropriate characterization
of the Offered Certificates under various legal investment restrictions, and
thus the ability of investors subject to these restrictions to purchase the
Offered Certificates of any Class, may be subject to significant interpretative
uncertainties. In addition, institutions whose investment activities are subject
to review by federal or state regulatory authorities may be or may become
subject to restrictions on the investment by such institutions in certain forms
of mortgage related securities. Investors should consult their own legal
advisors to determine whether and to what extent the Offered Certificates
constitute legal investments for them. See "Legal Investment" in the Prospectus.
As described therein, the definition of "mortgage related securities" for
purposes of SMMEA has been expanded by legislation such that, if the legislation
were currently effective, the Class A-1, Class A-2, Class A-3 and
S-70
<PAGE>
Class B Certificates would be "mortgage related securities" for purposes of
SMMEA as of the Closing Date. The legislation will not become effective until
certain implementing regulations are promulgated, and it is possible that those
regulations, if and when promulgated, may impose limitations on the benefits
provided by SMMEA with respect to securities newly included within the
definition.
The Depositor makes no representation as to the ability of particular
investors to purchase the Offered Certificates under applicable legal investment
or other restrictions. All institutions whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for them or are subject to investment, capital or other
restrictions. See "LEGAL INVESTMENT" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") among the Depositor and the Underwriters, the
Depositor has agreed to sell to each Underwriter, and each Underwriter has
agreed to purchase one-half of the respective Certificate Balances of each class
of Offered Certificates.
In the Underwriting Agreement, the Underwriters have severally agreed to
purchase all of the Offered Certificates if any are purchased. In the event of a
default by either Underwriter, the Underwriting Agreement provides that, the
purchase commitment of the non-defaulting Underwriter may be increased. Proceeds
to the Depositor from the sale of the Offered Certificates, before deducting
expenses payable by the Depositor, will be approximately $[ ], which includes
accrued interest.
Distribution of the Offered Certificates will be made by each Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Each Underwriter may effect such transactions
by selling the Offered Certificates to or through dealers, and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from such Underwriter. In connection with the purchase and sale of
the Offered Certificates, the Underwriters may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. Each
Underwriter and any dealers that participate with either Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriters that each of them,
through one or more of its affiliates, currently intends to make a market in the
Offered Certificates; however, neither Underwriter has any obligation to do so,
any market making may be discontinued at any time and there can be no assurance
that an active public market for the Offered Certificates will develop. See
"RISK FACTORS--Limited Liquidity" herein and in the Prospectus.
The Depositor has agreed to indemnify each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to each Underwriter and each such
controlling person with respect to, certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Willkie Farr
& Gallagher, New York, NewYork, and certain legal matters will be passed upon
for the Underwriters by Orrick, Herrington & Sutcliffe LLP, New York, New York.
S-71
<PAGE>
RATINGS
It is a condition of their issuance that the Class A-1, Class A-2 and Class
A-3 Certificates be rated not lower than "AAA" by each Rating Agency, that the
Class IO be rated not lower than "AAA" by Fitch and DCR, that the Class B
Certificates be rated not lower than "AA" by each Rating Agency, that the Class
C Certificates be rated not lower than "A" by each Rating Agency, that the Class
D Certificates be rated not lower than "BBB" by each Rating Agency and that the
Class E Certificates be rated not lower than "BBB-" by each Rating Agency.
The ratings on the Offered Certificates address the likelihood of the
receipt by holders thereof of distributions to which they are entitled by the
Rated Final Distribution Date set forth on the cover page of this Prospectus
Supplement. The ratings take into consideration the credit quality of the
Mortgage Pool, structural and legal aspects associated with the Offered
Certificates, and the extent to which the payment stream from the Mortgage Pool
is adequate to make payments required under the Offered Certificates. A security
rating does not represent any assessment of (i) the likelihood or frequency of
principal prepayments or default interest on the Mortgage Loans, (ii) the degree
to which such prepayments might differ from those originally anticipated or
(iii) whether and to what extent Prepayment Premiums and Yield Maintenance
Charges will be received. Also, a security rating does not represent any
assessment of the yield to maturity that investors may experience or the
possibility that the holders of the Class IO Certificates might not fully
recover their investment in the event of rapid prepayments of the Mortgage Loans
(including both voluntary and involuntary prepayments). As described herein, the
amounts payable with respect to the Class IO Certificates consist only of
interest. If the entire pool were to prepay in the initial month, with the
result that the Class IO Certificateholders receive only a single month's
interest and thus suffer a nearly complete loss of their investment, all amounts
"due" to such Certificateholders will nevertheless have been paid, and such
result is consistent with the ratings received on the Class IO Certificates. The
rating does not address the timing or magnitude of reductions of the notional
amounts of the Components of the Class IO Certificates, but only the obligation
to pay interest timely on the Notional Amount as reduced from time to time.
Accordingly, the ratings of the Class IO Certificates should be evaluated
independently from similar ratings on other types of securities.
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been requested
by the Depositor to do so may be lower than the rating assigned thereto by
either or both of the Rating Agencies.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. 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. See "RISK
FACTORS--Limited Nature of Ratings" in the Prospectus.
S-72
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
Page
----
30/360 Basis ............................................................. S-28
Accrued Certificate Interest ............................................. S-53
Additional Servicing Fee ................................................. S-45
Additional Servicing Fee Rate ............................................ S-45
Additional Trust Fund Expenses ........................................... S-11
Advance .................................................................. S-57
Appraisal Reduction Amount ............................................... S-57
Appraisal Reduction Amount Shortfall ..................................... S-58
Assumed Scheduled Payment ................................................ S-17
Available Distribution Amount ............................................ S-13
Balloon Loans ............................................................ S-9
Balloon Payment .......................................................... S-9
CBE ...................................................................... S-63
Certificate Balance ...................................................... S-2
Certificate Owner ........................................................ S-7
Certificate Registrar .................................................... S-58
Certificateholders ....................................................... S-11
Certificates ............................................................. S-1
Class .................................................................... S-1
Class IO-1 Component ..................................................... S-2
Class IO-2 Component ..................................................... S-2
Class Prepayment Percentage .............................................. S-55
Closing Date ............................................................. S-7
Code ..................................................................... S-8
Collection Period ........................................................ S-50
Compensating Interest Payment ............................................ S-18
Component ................................................................ S-2
Constant Prepayment Rate or CPR .......................................... S-62
Controlling Class of Sequential Pay Certificates ......................... S-43
Corrected Mortgage Loan .................................................. S-44
Custodian ................................................................ S-40
Cut-off Date ............................................................. S-1
Cut-off Date Balance ..................................................... S-7
Cut-off Date LTV ......................................................... S-32
Cut-off Date LTV Ratios .................................................. S-10
DCR ...................................................................... S-22
DSCR ..................................................................... S-31
Debt Service Coverage Ratio .............................................. S-31
Definitive Offered Certificate ........................................... S-7
Depositor ................................................................ S-1
Determination Date ....................................................... S-17
Distributable Certificate Interest ....................................... S-15
Distribution Date ........................................................ S-2
Distribution Date Statement .............................................. S-58
DTC ...................................................................... S-7
Due Dates ................................................................ S-28
ERISA .................................................................... S-22
Excluded Plan ............................................................ S-69
Exemption ................................................................ S-68
Extension Adviser ........................................................ S-46
First Union Capital ...................................................... S-6
Fitch .................................................................... S-22
Form 8-K ................................................................. S-42
FUNB ..................................................................... S-6
FUNB Loans ............................................................... S-10
S-73
<PAGE>
Page
----
HUD ...................................................................... S-30
Initial Pool Balance ..................................................... S-1
Initial Reserves at Closing .............................................. S-32
IRS ...................................................................... S-68
Loan per Sq ft, Unit, Bed, Key or Room ................................... S-32
Lockout Period ........................................................... S-9
Master Servicer .......................................................... S-1
Master Servicing Fee ..................................................... S-44
Master Servicing Fee Rate ................................................ S-44
Merrill Lynch ............................................................ S-6
MLMCI .................................................................... S-7
MLMCI Loans .............................................................. S-10
Monthly Payments ......................................................... S-8
Moody's .................................................................. S-69
Mortgage ................................................................. S-28
Mortgage File ............................................................ S-40
Mortgage Loan Purchase Agreements ........................................ S-40
Mortgage Loan Seller ..................................................... S-2
Mortgage Loans ........................................................... S-1
Mortgage Note ............................................................ S-28
Mortgage Pool ............................................................ S-1
Mortgage Rates ........................................................... S-8
Mortgaged Property ....................................................... S-1
Net Aggregate Prepayment Interest Shortfall .............................. S-18
Net Cash Flow ............................................................ S-31
Net Mortgage Rate ........................................................ S-12
Nonrecoverable P&I Advance ............................................... S-57
Notional Amount .......................................................... S-2
Offered Certificates ..................................................... S-1
OID Regulations .......................................................... S-68
Other Reserves At Closing ................................................ S-33
P&I Advance .............................................................. S-17
Participants ............................................................. S-7
Party in Interest ........................................................ S-69
Pass-Through Rate ........................................................ S-2
Plan ..................................................................... S-22
Pooling and Servicing Agreement .......................................... S-11
Prepayment Interest Excess ............................................... S-18
Prepayment Interest Shortfall ............................................ S-18
Prepayment Premiums ...................................................... S-54
Principal Distribution Amount ............................................ S-16
Principal Recovery Fee ................................................... S-45
Private Certificates ..................................................... S-6
PTE 95-60 ................................................................ S-70
Purchase Price ........................................................... S-40
Rating Agencies .......................................................... S-22
Realized Losses .......................................................... S-11
Reimbursement Rate ....................................................... S-18
Related Proceeds ......................................................... S-57
REMIC .................................................................... S-2
REMIC I .................................................................. S-2
REMIC II ................................................................. S-2
REMIC III ................................................................ S-2
REMIC Administrator ...................................................... S-60
REMIC Regular Certificates ............................................... S-6
REMIC Residual Certificates .............................................. S-6
Rental Property .......................................................... S-31
S-74
<PAGE>
Page
----
REO Extension ............................................................ S-47
REO Property ............................................................. S-20
REO Tax .................................................................. S-47
Required Appraisal Date .................................................. S-57
Required Appraisal Loan .................................................. S-57
Restricted Group ......................................................... S-69
Scenario ................................................................. S-64
Scheduled Maturity LTV Ratios ............................................ S-10
Scheduled Payment ........................................................ S-16
Section 42 Property ...................................................... S-8
Securities Act ........................................................... S-6
Senior Certificates ...................................................... S-18
Sequential Pay Certificates .............................................. S-24
Servicing Fees ........................................................... S-45
SMMEA .................................................................... S-70
Special Servicer ......................................................... S-1
Special Servicing Fee .................................................... S-45
Special Servicing Fee Rate ............................................... S-45
Specially Serviced Mortgage Loans ........................................ S-44
Specially Serviced Trust Fund Assets ..................................... S-44
Standard & Poor's ........................................................ S-22
Stated Principal Balance ................................................. S-12
Subordinate Certificates ................................................. S-18
Tax Credits .............................................................. S-29
Table Assumptions ........................................................ S-63
Trust Fund ............................................................... S-1
Trustee .................................................................. S-2
Trustee Fee .............................................................. S-60
Trustee Fee Rate ......................................................... S-60
Underwriters ............................................................. S-1
Underwriting Agreement ................................................... S-71
Underwriting Reserves .................................................... S-33
Voting Rights ............................................................ S-59
Weighted Average Net Mortgage Rate ....................................... S-12
Year Built ............................................................... S-32
Yield Maintenance Charges ................................................ S-54
S-75
<PAGE>
[THIS PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
83 Park Towne Place 2201 Park Towne Place
345 Estes - Best Western - Orlando 8738 International Drive
73 Olde Mill Landing 11800 Beltsville Drive
153 Best Buy Distribution Center 14401 Township Road 212
241 Renaissance III Shopping Center NWC of Pecos & Flamingo
- -----------------------------------------------------------------------------------------------------
152 The Port Authority of NY/NJ Technical Center 241 Erie Street
56 254 Park Avenue South 254 Park Avenue South
307 Shilo Inn-Portland Airport/I-205 11707 N.E. Airport Way
278 KFS-Sunset Apartments 910-975 Del Dios Highway
110 Central Shopping Center 3701 N.W. 7 Street
- -----------------------------------------------------------------------------------------------------
204 Canyon Center 19307 Soledad Canyon Rd.
271 Gateway Retail Center 2500 Gateway Boulevard South
277 KFS-Sycamore Ridge Apartments 820 Sycamore Avenue
145 Intelligent Electronics 5025 Tuggle Road
267 Oxford-Oaks at Woodbridge I Apts 3800 Woodbridge Blvd
- -----------------------------------------------------------------------------------------------------
147 Flagler 251 255 East Flagler Street
159 Reston International Center 11800, 11840 & 11816-11832 Sunrise Valley Drive
82 Islander Marina 14015 West Tahiti Way
266 Oxford - Island Club Apartments 2225 Montego Blvd
304 The Olympic Marketplace NWC Olympic and Cloverfield
- -----------------------------------------------------------------------------------------------------
215 INT-6200 Gessner Apartments 8721 Town Park Drive
302 SNE Enterprises 1000 Southview Drive
*108 1111 Beacon Street*** 1111 Beacon Street
*108 1101 Beacon Street*** 1101 Beacon Street
- -----------------------------------------------------------------------------------------------------
303 Shilo Inn-Seaside Oceanfront Resort 30 North Promenade
207 26 Court Street 26 Court Street
344 Town Center Plaza SEC Fred Waring Dr. & Town Ctr
265 Oxford-Runaway Bay Apartments 8242 Runaway Bay Drive
165 Las Villas del Norte 1325 Las Villas Way
- -----------------------------------------------------------------------------------------------------
264 Oxford - Hunters Chase Apartments 2550 Steeple Chase Drive
285 Copper Tree Shopping Plaza 350 Ramapo Valley Road
13 Kimberly Club 3000 East Kimberly Road
118 415 Hamburg Turnpike 415 Hamburg Turnpike
57 298 Mulberry 298 Mulberry
- -----------------------------------------------------------------------------------------------------
243 K&S - North County Village 9700 North Riverdale
173 Riverside Square 8190 Wiles Road
60 Greenhills Bicycle Club 7909 North Grandby Avenue
42 Woods on LaMonte 4800 LaMonte Lane
25 Sunwood Village 4020 Arville Street
- -----------------------------------------------------------------------------------------------------
353 Ramada Inn - Seattle 2200 Fifth Avenue
352 Horwitz-Ramada Inn - Portland 6221 NE 82nd Street
332 Summer Street Office Building 1111 & 1177 Summer Street
306 Collegetown Plaza 111-121 Dryden Road
284 Rodeo Square Apartments 6700 Dairy Ashford
- -----------------------------------------------------------------------------------------------------
174 Countryside Lakes 941 Village Trail
300 Shilo Inn-Tacoma 7414 South Hosmer Street
172 Tamarac Town Square 8177 North Pine Island Road
164 501 Route 17 South 501 Route 17 South
116 61-65 Brookline Avenue 61 - 65 Brookline Avenue
- -----------------------------------------------------------------------------------------------------
101 Market Place Shopping Center N.C. Highway 180
228 Shafer Plaza Shopping Center 8383 Westheimer
155 Willow Wood Shoppes 1141-1187 Wantagh Ave.
94 Biggs Park Mall 2800 N. Elm Street
351 Horwitz-Ramada Inn - Corvallis 1550 NW 9th Street
- -----------------------------------------------------------------------------------------------------
58 304 Mulberry 304 Mulberry
276 KFS-Sunset Village Apartments 3634 College Boulevard
169 Beverly Hills Carmel Retirement Hotel I 8757 Burton Way
299 Shilo Inn-Salem Suites 3304 Market Street NE
268 Paseo Plaza 2600 West Sahara Avenue
- -----------------------------------------------------------------------------------------------------
359 Metro Office Building 202 West Berry Street
342 Estes - HoJo Main Gate - Kissimmee 6051 Irlo Bronson Memorial Highway
350 Horwitz-Ramada Inn - Beaverton 13455 SW Canyon Road
245 SHL - Village Green Apartments 2305 Bay Area Bldv.
2 Woodcrest 3903 Camelot Circle
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
83 Philadelphia PA 19130 $38,500,000 $38,500,000 3.38% 3.38
345 Orlando FL 32819 21,000,000 21,000,000 1.84 5.23
73 Beltsville MD 20705 18,500,000 18,478,635 1.62 6.85
153 Findlay OH 45840 18,375,000 18,365,222 1.61 8.46
241 Las Vegas NV 89104 17,280,000 17,246,478 1.52 9.98
- -----------------------------------------------------------------------------------------------------
152 Jersey City NJ 07310 17,000,000 16,975,344 1.49 11.47
56 New York NY 10010 15,715,000 15,688,374 1.38 12.85
307 Portland OR 97220-1075 14,750,000 14,729,335 1.29 14.14
278 Escondido CA 92083 14,039,000 14,022,035 1.23 15.37
110 Miami FL 33126 13,650,000 13,603,721 1.20 16.57
- -----------------------------------------------------------------------------------------------------
204 Santa Clarita CA 91351 13,300,000 13,246,071 1.16 17.73
271 Federal Way WA 98003 12,750,000 12,725,849 1.12 18.85
277 Vista CA 92083 11,468,600 11,454,741 1.01 19.86
145 Memphis TN 38118 11,250,000 11,244,168 0.99 20.84
267 Fairfield OH 45014 11,070,000 11,056,261 0.97 21.82
- -----------------------------------------------------------------------------------------------------
147 Miami FL 33131 10,800,000 10,800,000 0.95 22.76
159 Reston VA 22090 10,650,000 10,631,616 0.93 23.70
82 Marina Del Rey CA 90292 10,125,000 10,110,315 0.89 24.59
266 Columbus OH 43235 10,120,000 10,107,440 0.89 25.48
304 Santa Monica CA 90404 10,000,000 9,991,838 0.88 26.35
- -----------------------------------------------------------------------------------------------------
215 Houston TX 77036 10,000,000 9,969,340 0.88 27.23
302 Mosinee WI 54455 9,975,000 9,966,776 0.88 28.10
*108 Brookline MA 02146 5,700,000 5,693,750 0.50
*108 Brookline MA 02146 4,000,000 3,995,614 0.35
--------------------------------------
9,700,000 9,689,363 0.85 28.96
- -----------------------------------------------------------------------------------------------------
303 Seaside OR 97138 9,510,000 9,496,676 0.83 29.79
207 Brooklyn NY 11242 9,500,000 9,409,635 0.83 30.62
344 Palm Desert CA 92260 9,350,000 9,350,000 0.82 31.44
265 Charlotte NC 28212 9,259,000 9,247,509 0.81 32.25
165 Escondido CA 92026 9,233,000 9,226,041 0.81 33.06
- -----------------------------------------------------------------------------------------------------
264 Miamisburg OH 45342 9,081,000 9,069,730 0.80 33.86
285 Oakland NJ 07436 9,000,000 8,990,152 0.79 34.65
13 Davenport IA 52807 9,000,000 8,962,951 0.79 35.43
118 Wayne NJ 07470 8,684,000 8,668,450 0.76 36.20
57 New York NY 10012 8,606,000 8,591,419 0.75 36.95
- -----------------------------------------------------------------------------------------------------
243 Thornton CO 80229 8,430,000 8,415,069 0.74 37.69
173 Coral Springs FL 33067 8,225,000 8,216,327 0.72 38.41
60 Kansas City MO 64151 8,100,000 8,086,627 0.71 39.12
42 Houston TX 77401 8,100,000 8,082,651 0.71 39.83
25 Las Vegas NV 89103 8,100,000 8,075,743 0.71 40.54
- -----------------------------------------------------------------------------------------------------
353 Seattle WA 98121 7,850,000 7,850,000 0.69 41.23
352 Portland OR 97220 7,800,000 7,800,000 0.69 41.92
332 Stamford CT 06905 7,620,000 7,613,823 0.67 42.59
306 Ithaca NY 14850 7,000,000 6,996,152 0.61 43.20
284 Houston TX 77072 6,960,000 6,951,380 0.61 43.81
- -----------------------------------------------------------------------------------------------------
174 Port Orange FL 32119 6,800,000 6,788,562 0.60 44.41
300 Tacoma WA 98408 6,770,000 6,760,515 0.59 45.00
172 Tamarac FL 33321 6,635,000 6,628,003 0.58 45.58
164 Paramus NJ 07652 6,591,000 6,586,839 0.58 46.16
116 Boston MA 02215 6,600,000 6,583,466 0.58 46.74
- -----------------------------------------------------------------------------------------------------
101 Shelby NC 28150 6,600,000 6,577,790 0.58 47.32
228 Houston TX 77063 6,500,000 6,482,639 0.57 47.89
155 Wantagh NY 11793 6,098,000 6,098,000 0.54 48.42
94 Lumberton NC 28359 5,800,000 5,775,323 0.51 48.93
351 Corvallis OR 97330 5,750,000 5,750,000 0.51 49.44
- -----------------------------------------------------------------------------------------------------
58 New York NY 10012 5,683,000 5,673,371 0.50 49.93
276 Oceanside CA 92056 5,650,000 5,643,172 0.50 50.43
169 Beverly Hills CA 90048 5,500,000 5,486,358 0.48 50.91
299 Salem OR 97301 5,470,000 5,462,336 0.48 51.39
268 Las Vegas NV 89102 5,333,400 5,311,065 0.47 51.86
- -----------------------------------------------------------------------------------------------------
359 Fort Wayne IN 46802 5,300,000 5,300,000 0.47 52.32
342 Kissimmee FL 34747 5,110,000 5,110,000 0.45 52.77
350 Beaverton OR 97005 4,900,000 4,900,000 0.43 53.20
245 Houston TX 77058 4,900,000 4,891,321 0.43 53.63
2 Decatur IL 62526 4,728,000 4,694,438 0.41 54.05
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
83 9.1250 120 120 360 360 10/2/96 11/1/06 34,557,552
345 9.8900 264 264 264 264 10/9/96 11/1/18 NAP
73 8.7500 120 118 360 358 8/12/96 9/1/06 16,494,410
153 9.1250 120 119 360 359 9/24/96 10/1/06 16,493,377
241 9.1700 120 117 336 333 7/23/96 8/1/06 15,140,789
- -----------------------------------------------------------------------------------------------------------------
152 9.2500 240 239 240 239 9/30/96 10/1/16 NAP
56 8.8750 84 81 360 357 7/3/96 8/1/03 14,710,360
307 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
278 8.5300 84 82 360 358 8/26/96 9/1/03 13,087,470
110 9.3750 120 116 300 296 6/28/96 7/1/06 11,418,492
- -----------------------------------------------------------------------------------------------------------------
204 9.0600 180 175 312 307 5/21/96 6/1/11 9,298,753
271 8.6600 36 34 300 298 8/22/96 9/1/99 12,272,854
277 8.5300 84 82 360 358 8/26/96 9/1/03 10,691,285
145 9.2500 120 119 360 359 9/12/96 10/1/06 10,119,832
267 8.4000 120 118 360 358 8/20/96 9/1/06 9,805,020
- -----------------------------------------------------------------------------------------------------------------
147 8.8750 84 84 300 300 10/4/96 11/1/03 9,678,422
159 9.2200 84 82 300 298 8/30/96 9/1/03 9,592,241
82 9.2500 240 239 240 239 10/1/96 10/1/16 NAP
266 8.4000 120 118 360 358 8/20/96 9/1/06 8,963,577
304 9.5300 240 239 300 299 9/12/96 10/1/16 4,221,171
- -----------------------------------------------------------------------------------------------------------------
215 8.5100 60 55 360 355 5/8/96 6/1/01 9,559,009
302 9.4700 120 119 300 299 9/20/96 10/1/06 8,361,522
*108 9.0000 120 118 360 358 8/16/96 9/1/06 5,105,071
*108 9.0000 120 118 360 358 8/16/96 9/1/06 3,582,506
----------
8,687,577
- -----------------------------------------------------------------------------------------------------------------
303 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
207 9.9500 240 233 240 233 3/26/96 4/1/16 NAP
344 8.7800 120 120 360 360 10/9/96 11/1/06 8,340,954
265 8.4000 120 118 360 358 8/20/96 9/1/06 8,200,965
165 10.0000 120 119 300 299 9/6/96 10/1/06 7,826,232
- -----------------------------------------------------------------------------------------------------------------
264 8.4000 120 118 360 358 8/20/96 9/1/06 8,043,305
285 9.0100 120 118 360 358 8/30/96 9/1/06 8,062,068
13 8.7500 120 113 360 353 3/29/96 4/1/06 8,024,308
118 9.0000 120 118 300 298 8/16/96 9/1/06 7,203,921
57 8.8750 84 81 360 357 7/3/96 8/1/03 8,055,829
- -----------------------------------------------------------------------------------------------------------------
243 8.6600 60 57 360 357 7/10/96 8/1/01 8,068,173
173 9.1875 186 184 360 358 8/22/96 3/1/12 6,475,703
60 9.0000 60 57 360 357 7/8/96 8/1/01 7,773,167
42 9.1500 84 80 360 356 6/24/96 7/1/03 7,605,959
25 8.6250 60 55 360 355 5/17/96 6/1/01 7,750,130
- -----------------------------------------------------------------------------------------------------------------
353 9.4300 264 264 264 264 10/3/96 11/1/18 NAP
352 9.6500 240 240 240 240 10/3/96 11/1/16 NAP
332 9.5700 120 119 300 299 9/12/96 10/1/06 6,401,197
306 8.9700 120 119 360 359 9/25/96 10/1/06 6,266,040
284 8.4100 36 34 360 358 8/26/96 9/1/99 6,790,300
- -----------------------------------------------------------------------------------------------------------------
174 9.3750 120 118 300 298 8/30/96 9/1/06 5,688,333
300 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
172 9.1875 157 155 360 358 8/22/96 10/1/09 5,594,204
164 9.5200 120 119 330 329 9/17/96 10/1/06 5,772,406
116 9.6250 120 116 330 326 6/7/96 7/1/06 5,791,683
- -----------------------------------------------------------------------------------------------------------------
101 9.0000 120 115 336 331 5/10/96 6/1/06 5,763,872
228 9.1800 120 115 360 355 5/31/96 6/1/06 5,839,970
155 9.1250 84 84 360 360 10/4/96 11/1/03 5,724,468
94 9.3750 120 115 300 295 5/8/96 6/1/06 4,851,813
351 9.6500 252 252 252 252 10/3/96 11/1/17 NAP
- -----------------------------------------------------------------------------------------------------------------
58 8.8750 84 81 360 357 7/3/96 8/1/03 5,319,693
276 8.5300 84 82 360 358 8/26/96 9/1/03 5,267,056
169 9.5000 120 117 300 297 7/3/96 8/1/06 4,613,349
299 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
268 9.4700 120 115 300 295 5/17/96 6/1/06 4,470,711
- -----------------------------------------------------------------------------------------------------------------
359 9.0900 120 120 300 300 10/8/96 11/1/06 4,405,635
342 9.8900 264 264 264 264 10/9/96 11/1/18 NAP
350 9.6500 240 240 240 240 10/3/96 11/1/16 NAP
245 8.6600 48 45 360 357 7/1/96 8/1/00 4,739,974
2 8.3500 84 77 300 293 3/12/96 4/1/03 4,202,951
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- ---------------------------
83 Multifamily
345 Hospitality
73 Multifamily
153 Industrial
241 Anchored Retail
- ---------------------------
152 Office
56 Multifamily
307 Hospitality
278 Multifamily
110 Anchored Retail
- ---------------------------
204 Anchored Retail
271 Anchored Retail
277 Multifamily
145 Industrial
267 Multifamily
- ---------------------------
147 Anchored Retail
159 Office
82 Multifamily
266 Multifamily
304 Anchored Retail
- ---------------------------
215 Multifamily
302 Industrial
*108 Multifamily
*108 Office
- ---------------------------
303 Hospitality
207 Office
344 Anchored Retail
265 Multifamily
165 Assisted Living
- ---------------------------
264 Multifamily
285 Anchored Retail
13 Multifamily
118 Industrial
57 Multifamily
- ---------------------------
243 Mobile Home Park
173 Anchored Retail
60 Multifamily
42 Multifamily
25 Multifamily
- ---------------------------
353 Hospitality
352 Hospitality
332 Office
306 Multifamily/Retail
284 Multifamily
- ---------------------------
174 Congregate Care
300 Hospitality
172 Anchored Retail
164 Unanchored Retail
116 Multifamily/Retail
- ---------------------------
101 Anchored Retail
228 Anchored Retail
155 Anchored Retail
94 Anchored Retail
351 Hospitality
- ---------------------------
58 Multifamily
276 Multifamily
169 Congregate Care
299 Hospitality
268 Unanchored Retail
- ---------------------------
359 Office
342 Hospitality
350 Hospitality
245 Multifamily
2 Multifamily
- ---------------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- -------------------------------------------------------------------------------------
<S> <C>
83 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
345 11 yr lock, >1% or YM through yr 21 3/4, open last 3 months
73 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
153 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
241 5.25 yr lock, >1% or YM through yr 9 1/2, open last 6 months
- -------------------------------------------------------------------------------------
152 5 yr lock, >1% or YM through yr 19 1/2, open last 6 mos
56 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
307 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
278 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
110 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
204 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
271 2 yr lock, >1% or YM through yr 2 3/4, open last 3 months
277 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
145 5 1/2 yr lock, >1% or YM through yr 9, open last 12 mos
267 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
- -------------------------------------------------------------------------------------
147 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
159 4 yr lock, 3% Yr 5, 2% Yr 6, 1% Yr 6 1/2, open last 6 mos
82 2 yr lock, >1% or YM through yr 4, 5%-1%, 1% yr 10, open last 10 years
266 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
304 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
- -------------------------------------------------------------------------------------
215 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
302 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
*108 4 yr lock, >1% or YM through yr 9, open last 12 mos
*108 4 yr lock, >1% or YM through yr 9, open last 12 mos
- -------------------------------------------------------------------------------------
303 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
207 10 yr lock, yearly @ 8%, 7, 6, 5, 4, 3, 2, 33 mos @ 1%, open last 3 months
344 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
265 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
165 3 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
264 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
285 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
13 5 yr lock, >1% or YM through yr 9, open last 12 mos
118 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
57 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
243 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
173 5 yr lock,>1% or YM through yr 10,4%,3%,2%,1%-yr 14 1/2, open last 12 mos
60 1 yr lock, >1% or YM through yr 4 1/2, open last 6 mos
42 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
25 1 yr lock, >1% or YM through yr 4 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
353 11 yr lock, >1% or YM through yr 21 3/4, open last 3 months
352 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
332 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
306 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
284 2.25 yr lock, >1% or YM through yr 2 1/2, open last 6 months
- -------------------------------------------------------------------------------------
174 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
300 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
172 5 yr lock, >1% or YM through yr 10, 2%, 1%-yr 12 and 1 mos,open last 12 mos
164 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
116 6 yr lock, >1% or YM through yr 9, open last 12 mos
- -------------------------------------------------------------------------------------
101 4 yr lock, >1% or YM through yr 9, 5% through yr 9 1/2, open last 6 mos
228 5.25 yr lock, >1% or YM through yr 9 1/2, open last 6 months
155 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
94 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
351 10 yr lock, >1% or YM through yr 20 3/4, open last 3 months
- -------------------------------------------------------------------------------------
58 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
276 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
169 4 yr lock, >1% or YM through yr 9, open last 12 mos
299 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
268 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------
359 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
342 11 yr lock, >1% or YM through yr 21 3/4, open last 3 months
350 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
245 2.5 yr lock, >1% or YM through yr 3 3/4, open last 3 months
2 1 yr lock, >1% or YM through yr 6, open last 12 mos
- -------------------------------------------------------------------------------------
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
83 313,249 10,207,812 5,184,327 4,780,235 1.27 51,000,000 1996 75.49
345 195,462 8,871,101 5,560,462 3,310,639 1.41 30,000,000 1996 70.00
73 145,540 5,145,396 2,643,868 2,323,283 1.33 25,500,000 1996 72.47
153 149,505 2,390,557 59,764 2,290,384 1.28 24,500,000 1996 74.96
241 143,137 2,802,128 576,444 2,172,055 1.26 24,000,000 1996 71.86
- ------------------------------------------------------------------------------------------------------------------------------------
152 155,697 2,885,816 493,966 2,241,659 1.20 24,000,000 1996 70.73
56 125,036 3,477,590 1,472,220 1,955,196 1.30 20,300,000 1996 77.28
307 137,682 5,494,759 3,048,388 2,446,371 1.48 22,500,000 1996 65.46
278 108,246 2,581,971 958,241 1,623,730 1.25 19,000,000 1996 73.80
110 118,076 3,153,291 1,179,265 1,868,647 1.32 24,800,000 1996 54.85
- ------------------------------------------------------------------------------------------------------------------------------------
204 111,039 2,281,860 522,007 1,672,210 1.25 18,800,000 1996 70.46
271 104,045 2,188,311 524,521 1,626,759 1.30 17,000,000 1996 74.86
277 88,428 2,023,384 749,995 1,273,389 1.20 14,700,000 1996 77.92
145 92,551 1,487,852 29,757 1,405,157 1.27 16,700,000 1996 67.33
267 84,335 2,216,880 966,118 1,250,763 1.24 13,890,000 1996 79.60
- ------------------------------------------------------------------------------------------------------------------------------------
147 89,711 3,370,587 1,702,529 1,523,269 1.41 18,000,000 1996 60.00
159 90,984 3,049,871 1,268,890 1,478,138 1.35 17,000,000 1996 62.54
82 92,732 3,167,475 1,704,657 1,401,523 1.26 17,500,000 1996 57.77
266 77,098 2,018,588 860,242 1,158,347 1.25 13,035,000 1996 77.54
304 87,578 1,660,211 274,413 1,385,798 1.32 14,500,000 1996 68.91
- ------------------------------------------------------------------------------------------------------------------------------------
215 76,962 3,010,563 1,822,218 1,188,345 1.29 12,500,000 1996 79.75
302 86,943 1,975,614 671,542 1,304,072 1.25 13,300,000 1996 74.94
*108 78,048 1,314,424 584,760 711,964 1.33 7,800,000 1996 65.03
*108 1,073,073 468,889 533,881 7,100,000 1996
------------------------------------------ ----------
2,387,497 1,053,649 1,245,845 14,900,000
- ------------------------------------------------------------------------------------------------------------------------------------
303 88,770 3,167,906 1,588,284 1,579,621 1.48 14,000,000 1996 67.83
207 91,363 5,481,680 3,534,565 1,548,252 1.41 13,000,000 1996 72.38
344 73,757 1,521,024 350,708 1,129,823 1.28 12,880,000 1996 72.59
265 70,539 1,898,626 838,668 1,059,958 1.25 13,200,000 1996 70.06
165 83,900 7,500,000 6,030,000 1,409,500 1.40 14,700,000 1996 62.76
- ------------------------------------------------------------------------------------------------------------------------------------
264 69,182 1,912,748 877,115 1,035,633 1.25 11,860,000 1996 76.47
285 72,481 1,591,045 481,030 1,066,048 1.23 12,900,000 1996 69.69
13 70,803 2,228,712 1,094,851 1,062,261 1.25 12,300,000 1996 72.87
118 72,876 2,148,309 845,283 1,170,834 1.34 13,000,000 1996 66.68
57 68,473 1,917,902 813,526 1,085,176 1.32 11,300,000 1996 76.03
- ------------------------------------------------------------------------------------------------------------------------------------
243 65,778 1,565,107 520,560 1,044,547 1.32 11,000,000 1996 76.50
173 67,293 1,495,705 437,735 1,007,468 1.25 10,900,000 1996 75.38
60 65,174 1,838,608 809,528 971,360 1.24 10,800,000 1996 74.88
42 66,051 2,660,657 1,499,539 1,038,988 1.31 11,650,000 1996 69.38
25 63,001 1,722,217 707,476 958,041 1.27 11,400,000 1996 70.84
- ------------------------------------------------------------------------------------------------------------------------------------
353 70,632 2,848,054 1,699,734 1,148,320 1.35 11,400,000 1996 68.86
352 73,472 3,034,080 1,827,901 1,206,179 1.37 12,200,000 1996 63.93
332 66,947 1,987,774 871,410 1,004,121 1.25 10,300,000 1996 73.92
306 56,173 1,450,566 484,940 952,544 1.41 10,350,000 1996 67.60
284 53,073 2,723,344 1,887,412 835,932 1.31 10,000,000 1996 69.51
- ------------------------------------------------------------------------------------------------------------------------------------
174 58,822 2,969,701 1,995,485 931,593 1.32 9,500,000 1996 71.46
300 63,194 2,464,677 1,251,271 1,213,406 1.60 9,950,000 1996 67.94
172 54,284 1,301,117 429,011 807,086 1.24 9,500,000 1996 69.77
164 56,449 1,150,659 245,339 871,073 1.29 9,350,000 1996 70.45
116 57,022 1,224,353 291,417 904,096 1.32 8,800,000 1996 74.81
- ------------------------------------------------------------------------------------------------------------------------------------
101 53,876 1,052,688 167,734 820,288 1.27 9,000,000 1996 73.09
228 53,145 1,117,043 273,895 809,742 1.27 9,000,000 1996 72.03
155 49,615 1,412,732 628,794 743,712 1.25 8,400,000 1996 72.60
94 50,171 1,349,505 456,725 785,369 1.30 9,500,000 1996 60.79
351 53,325 1,837,040 958,834 878,206 1.37 8,500,000 1996 67.65
- ------------------------------------------------------------------------------------------------------------------------------------
58 45,217 1,402,525 667,872 715,483 1.32 7,200,000 1996 78.80
276 43,564 995,937 368,608 627,329 1.20 7,400,000 1996 76.26
169 48,053 1,974,000 1,130,200 824,144 1.43 7,600,000 1996 72.19
299 51,059 1,766,189 850,597 915,593 1.49 8,400,000 1996 65.03
268 46,487 906,963 160,429 722,557 1.30 8,000,000 1996 66.39
- ------------------------------------------------------------------------------------------------------------------------------------
359 44,805 1,568,907 797,993 680,146 1.27 7,500,000 1996 70.67
342 47,562 4,139,121 3,329,629 809,496 1.42 7,300,000 1996 70.00
350 46,155 1,653,338 902,485 750,853 1.36 8,300,000 1996 59.04
245 38,234 1,209,636 629,315 580,321 1.26 6,200,000 1996 78.89
2 37,594 1,257,903 580,489 625,014 1.39 6,100,000 1996 76.96
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
83 67.76 1959 973/units 39,568.35/ unit 90.70 222,500.00 250 per unit
345 NAP 1985 672/rooms 31,250.00/room NAP 875.00 4% of gross rev.
73 64.68 1971 699/units 26,435.82/ unit 93.20 70,000.00 255 per unit
153 67.32 1995 808,178/sqft 22.72/ /sqft 100.00 0.00 0.05 per sq. ft.
241 63.09 1987 213,552/sqft 80.76//sqft 99.38 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
152 NAP 1972 296,393/sqft 57.27/ /sqft 100.00 3,500.00 0.14 per sq. ft.
56 72.46 1979 223/units 70,351.45/ unit 98.20 7,750.00 225 per unit
307 NAP 1989 200/rooms 73,646.67/room NAP 0.00 4% of gross rev.
278 68.88 1984 334/units 41,982.14//units 99.70 0.00 200 per unit
110 46.04 1959 309,474/sqft 43.96/ /sqft 100.00 39,062.50 0.12 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
204 49.46 1963 229,115/sqft 57.81//sqft 100.00 0.00 0.15 per sq. ft.
271 72.19 1988 100,183/sqft 127.03//sqft 98.51 0.00 0.15 per sq. ft.
277 72.73 1986 282/units 40,619.65//units 99.65 0.00 200 per unit
145 60.60 1995 487,372/sqft 23.07/ /sqft 100.00 0.00 0.05 per sq. ft.
267 70.59 1986 332/units 33,301.99//units 91.87 0.00 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
147 53.77 1990 110,291/sqft 97.92/ /sqft 96.00 6,187.50 0.15 per sq. ft.
159 56.42 1974 200,572/sqft 53.01/ /sqft 95.30 0.00 0.10 per sq. ft.
82 NAP 1972 205/units 49,318.61/ unit 98.05 22,356.25 299 per unit
266 68.77 1986 308/units 32,816.36//units 97.40 0.00 250 per unit
304 29.11 1996 50,000/sqft 199.84//sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
215 76.47 1979 659/units 15,127.98//units 96.16 0.00 225 per unit
302 62.87 1990 660,000/sqft 15.10//sqft 100.00 93,937.50 0.15 per sq. ft.
*108 58.31 1984 60/units 94,895.83/ unit 100.00 16,462.50 295 per unit
*108 1929 57,268/sqft 69.77/ /sqft 98.61 11,125.00 0.29 per sq. ft.
NAP 1984 113/rooms 84,041.38/room NAP 35,875.00 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
303 NAP 1915 256,997/sqft 36.61//sqft 92.93 78,937.50 0.21 per sq. ft.
207
344 64.76 1993 81,168/sqft 115.19//sqft 97.04 0.00 0.15 per sq. ft.
265 62.13 1985 280/units 33,026.82//units 98.57 31,250.00 254 per unit
165 53.24 1986 242/beds 38,124.14/ /bed 90.91 1,935.00 250 per /bed
- ------------------------------------------------------------------------------------------------------------------------------------
264 67.82 1985 292/units 31,060.72//units 94.86 0.00 250 per unit
285 62.50 1972 120,053/sqft 74.88//sqft 93.66 0.00 0.15 per sq. ft.
13 65.24 1974 358/units 25,036.18/ unit 90.70 71,250.00 200 per unit
118 55.41 1968 358,012/sqft 24.21/ /sqft 95.00 188,025.00 0.23 per sq. ft.
57 71.29 1986 96/units 89,493.95/ unit 98.70 6,625.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
243 73.35 1986 425/pad 19,800.16/pad 99.06 12,500.00 50 per pad
173 59.41 1986 103,246/sqft 79.58/ /sqft 93.00 16,250.00 0.10 per sq. ft.
60 71.97 1987 312/units 25,918.68/ unit 91.30 15,225.00 185 per unit
42 65.29 1978 531/units 15,221.56/ unit 93.00 172,187.50 230 per unit
25 67.98 1985 252/units 32,046.60/ unit 96.10 28,750.00 225 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
353 NAP 1978 120/rooms 65,416.67/room NAP 0.00 4% of gross rev.
352 NAP 1969 202/rooms 38,613.86/room NAP 37,187.50 4% of gross rev.
332 62.15 1978 123,473/sqft 61.66//sqft 97.09 359,202.50 0.15 per sq. ft.
306 60.54 1980 72,083/sqft 97.06//sqft 98.50 95,765.00 350 per unit
284 67.90 1980 592/units 11,742.20//units 88.00 48,012.50 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
174 59.88 1984 149/beds 45,560.82/ room 100.00 33,390.00 292 per /bed
300 NAP 1985 132/rooms 51,216.02/room NAP 8,076.25 4% of gross rev.
172 58.89 1980 120,316/sqft 55.09/ /sqft 94.30 18,000.00 0.22 per sq. ft.
164 61.74 1981 39,803/sqft 165.49/ /sqft 100.00 39,042.50 0.29 per sq. ft.
116 65.81 1913 58,557/sqft 112.43/ /sqft 100.00 5,075.00 0.28 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
101 64.04 1987 197,787/sqft 33.26/ /sqft 100.00 0.00 0.10 per sq. ft.
228 64.89 1995 43,000/sqft 150.76//sqft 100.00 0.00 0.15 per sq. ft.
155 68.15 1985 56,540/sqft 107.85/ /sqft 88.00 9,750.00 0.26 per sq. ft.
94 51.07 1964 249,053/sqft 23.19/ /sqft 98.54 143,750.00 0.16 per sq. ft.
351 NAP 1972 120/rooms 47,916.67/room NAP 15,156.25 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
58 73.88 1984 90/units 63,037.46/ unit 98.60 7,618.75 213 per unit
276 71.18 1987 114/units 49,501.51//units 100.00 27,937.50 220 per unit
169 60.70 1986 78/units 70,337.92/ unit 97.43 1,562.50 252 per /bed
299 NAP 1989 89/rooms 61,374.57/room NAP 0.00 4% of gross rev.
268 55.88 1995 45,940/sqft 115.61//sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
359 58.74 1975 120,650/sqft 43.93//sqft 86.74 28,273.75 0.15 per sq. ft.
342 NAP 1984 367/rooms 13,923.71/room NAP 93,862.50 4% of gross rev.
350 NAP 1980 143/rooms 34,265.73/room NAP 0.00 4% of gross rev.
245 76.45 1979 232/units 21,083.28//units 90.52 12,112.50 225 per unit
2 68.90 1972 262/units 17,917.70/ unit 95.21 1,500.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
----------------------------------------------------------------------------------------------------------
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
83 0.1500
345 0.1150
73 0.1500
153 0.1150 Best Buy 808,178
241 0.1350 Price Rite (Anchored by Payless Drug) 60,560
- ------------------------------------------------------------------------------------------------------------------------------------
152 0.1150 Port Authority of New York 296,393
56 0.1150
307 0.1350
278 0.1350
110 0.1650 KMART 100,000
- ------------------------------------------------------------------------------------------------------------------------------------
204 0.1350 Howard & Phil's (Anchored by TJ Maxx; Ralphs Supermarket) 48,000
271 0.1150 General Cinema (Next to Sea-Tac Mall) 32,000
277 0.1350
145 0.1150 Intelligent Electronics, Inc. 487,372
267 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
147 0.1150 Marshalls 35,447
159 0.1150 Decision Support Systems 25,528
82 0.1150
266 0.1150
304 0.1350 Ralphs 50,000
- ------------------------------------------------------------------------------------------------------------------------------------
215 0.1150
302 0.1150 SNE Enterprises 660,000
*108 0.1150
*108 0.1150 BIH Radiologic Foundation 3,620
- ------------------------------------------------------------------------------------------------------------------------------------
0.1350
303 0.1350 Gail Shields 9,748
207 0.1150 Michaels (Anchored by Trader Joe's; Pier 1 Imports; House of Fabrics) 18,000
344 0.1150
265 0.1150
165 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
264 0.1150 Grand Union 33,660
285 0.1500
13 0.1150 Swan Pkg. 107,510
118 0.1150
57 0.1350
- ------------------------------------------------------------------------------------------------------------------------------------
243 0.1150 Publix 39,795
173 0.1150
60 0.1500
42 0.1150
25 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
353 0.1150
352 0.1150 ITT Rayon 43,462
332 0.1150
306 0.1150
284 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
174 0.1350
300 0.1150 Publix 36,464
172 0.1150 The Gap 20,000
164 0.1150 Mercantile Bank & Trust 9,696
116 0.1150 Wal-Mart 101,517
- ------------------------------------------------------------------------------------------------------------------------------------
101 0.1350 DSW Shoe Warehouse ("Shadow"-Walmart; JAM'S) 24,500
228 0.1150 Genovese Drug 11,500
155 0.1150 Belks (Anchored by Winn Dixie) 66,635
94 0.1150
351 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
58 0.1350
276 0.1150
169 0.1350
299 0.1350 David's Bridal 12,600
268 0.1350 Baden, Gage, & Schroeder 14,204
- ------------------------------------------------------------------------------------------------------------------------------------
359 0.1150
342 0.1150
350 0.1150
245 0.1150
2
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- --------------------------------------------------------------------------------
83
345
73
6/25/2016 153
12/31/2008 241
- --------------------------------------------------------------------------------
2/28/2010 152
56
307
278
1/31/2007 110
- --------------------------------------------------------------------------------
1/01/2001 204
11/19/2008 271
277
11/30/2005 145
267
- --------------------------------------------------------------------------------
12/31/2006 147
2/28/1999 159
82
266
9/08/2021 304
- --------------------------------------------------------------------------------
215
6/30/2016 302
*108
3/31/1999 *108
- --------------------------------------------------------------------------------
303
11/30/1998 207
11/02/2005 344
265
165
- --------------------------------------------------------------------------------
264
11/30/2008 285
13
8/31/1997 118
57
- --------------------------------------------------------------------------------
243
2/18/2007 173
60
42
25
- --------------------------------------------------------------------------------
353
352
12/31/2003 332
306
284
- --------------------------------------------------------------------------------
174
300
9/30/2004 172
12/31/2002 164
3/31/2008 116
- --------------------------------------------------------------------------------
6/26/2007 101
7/31/2005 228
1/31/2006 155
7/31/2005 94
351
- --------------------------------------------------------------------------------
58
276
169
299
12/26/2000 268
- --------------------------------------------------------------------------------
2/14/2000 359
342
350
245
2
- --------------------------------------------------------------------------------
Page 1
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
333 Melbourne Village Plaza 1270 North Wickham Road
218 INT-The Lodge Apartments 7600 Kirby
263 Oxford-Runaway Bay II Apartments 1480 Runaway Bay Drive
170 Beverly Hills Carmel Retirement Hotel II 8750 Burton Way
98 Herndon Centre II 460-490 Elden Street
- -----------------------------------------------------------------------------------------------------
176 Woodland Park West Retirement Hotel 21711 Ventura Boulevard
224 INT-Regency Walk Apartments 10301 Sandpiper
252 Belfonti-Greenbriar Hills Apartments 110 Falls Terrace
360 Park Place Shopping Center 3761 Nova Road
49 Orchard Place 1901 Dawson
- -----------------------------------------------------------------------------------------------------
35 Twin Creek 401 South Twin Creek Drive
18 University Place 1205 University Avenue
356 Prospect Plaza 401 Jefferson Street
236 AB - Westgate @ Fairfield 9 Law Drive
61 Nob Hill 600 North Semoran Boulevard
- -----------------------------------------------------------------------------------------------------
89 Skyview 1590 Sky Valley Drive
309 Riverside Shopping Center 2410 Riverside Drive
171 Charlotte Square 2150 US 41
88 Skyline 1570 Sky Valley Drive
324 CAP-Knollwood Apartments Knollwood Acres Road
- -----------------------------------------------------------------------------------------------------
*29 Laurel Woods 1096 Green Holly Road
*30 Morgan Manor 124 Mountain View Way
- -----------------------------------------------------------------------------------------------------
297 Rancho Niguel Medical Building 25500 Rancho Niguel Road
27 Cedar Village 217 Cedar Village Drive
240 West Palm Industrial Park 501-635 West Palm Avenue
163 7 Star Mobile Home Park 170 Koontz Lane
4 Charter Oaks 8196 Lincoln Avenue
- -----------------------------------------------------------------------------------------------------
200 AB - Sixty-Five Madison Avenue 65 Madison Avenue
275 KFS-Citrus Sunset Apartments 1280 North Citrus Avenue
67 Stratford Village 14222 Kimberly Lane
65 Colonial Arms 19 East Colonial Drive
313 Parker Plaza West 2109 West Parker Road
- -----------------------------------------------------------------------------------------------------
80 Gregory Apartments 3300 16th Street
140 SMC 360 9860 West Broad St.
201 JMA - Ashford On The Green Apts. 2700 S. Dairy Ashford
210 INT-Deer Creek Apartments 16303 Imperial Valley Drive
202 Belmont Square Apts. 2020 Jerry Murphy Road
- -----------------------------------------------------------------------------------------------------
229 Shiloh Road Apartments 1717 Shiloh Road
326 The Branson Mall 2206 West State Hwy. 76
225 Southgate Apartments & Townhouses 801A Southgate Drive
141 SMC 348 1300 Huguenot Road
336 Naugatuck Industrial 50 Rado Drive
- -----------------------------------------------------------------------------------------------------
70 Desert Palms 210 West Brown Road
334 Comfort Inn - Panama City 1023 East 23rd Street
135 SMC 353 17727 Tomball Parkway
9 Rolling Hills 280 John Knox Road
137 SMC 276 600 E. Expressway 83
- -----------------------------------------------------------------------------------------------------
244 SHL - San Antonio Station Apts. 7458 Louis Pasteur
8 Northside Villas 2711 Allen Road
148 Rivers Park Business Center - Phase II 8085 Rivers Avenue
274 KFS-Sunset Pointe Apartments 465 West Clemmens Lane
227 Seneca Village Apartments 3201 East Seneca St.
- -----------------------------------------------------------------------------------------------------
234 1212 Westheimer Apartments 1212 Westheimer
144 Tarzana Town Plaza 18607 Ventura Boulevard
68 Royal Sheridan 4200 Sheridan Street
335 Cooper Park Apartments 812 Cooper Square Circle
283 Pioneer Way Industrial Park 1035 Pioneer Way
- -----------------------------------------------------------------------------------------------------
134 SMC 359 11250 N. Central Expressway
362 Promenade Center 4440 South Maryland Parkway
121 SMC 202 1380 N. Dupont Hway
131 SMC 389 4701 Capitol Blvd
120 SMC 316 3563 Berlin Turnpike
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
333 Melbourne FL 32935 4,600,000 4,600,000 0.40 54.45
218 Houston TX 77030 4,553,500 4,539,539 0.40 54.85
263 Columbus OH 43204 4,522,000 4,516,388 0.40 55.25
170 Beverly Hills CA 90048 4,500,000 4,488,838 0.39 55.64
98 Herndon VA 22070 4,433,000 4,404,270 0.39 56.03
- -----------------------------------------------------------------------------------------------------
176 Woodland Hills CA 91364 4,375,000 4,371,560 0.38 56.41
224 Houston TX 77096 4,360,000 4,346,632 0.38 56.79
252 Watertown CT 06779 4,350,000 4,334,408 0.38 57.17
360 Port Orange FL 32119 4,300,000 4,300,000 0.38 57.55
49 Grand Rapids MI 48116 4,300,000 4,291,528 0.38 57.93
- -----------------------------------------------------------------------------------------------------
35 Kileen TX 76543 4,300,000 4,288,323 0.38 58.30
18 Columbia MO 65201 4,200,000 4,182,329 0.37 58.67
356 Frederick MD 21701 4,155,000 4,151,722 0.36 59.04
236 Fairfield NJ 07004 4,163,000 4,142,239 0.36 59.40
61 Winter Park FL 32792 4,043,000 4,036,557 0.35 59.76
- -----------------------------------------------------------------------------------------------------
89 Reno NV 89503 4,027,000 4,024,768 0.35 60.11
309 Austin TX 78741 4,000,000 4,000,000 0.35 60.46
171 Port Charlotte FL 33948 3,940,000 3,934,683 0.35 60.81
88 Reno NV 89503 3,893,000 3,890,842 0.34 61.15
324 Storrs CT 06268 3,828,000 3,824,423 0.34 61.48
- -----------------------------------------------------------------------------------------------------
*29 Clark Summit PA 18411 1,488,000 1,481,536 0.13
*30 Scranton PA 18508 2,325,000 2,314,900 0.20
--------------------------------------
3,813,000 3,796,437 0.33 61.82
- -----------------------------------------------------------------------------------------------------
297 Laguna Niguel CA 92677 3,739,000 3,739,000 0.33 62.15
27 York PA 17402 3,750,000 3,737,351 0.33 62.47
240 Orange CA 92666 3,735,000 3,721,788 0.33 62.80
163 Carson City NV 89701 3,700,000 3,693,906 0.32 63.13
4 Evansville IN 47715 3,700,000 3,685,530 0.32 63.45
- -----------------------------------------------------------------------------------------------------
200 Morristown NJ 07960 3,691,000 3,672,470 0.32 63.77
275 Vista CA 92083 3,660,000 3,655,577 0.32 64.09
67 Houston TX 77079 3,654,000 3,654,000 0.32 64.41
65 New Paltz NY 12561 3,525,000 3,518,085 0.31 64.72
313 Plano TX 75080 3,500,000 3,500,000 0.31 65.03
- -----------------------------------------------------------------------------------------------------
80 Washington DC 20010 3,500,000 3,497,649 0.31 65.34
140 Glen Allen VA 23060 3,447,000 3,447,000 0.30 65.64
201 Houston TX 77082 3,450,000 3,444,410 0.30 65.94
210 Houston TX 77060 3,326,100 3,315,902 0.29 66.23
202 Pueblo CO 81001 3,320,300 3,313,276 0.29 66.53
- -----------------------------------------------------------------------------------------------------
229 Tyler TX 75703 3,320,000 3,310,526 0.29 66.82
326 Branson MO 65616 3,300,000 3,300,000 0.29 67.11
225 State College PA 16801 3,300,000 3,294,597 0.29 67.40
141 Midlothian VA 23113 3,220,000 3,220,000 0.28 67.68
336 Naugatuck CT 06770 3,211,000 3,211,000 0.28 67.96
- -----------------------------------------------------------------------------------------------------
70 Mesa AZ 85201 3,175,000 3,169,758 0.28 68.24
334 Panama City FL 32405 3,161,000 3,161,000 0.28 68.52
135 Houston TX 77064 3,110,000 3,110,000 0.27 68.79
9 Tallahassee FL 32303 3,108,000 3,086,899 0.27 69.06
137 McAllen TX 78503 3,073,000 3,073,000 0.27 69.33
- -----------------------------------------------------------------------------------------------------
244 San Antonio TX 78229 3,030,000 3,024,633 0.27 69.60
8 Tallahassee FL 32312 3,036,000 3,019,787 0.27 69.86
148 North Charleston SC 29406 3,000,000 3,000,000 0.26 70.13
274 Fallbrook CA 92028 3,000,000 2,996,375 0.26 70.39
227 Tucson AZ 85716 3,000,000 2,995,139 0.26 70.65
- -----------------------------------------------------------------------------------------------------
234 Austin TX 78752 2,990,000 2,982,058 0.26 70.91
144 Tarzana CA 91356 2,973,000 2,973,000 0.26 71.18
68 Hollywood FL 33021 2,950,000 2,944,042 0.26 71.43
335 Arlington TX 76013 2,920,000 2,918,470 0.26 71.69
283 El Cajon CA 92020 2,900,000 2,894,790 0.25 71.94
- -----------------------------------------------------------------------------------------------------
134 Dallas TX 75243 2,885,000 2,885,000 0.25 72.20
362 Las Vegas NV 89119 2,870,000 2,870,000 0.25 72.45
121 Dover DE 19901 2,848,000 2,848,000 0.25 72.70
131 Raleigh NC 27604 2,848,000 2,848,000 0.25 72.95
120 Newington CT 06111 2,810,000 2,810,000 0.25 73.20
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
333 8.7700 120 120 324 324 10/9/96 11/1/06 3,938,259
218 8.5100 60 55 360 355 5/8/96 6/1/01 4,352,695
263 8.4000 120 118 360 358 8/20/96 9/1/06 4,005,266
170 9.5000 120 117 300 297 7/3/96 8/1/06 3,774,558
98 8.9100 120 113 300 293 3/29/96 4/1/06 3,669,907
- ----------------------------------------------------------------------------------------------------------------------
176 9.7500 120 119 300 299 9/19/96 10/1/06 3,689,268
224 8.5100 60 55 360 355 5/8/96 6/1/01 4,167,728
252 9.0400 120 116 300 296 6/28/96 7/1/06 3,611,870
360 8.6700 120 120 324 324 10/9/96 11/1/06 3,673,575
49 9.5500 300 296 360 356 6/28/96 7/1/21 1,749,452
- ----------------------------------------------------------------------------------------------------------------------
35 9.1000 120 115 360 355 5/24/96 6/1/06 3,857,989
18 9.0625 120 114 330 324 4/26/96 5/1/06 3,645,823
356 9.7300 84 83 300 299 9/20/96 10/1/03 3,768,950
236 9.5400 120 114 300 294 4/30/96 5/1/06 3,494,890
61 9.1700 84 81 360 357 7/9/96 8/1/03 3,797,252
- ----------------------------------------------------------------------------------------------------------------------
89 8.9300 360 359 360 359 9/25/96 10/1/26 NAP
309 9.1700 180 180 180 180 10/9/96 11/1/11 NAP
171 9.1875 173 171 330 328 8/22/96 2/1/11 3,001,552
88 8.9300 360 359 360 359 9/25/96 10/1/26 NAP
324 8.7200 84 83 300 299 9/30/96 10/1/03 3,422,474
- ----------------------------------------------------------------------------------------------------------------------
*29 9.2500 120 115 300 295 5/20/96 6/1/06 1,241,326
*30 9.2500 120 115 300 295 5/20/96 6/1/06 1,939,572
---------
3,180,898
- ----------------------------------------------------------------------------------------------------------------------
297 9.1100 120 120 330 330 10/8/96 11/1/06 3,248,722
27 9.2500 120 115 330 325 5/20/96 6/1/06 3,267,274
240 9.1200 120 116 300 296 6/4/96 7/1/06 3,106,819
163 9.5000 120 118 300 298 8/28/96 9/1/06 3,103,525
4 9.0000 120 113 360 353 3/15/96 4/1/06 3,313,818
- ----------------------------------------------------------------------------------------------------------------------
200 9.5000 120 114 300 294 4/30/96 5/1/06 3,095,976
275 8.5300 84 82 360 358 8/26/96 9/1/03 3,411,934
67 9.0500 84 84 360 360 10/24/96 11/1/03 3,427,280
65 9.3750 120 117 330 327 7/15/96 8/1/06 3,078,683
313 8.9900 120 120 300 300 10/2/96 11/1/06 2,902,809
- ----------------------------------------------------------------------------------------------------------------------
80 9.1900 120 119 330 329 9/3/96 10/1/06 3,045,873
140 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
201 9.0900 120 117 360 357 7/1/96 8/1/06 3,094,821
210 8.5100 60 55 360 355 5/8/96 6/1/01 3,179,422
202 9.2100 120 116 360 356 6/11/96 7/1/06 2,984,693
- ----------------------------------------------------------------------------------------------------------------------
229 8.8600 60 55 360 355 5/9/96 6/1/01 3,182,577
326 9.1400 120 120 300 300 10/2/96 11/1/06 2,746,211
225 9.0400 120 117 360 357 7/3/96 8/1/06 2,957,661
141 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
336 9.2200 120 120 300 300 10/9/96 11/1/06 2,676,915
- ----------------------------------------------------------------------------------------------------------------------
70 9.0000 300 297 360 357 7/31/96 8/1/21 1,246,869
334 10.3400 240 240 240 240 10/4/96 11/1/16 NAP
135 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
9 8.6250 84 77 300 293 3/29/96 4/1/03 2,774,722
137 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
244 8.6600 48 45 360 357 7/1/96 8/1/00 2,931,045
8 8.6250 84 77 330 323 3/29/96 4/1/03 2,779,925
148 9.0625 120 120 180 180 10/4/96 11/1/06 1,488,349
274 8.5300 84 82 360 358 8/26/96 9/1/03 2,796,667
227 9.0900 120 117 360 357 7/15/96 8/1/06 2,691,149
- ----------------------------------------------------------------------------------------------------------------------
234 9.0900 120 117 300 297 7/16/96 8/1/06 2,485,443
144 9.8125 120 120 330 330 10/8/96 11/1/06 2,617,914
68 9.2200 120 117 330 327 7/29/96 8/1/06 2,568,748
335 9.2000 240 239 360 359 9/18/96 10/1/16 1,881,460
283 8.9800 120 118 300 298 8/30/96 9/1/06 2,404,638
- ----------------------------------------------------------------------------------------------------------------------
134 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
362 9.0000 84 84 330 330 10/9/96 11/1/03 2,641,077
121 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
131 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
120 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- -----------------------
333 Anchored Retail
218 Multifamily
263 Multifamily
170 Congregate Care
98 Unanchored Retail
- -----------------------
176 Congregate Care
224 Multifamily
252 Multifamily
360 Anchored Retail
49 Sec. 42
- -----------------------
35 Multifamily
18 Multifamily
356 Unanchored Retail
236 Office
61 Multifamily
- -----------------------
89 Sec. 42
309 Anchored Retail
171 Anchored Retail
88 Sec. 42
324 Multifamily
- -----------------------
*29 Multifamily
*30 Multifamily
- -----------------------
297 Office
27 Multifamily
240 Industrial
163 Mobile Home Park
4 Multifamily
- -----------------------
200 Office
275 Multifamily
67 Multifamily
65 Multifamily
313 Anchored Retail
- -----------------------
80 Multifamily
140 Anchored Retail
201 Multifamily
210 Multifamily
202 Multifamily
- -----------------------
229 Multifamily
326 Anchored Retail
225 Multifamily
141 Unanchored Retail
336 Industrial
- -----------------------
70 Sec. 42
334 Hospitality
135 Anchored Retail
9 Multifamily
137 Anchored Retail
- -----------------------
244 Multifamily
8 Multifamily
148 Office
274 Multifamily
227 Multifamily
- -----------------------
234 Multifamily
144 Unanchored Retail
68 Multifamily
335 Multifamily
283 Industrial
- -----------------------
134 Anchored Retail
362 Unanchored Retail
121 Unanchored Retail
131 Anchored Retail
120 Anchored Retail
- -----------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
333 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
218 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
263 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
170 4 yr lock, >1% or YM through yr 9, open last 12 mos
98 5 yr lock, >1% or YM through yr 8, open last 2 yrs.
- ----------------------------------------------------------------------------------------------------------------------------
176 4 yr lock, >1% or YM through yr 9, open last 12 mos
224 3 yr lock >1% or YM through yr 4 3/4, open last 3 months
252 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
360 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
49 15 yr lock, open last 10 years
- ----------------------------------------------------------------------------------------------------------------------------
35 2 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
18 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
356 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
236 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
61 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
89 5 yr lock, >1% or YM through yr 15, open last 15 years
309 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
171 5 yr lock, >1% or YM through yr 10, 4%, 3%, 2%-yr 13 and 5 mos,open last 12 mos
88 5 yr lock, >1% or YM through yr 15, open last 15 years
324 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
*29 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
*30 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
297 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
27 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
240 5 yr lock, yearly @ 5%, 4, 3, 2, 9mos @ 1%, open last 3 months
163 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
4 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
200 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
275 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
67 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
65 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
313 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
80 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
140 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
201 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
210 3 yr lock, > 1% or YM through yr 4 3/4, open last 3 months
202 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
229 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @1%, open last 3 months
326 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
225 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
141 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
336 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
70 15 yr lock, open last 10 years
334 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
135 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
9 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
137 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
244 2.5 yr lock, >1% or YM through yr 3 3/4, open last 3 months
8 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
148 4 yr lock, >1% or YM through yr 9, open last 12 mos
274 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
227 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
234 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
144 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
68 3 yr lock, >1% or YM through yr 9, open last 12 mos
335 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
283 4 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
134 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
362 4.25 yr lock, >1% or Ym through yr 6 1/2, open last 6 months
121 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
131 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
120 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
333 37,126 904,140 268,554 608,109 1.36 6,150,000 1996 74.80
218 35,045 1,196,385 691,738 532,177 1.27 6,200,000 1996 73.22
263 34,450 887,254 363,082 524,172 1.27 5,880,000 1996 76.81
170 39,316 1,915,200 1,220,260 667,190 1.41 6,390,000 1996 70.25
98 36,929 882,790 259,259 583,048 1.32 6,500,000 1996 67.76
- ---------------------------------------------------------------------------------------------------------------------------------
176 38,987 1,697,400 1,007,870 652,630 1.39 10,000,000 1996 43.72
224 33,556 1,472,099 942,083 530,016 1.32 5,450,000 1996 79.75
252 36,624 1,220,311 628,120 592,190 1.35 5,750,000 1996 75.38
360 34,407 811,680 264,869 516,319 1.25 5,845,000 1996 73.57
49 36,314 841,782 299,165 518,467 1.19 5,280,000 1996 81.28
- ---------------------------------------------------------------------------------------------------------------------------------
35 34,909 1,056,613 467,854 553,879 1.32 6,000,000 1995 71.47
18 34,609 1,148,712 526,678 571,634 1.38 5,900,000 1995 70.89
356 36,969 981,301 300,374 621,925 1.40 7,850,000 1996 52.89
236 36,488 1,044,079 428,589 547,534 1.25 5,900,000 1996 70.21
61 33,027 1,104,479 541,814 520,233 1.31 6,007,000 1996 67.20
- ---------------------------------------------------------------------------------------------------------------------------------
89 32,200 729,926 251,490 463,436 1.20 4,950,000 1996 81.31
309 40,976 1,181,445 407,945 735,575 1.50 7,400,000 1996 54.05
171 32,814 746,318 203,887 502,607 1.28 5,400,000 1996 72.86
88 31,128 707,541 251,495 441,046 1.18 4,700,000 1996 82.78
324 31,394 759,017 288,069 470,948 1.25 5,600,000 1996 68.29
- ---------------------------------------------------------------------------------------------------------------------------------
*29 32,654 528,756 290,744 216,761 1.43 2,000,000 1996 74.44
*30 748,396 369,741 342,047 3,100,000 1996
1,277,152 660,485 558,808 5,100,000
- ---------------------------------------------------------------------------------------------------------------------------------
297 30,935 730,011 186,525 464,026 1.25 5,975,000 1996 62.58
27 31,397 1,134,278 594,352 484,176 1.29 5,000,000 1996 74.75
240 31,651 719,196 173,063 503,528 1.33 4,980,000 1995 74.73
163 32,327 662,436 156,874 499,982 1.29 5,230,000 1996 70.63
4 29,771 973,975 458,815 476,760 1.33 5,800,000 1995 63.54
- ---------------------------------------------------------------------------------------------------------------------------------
200 32,248 1,192,332 630,622 483,723 1.25 5,950,000 1996 61.72
275 28,220 728,969 291,114 437,855 1.29 4,800,000 1996 76.16
67 29,532 1,053,550 578,355 443,469 1.25 5,175,000 1996 70.61
65 29,826 1,497,663 952,683 489,610 1.37 5,700,000 1996 61.72
313 29,348 714,879 219,291 441,828 1.25 5,450,000 1996 64.22
- ---------------------------------------------------------------------------------------------------------------------------------
80 29,156 1,032,453 521,391 474,162 1.36 4,800,000 1996 72.87
140 35,528 569,412 8,991 534,387 1.25 6,200,000 1996 55.60
201 27,983 1,041,110 618,304 422,806 1.26 5,000,000 1996 68.89
210 25,598 1,118,707 750,084 368,622 1.20 4,200,000 1996 78.95
202 27,219 778,789 386,827 391,962 1.20 4,500,000 1996 73.63
- ---------------------------------------------------------------------------------------------------------------------------------
229 26,380 768,188 381,102 387,086 1.22 4,150,000 1996 79.77
326 28,011 795,788 237,894 527,275 1.57 4,650,000 1996 70.97
225 26,648 1,005,788 613,285 392,503 1.23 4,300,000 1996 76.62
141 33,188 532,226 8,404 498,806 1.25 5,950,000 1996 54.12
336 27,432 629,985 218,489 411,496 1.25 4,300,000 1996 74.67
- ---------------------------------------------------------------------------------------------------------------------------------
70 25,547 626,291 242,585 366,906 1.20 4,700,000 1996 67.44
334 31,220 1,464,934 954,068 510,867 1.36 4,550,000 1996 69.47
135 32,054 514,351 8,121 481,384 1.25 5,750,000 1996 54.09
9 25,289 760,093 346,117 387,176 1.28 4,000,000 1996 77.17
137 31,673 508,669 8,032 475,112 1.25 5,750,000 1996 53.44
- ---------------------------------------------------------------------------------------------------------------------------------
244 23,643 824,116 477,117 346,999 1.22 4,050,000 1996 74.68
8 24,088 795,144 389,588 360,597 1.25 4,350,000 1996 69.42
148 30,540 598,844 98,125 494,875 1.35 4,300,000 1996 69.77
274 23,131 567,545 227,162 340,383 1.23 3,800,000 1996 78.85
227 24,333 1,039,663 574,514 465,149 1.59 5,200,000 1996 57.60
- ---------------------------------------------------------------------------------------------------------------------------------
234 25,277 1,079,655 715,956 363,699 1.20 4,200,000 1996 71.00
144 26,086 696,185 249,309 406,936 1.30 4,140,000 1996 71.81
68 24,637 768,725 356,302 392,423 1.33 4,050,000 1996 72.69
335 23,916 986,676 622,885 363,791 1.27 4,200,000 1996 69.49
283 24,297 523,677 113,696 387,048 1.33 4,300,000 1996 67.32
- ---------------------------------------------------------------------------------------------------------------------------------
134 29,735 476,885 7,530 446,875 1.25 5,100,000 1996 56.57
362 23,523 631,935 222,400 387,258 1.37 4,100,000 1996 70.00
121 29,354 470,491 7,429 441,490 1.25 5,150,000 1996 55.30
131 29,354 470,623 7,431 441,326 1.25 5,000,000 1996 56.96
120 28,962 464,389 7,332 435,380 1.25 5,650,000 1996 49.73
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
333 64.04 1988 128,318/sqft 35.85/sqft 85.82 13,000.00 0.15 per sq. ft.
218 70.20 1977 240/units 18,914.75/units 90.83 0.00 225 per unit
263 68.12 1986 132/units 34,215.06/units 92.42 0.00 284 per unit
170 59.07 1975 111/units 40,439.98/ unit 92.79 3,843.75 250 per bed
98 56.46 1978 50,708/sqft 86.86/sqft 98.52 2,875.00 0.16 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
176 36.89 1978 164/beds 26,655.85/ bed 100.00 39,525.00 225 per bed
224 76.47 1979 320/units 13,583.23/units 96.30 0.00 225 per unit
252 62.82 1973 182/units 23,815.43/units 96.70 41,000.00 250 per unit
360 62.85 1984 87,386/sqft 49.21/sqft 97.17 13,414.00 0.20 per sq. ft.
49 33.13 1995 138/units 31,098.03/ unit 97.83 61,302.00 175 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
35 64.30 1984 160/units 26,802.02/ unit 90.63 18,250.00 218 per unit
18 61.79 1966 168/units 24,894.81/ unit 96.00 19,375.00 300 per unit
356 48.01 1962 109,651/sqft 37.86/sqft 93.82 27,156.25 0.15 per sq. ft.
236 59.24 1989 65,949/sqft 62.81/sqft 100.00 17,500.00 0.15 per sq. ft.
61 63.21 1969 192/units 21,023.73/ unit 97.26 318,750.00 221 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
89 NAP 1994 100/units 40,247.68/ unit 99.00 0.00 150 per unit
309 NAP 1986 101,408/sqft 39.44/sqft 89.49 33,465.00 0.20 per sq. ft.
171 55.58 1980 96,188/sqft 40.91/sqft 98.30 174,125.00 0.22 per sq. ft.
88 NAP 1994 100/units 38,908.42/ unit 94.50 0.00 150 per unit
324 61.12 1964 136/units 28,120.76/units 97.79 0.00 280 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
*29 62.37 1972 85/units 17,429.84/ unit 97.61 161,397.50 250 per unit
*30 1972 128/units 18,085.16/ unit 94.87 108,000.00 286 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
297 54.37 1990 29,270/sqft 127.74/sqft 83.38 0.00 0.15 per sq. ft.
27 65.35 1970 223/units 16,759.42/ unit 87.87 62,531.25 250 per unit
240 62.39 1923 194,274/sqft 19.16/sqft 100.00 15,375.00 0.15 per sq. ft.
163 59.34 1973 180/pads 20,555.56/ pad 100.00 2,812.50 31 per pad
4 57.13 1984 192/units 19,195.47/ unit 95.00 1,620.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
200 52.03 1975 80,194/sqft 45.79/sqft 82.50 11,587.50 0.26 per sq. ft.
275 71.08 1985 97/units 37,686.36/units 100.00 50,000.00 225 per unit
67 66.23 1974 135/units 27,066.67/ unit 97.04 230,477.50 235 per unit
65 54.01 1970 226/units 15,566.75/ unit 92.04 215,000.00 245 per unit
313 53.26 1979 99,588/sqft 35.14/sqft 97.28 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
80 63.46 1965 164/units 21,327.13/ unit 89.50 21,531.25 225 per unit
140 NAP 1993 60,200/sqft 57.26/sqft 100.00 2,000.00 0.10 per sq. ft.
201 61.90 1982 180/units 19,135.61/units 93.89 22,643.75 250 per unit
210 75.70 1978 304/units 10,907.57/units 90.79 0.00 225 per unit
202 66.33 1973 138/units 24,009.25/units 97.62 23,343.75 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
229 76.69 1979 160/units 20,690.79/units 96.25 0.00 225 per unit
326 59.06 1989 46,524/sqft 70.93/sqft 100.00 0.00 0.15 per sq. ft.
225 68.78 1968 151/units 21,818.52/units 99.34 58,500.00 275 per unit
141 NAP 1993 59,195/sqft 54.40/sqft 100.00 1,625.00 0.10 per sq. ft.
336 62.25 1988 104,613/sqft 30.69/sqft 100.00 23,875.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
70 26.53 1995 96/units 33,018.31/ unit 97.60 0.00 175 per unit
334 NAP 1987 105/rooms 30,104.76/room NAP 30,031.25 4% of gross rev.
135 NAP 1993 60,075/sqft 51.77/sqft 100.00 0.00 0.10 per sq. ft.
9 69.37 1972 134/units 23,036.56/ unit 93.90 56,250.00 200 per unit
137 NAP 1993 63,500/sqft 48.39/sqft 100.00 0.00 0.10 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
244 72.37 1978 172/units 17,585.08/units 91.28 36,437.50 250 per unit
8 63.91 1974 160/units 18,873.67/ unit 93.00 10,000.00 281 per unit
148 34.61 1984 58,444/sqft 51.33/sqft 100.00 26,823.00 0.10 per sq. ft.
274 73.60 1988 76/units 39,425.98/units 100.00 0.00 200 per unit
227 51.75 1973 176/units 17,017.83/units 89.77 262,071.25 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
234 59.18 1968 199/units 14,985.22/units 98.99 66,762.50 309 per unit
144 63.23 1986 37,208/sqft 79.90/sqft 100.00 24,750.00 0.11 per sq. ft.
68 63.43 1974 100/units 29,440.42/ unit 100.00 0.00 200 per unit
335 44.80 1979 180/units 16,213.72/units 95.55 31,528.75 269 per unit
283 55.92 1980 95,427/sqft 30.34/sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
134 NAP 1994 53,316/sqft 54.11/sqft 100.00 1,625.00 0.10 per sq. ft.
362 64.42 1978 39,166/sqft 73.28/sqft 97.06 0.00 0.15 per sq. ft.
121 NAP 1992 50,000/sqft 56.96/sqft 100.00 1,875.00 0.10 per sq. ft.
131 NAP 1994 51,250/sqft 55.57/sqft 100.00 2,750.00 0.10 per sq. ft.
120 NAP 1994 51,000/sqft 55.10/sqft 100.00 3,875.00 0.10 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Largest Retail Tenant
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
333 0.1350 Gooding's supermkt (Guaranteed by A&P) 57,500
218 0.1150
263 0.1150
170 0.1150
98 0.1150 Total Crafts 24,989
- ------------------------------------------------------------------------------------------------------------------------------------
176 0.1150
224 0.1150
252 0.1150
360 0.1350 Beall's Dept Store 41,077
49 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
35 0.1500
18 0.1500
356 0.1150 Hub Furniture 27,392
236 0.1350 Duro-Test Corporation 34,639
61 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
89 0.1150
309 0.1350 Presidio Theater ("Shadow"-HEB Supermarket) 30,277
171 0.1150 Publix 44,024
88 0.1150
324 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
*29 0.1150
*30 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
297 0.1350 South Coast Medical 8,784
27 0.1150
240 0.1350 St. Joseph Hospital 37,156
163 0.1150
4 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
200 0.1350 United Jersey Bank 8,944
275 0.1350
67 0.2000
65 0.1500
313 0.1150 Burrurk/Ross 35,320
- ------------------------------------------------------------------------------------------------------------------------------------
80 0.1150
140 0.1150 Service Merchandise Inc. 60,200
201 0.1350
210 0.1150
202 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
229 0.1150
326 0.1150 Craft Country ("Shadow"-Walmart; Consumers Food/Drug) 8,563
225 0.1150
141 0.1150 Service Merchandise Inc. 59,195
336 0.1150 Fabricated Metal Prod. 62,963
- ------------------------------------------------------------------------------------------------------------------------------------
70 0.1150
334 0.1150
135 0.1150 Service Merchandise Inc. 60,075
9 0.1150
137 0.1150 Service Merchandise Inc. ("Shadow"-Office Max; Petsmart) 63,500
- ------------------------------------------------------------------------------------------------------------------------------------
244 0.1150
8 0.1150
148 0.1150 Medaphis, Inc. 58,444
274 0.1350
227 0.1350
- ------------------------------------------------------------------------------------------------------------------------------------
234 0.1150
144 0.1150 Hypnosis Motivation 7,216
68 0.1150
335 0.1150
283 0.1350 Auto Parts Club 42,736
- ------------------------------------------------------------------------------------------------------------------------------------
134 0.1150 Service Merchandise Inc. ("Shadow"-Albertson's) 53,316
362 0.1350 Kinko-s Graphics 4,782
121 0.1150 Service Merchandise Inc. 50,000
131 0.1150 Service Merchandise Inc. ("Shadow"-Target; Lowes) 51,250
120 0.1150 Service Merchandise Inc. 51,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- ----------------------------------------------------------------------------
12/18/2008 333
218
263
170
12/31/2005 98
- ----------------------------------------------------------------------------
176
224
252
12/31/2004 360
49
- ----------------------------------------------------------------------------
35
18
1/31/1998 356
6/30/1999 236
61
- ----------------------------------------------------------------------------
89
12/31/2001 309
1/31/2011 171
88
324
- ----------------------------------------------------------------------------
*29
*30
- ----------------------------------------------------------------------------
10/31/2000 297
27
4/30/2002 240
163
4
- ----------------------------------------------------------------------------
11/01/2005 200
275
67
65
9/27/2004 313
- ----------------------------------------------------------------------------
80
11/30/2011 140
201
210
202
- ----------------------------------------------------------------------------
229
10/31/2000 326
225
11/30/2011 141
8/30/2014 336
- ----------------------------------------------------------------------------
70
334
11/30/2011 135
9
11/30/2011 137
- ----------------------------------------------------------------------------
244
8
6/30/2011 148
274
227
- ----------------------------------------------------------------------------
234
2/17/1999 144
68
335
4/30/2001 283
- ----------------------------------------------------------------------------
11/30/2011 134
12/31/1999 362
11/30/2011 121
11/30/2011 131
11/30/2011 120
- ----------------------------------------------------------------------------
Page 2
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
122 SMC 452 260 Jimmy Ann Drive
81 Sutton Place 6838 Everhart Road
125 SMC 343 123 South Kingston Drive
24 Courtyard at Glenview (Manchester Arms) 2035 Memorial Drive
127 SMC 441 6502 Grape Road
- -----------------------------------------------------------------------------------------------------
133 SMC 259 9333 Kingston Pike
126 SMC 309 5501 Coldwater Road
130 SMC 532 7368 Nankin Road
312 Parkridge Village Apartments 5252 Orange Avenue
21 Hillcrest 105 West Avenue & Hillcrest Drive
- -----------------------------------------------------------------------------------------------------
158 Palmdale Marketplace 4500 Avenue S
139 SMC 277 6161 Northwest Loop 410
331 Holiday Inn Express 4100 Salida Blvd
156 Comfort Inn - Mt. Airy 2136 Rockford Street
1 Park Victoria 2312 Victoria Drive
- -----------------------------------------------------------------------------------------------------
106 Rhodes Furniture Store 4363 Northeast Expressway
136 SMC 042 2665 HWY 6 South
330 911 North Buffalo Drive 911 North Buffalo Drive
226 Scripps Mesa Apartments 9961 Erma Road
149 Normandy Village 7764 Normandy Boulevard
- -----------------------------------------------------------------------------------------------------
17 Park View 3101 East Artesia Boulevard
168 Comfort Inn - Simpsonville 600 Fairview Rd. / I-385, Exit 27
316 Howard Johnson - Delk Road 2375 Delk Road
295 Westside Apartments 2647 Broadway
45 Palm Cove 950 W. Main St.
- -----------------------------------------------------------------------------------------------------
251 Glenbrook Townhomes 600 West Pioneer Parkway
258 Berkeley Heights Grand Union 396 Springfield Avenue
358 Casa Claire Apartments 1125 Hillcrest Street
223 Ralston Plaza Ward Rd. & 64th Ave.
232 EW - Sorrento Creek Industrial Park 10350-60 Sorrento Valley Road
- -----------------------------------------------------------------------------------------------------
16 Turtle Place 455 Eastdale Road South
262 22601 Pacific Coast Highway Ctr 22601 Pacific Coast Highway
273 KFS-Sunset Terrace Apartments 1456 Alturas Street
12 Wellington Place 10803 Green Creek Drive
43 Jennifer Green 741 Park Avenue
- -----------------------------------------------------------------------------------------------------
281 Cedar Grove Mobile Home Park 1A Whippoorwill Way
132 SMC 190 5537 N.W. Expressway
253 Wilshire Villa Apartments 4245 5th Avenue South
209 Crosby Creek 1300 E. Crosby Road
66 Lakeview Commons 15205-15235 18th Avenue North
- -----------------------------------------------------------------------------------------------------
339 Twin Parks Estates 800 West Harris Road
51 Candleridge Park 1601 Wooded Pine
296 Days Inn South 2850 South Circle Drive
128 SMC 214 1636 Martin Luther King Blvd.
138 SMC 440 1300 E. Beltline Road
- -----------------------------------------------------------------------------------------------------
113 Park Forest Office Building 3530 Forest Lane
50 Country Wood 791 Bateswood Drive
292 Multiflex VI 2540 Alamo, S.E. & 2500 Yale Blvd. S.E
23 Parkwood Lofts II 4231 Travis Street
349 Comfort Inn Sugar Creek 5111 North Service Road
- -----------------------------------------------------------------------------------------------------
293 JF Commons West 107 The Commons
269 Cordele Corners Shopping Center 1411 East 16th Avenue
75 Clearlake Village 1239 Bay Area Boulevard
270 Vista Gardens Apartments 555 East Fruitvale
53 Art Museum 1705 Art Museum Drive
- -----------------------------------------------------------------------------------------------------
47 Merrifield 1027-A Adams Avenue
142 Sigo Shopping Center 205 East Oneida Street
259 College Park Apartments S.R. 696 (North Earl Street)
260 Homestead Lodge 13300 York Center Drive
249 Marigold I Apartments 2303 Goliad Road
- -----------------------------------------------------------------------------------------------------
59 Ridgeview 350 Six Flags Drive
22 Fountain Place 920 S. Washington Ave
346 Chapel Creek Apartments 3410 Hilalgo
357 Glenwood Village S.C. 12611 Montgomery Boulevard
175 Village Shopping Center 19609 NW 57th Ave.
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
122 Daytona Beach FL 32114 2,810,000 2,810,000 0.25 73.44
81 Corpus Christi TX 78413 2,800,000 2,798,096 0.25 73.69
125 Bloomington IN 47408 2,773,000 2,773,000 0.24 73.93
24 Atlanta GA 30317 2,750,000 2,738,054 0.24 74.17
127 Mishawaka IN 46545 2,735,000 2,735,000 0.24 74.41
- --------------------------------------------------------------------------------------------------
133 Knoxville TN 37922 2,735,000 2,735,000 0.24 74.65
126 Fort Wayne IN 46825 2,698,000 2,698,000 0.24 74.89
130 Westland MI 48185 2,660,000 2,660,000 0.23 75.13
312 San Diego CA 92115 2,650,000 2,648,510 0.23 75.36
21 Woodstown NJ 08098 2,650,000 2,640,636 0.23 75.59
- --------------------------------------------------------------------------------------------------
158 Palmdale CA 93552 2,642,000 2,639,643 0.23 75.82
139 San Antonio TX 78238 2,623,000 2,623,000 0.23 76.05
331 Modesto CA 95358 2,600,000 2,600,000 0.23 76.28
156 Mount Airy NC 27030 2,600,000 2,596,631 0.23 76.51
1 Kansas City KS 66106 2,607,000 2,588,494 0.23 76.74
- --------------------------------------------------------------------------------------------------
106 Doraville GA 30340 2,600,000 2,586,395 0.23 76.96
136 Houston TX 77082 2,585,000 2,585,000 0.23 77.19
330 Las Vegas NV 89128 2,575,000 2,575,000 0.23 77.42
226 San Diego CA 92131 2,573,700 2,565,937 0.23 77.64
149 Jacksonville FL 32221 2,550,000 2,550,000 0.22 77.87
- --------------------------------------------------------------------------------------------------
17 Long Beach CA 90805 2,531,000 2,517,084 0.22 78.09
168 Simpsonville SC 29680 2,500,000 2,500,000 0.22 78.31
316 Marietta GA 30067 2,500,000 2,500,000 0.22 78.53
295 New York NY 10025 2,500,000 2,500,000 0.22 78.75
45 Mesa AZ 85201 2,500,000 2,494,476 0.22 78.97
- --------------------------------------------------------------------------------------------------
251 Arlington TX 76010 2,500,000 2,493,360 0.22 79.18
258 Berkeley Heights NJ 07922 2,500,000 2,492,720 0.22 79.40
358 Mesquite TX 75149 2,450,000 2,450,000 0.22 79.62
223 Arvada CO 80002 2,461,100 2,449,309 0.22 79.83
232 San Diego CA 92121 2,450,000 2,445,213 0.21 80.05
- --------------------------------------------------------------------------------------------------
16 Montgomery AL 36117 2,450,000 2,440,917 0.21 80.26
262 Malibu CA 90265 2,450,000 2,439,960 0.21 80.48
273 Fallbrook CA 92028 2,442,400 2,439,449 0.21 80.69
12 Houston TX 77070 2,451,000 2,433,672 0.21 80.91
43 Orange Park FL 32073 2,434,000 2,426,780 0.21 81.12
- --------------------------------------------------------------------------------------------------
281 Mantua NJ 08051 2,430,000 2,425,620 0.21 81.33
132 Warr Acres OK 73132 2,398,000 2,398,000 0.21 81.54
253 Lake Charles LA 70605 2,400,000 2,397,569 0.21 81.75
209 Carrollton TX 75006 2,400,000 2,388,936 0.21 81.96
66 Plymouth MN 55447 2,379,000 2,375,564 0.21 82.17
- --------------------------------------------------------------------------------------------------
339 Arlington TX 76017 2,320,000 2,318,071 0.20 82.38
51 Houston TX 77073 2,309,000 2,303,910 0.20 82.58
296 Colorado Springs CO 80906 2,300,000 2,300,000 0.20 82.78
128 Houma LA 70360 2,286,000 2,286,000 0.20 82.98
138 Richardson TX 75081 2,286,000 2,286,000 0.20 83.18
- --------------------------------------------------------------------------------------------------
113 Dallas TX 75234 2,255,000 2,249,637 0.20 83.38
50 Houston TX 77079 2,242,000 2,235,701 0.20 83.58
292 Albuquerque NM 87106 2,215,000 2,215,000 0.19 83.77
23 Dallas TX 75205 2,221,000 2,214,931 0.19 83.96
349 Charlotte NC 28269 2,200,000 2,200,000 0.19 84.16
- --------------------------------------------------------------------------------------------------
293 Ithaca NY 14850 2,200,000 2,198,140 0.19 84.35
269 Cordele GA 31015 2,175,000 2,171,066 0.19 84.54
75 Houston TX 77062 2,167,000 2,163,900 0.19 84.73
270 Hemet CA 92543 2,150,000 2,147,677 0.19 84.92
53 Jacksonville FL 32207 2,140,000 2,135,239 0.19 85.11
- --------------------------------------------------------------------------------------------------
47 Salisbury MD 21801 2,137,000 2,129,289 0.19 85.30
142 Oswego NY 13126 2,100,000 2,098,632 0.18 85.48
259 Shippensburg PA 17257 2,100,000 2,096,271 0.18 85.66
260 Charlotte NC 28273 2,100,000 2,094,257 0.18 85.85
249 San Antonio TX 78223 2,095,200 2,087,752 0.18 86.03
- --------------------------------------------------------------------------------------------------
59 Austell GA 30001 2,050,000 2,044,510 0.18 86.21
22 Lansing MI 48910 2,054,000 2,041,958 0.18 86.39
346 Dallas TX 75220 2,000,000 2,000,000 0.18 86.57
357 Albuquerque NM 87111 2,000,000 2,000,000 0.18 86.74
175 Miami FL 33055 2,000,000 1,996,565 0.18 86.92
- --------------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
122 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
81 9.1250 84 83 330 329 9/6/96 10/1/03 2,580,809
125 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
24 9.2500 300 295 300 295 5/15/96 6/1/21 NAP
127 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
133 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
126 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
130 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
312 8.8600 60 59 360 359 9/30/96 10/1/01 2,540,310
21 9.0000 120 115 330 325 5/3/96 6/1/06 2,297,459
- ----------------------------------------------------------------------------------------------------------------------
158 9.0000 84 83 300 299 9/4/96 10/1/03 2,372,014
139 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
331 10.1200 240 240 240 240 10/3/96 11/1/16 NAP
156 10.1250 120 119 240 239 9/24/96 10/1/06 1,914,119
1 8.3500 84 77 300 293 3/12/96 4/1/03 2,317,490
- ----------------------------------------------------------------------------------------------------------------------
106 9.2500 84 78 300 294 4/29/96 5/1/03 2,342,773
136 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
330 9.2900 120 120 330 330 10/9/96 11/1/06 2,245,277
226 8.5900 60 55 360 355 5/14/96 6/1/01 2,461,827
149 9.0000 120 120 300 300 10/4/96 11/1/06 2,115,384
- ----------------------------------------------------------------------------------------------------------------------
17 8.9500 120 114 300 294 4/24/96 5/1/06 2,097,234
168 9.5000 180 180 180 180 10/3/96 11/1/11 NAP
316 9.8400 180 180 240 240 10/2/96 11/1/11 1,141,704
295 8.8400 120 120 300 300 10/8/96 11/1/06 2,066,321
45 9.0000 300 296 360 356 6/27/96 7/1/21 981,787
- ----------------------------------------------------------------------------------------------------------------------
251 9.0900 120 117 300 297 7/26/96 8/1/06 2,078,130
258 9.2500 120 118 240 238 8/2/96 9/1/06 1,797,387
358 9.0900 120 120 360 360 10/3/96 11/1/06 2,197,772
223 9.7800 120 114 300 294 4/30/96 5/1/06 2,076,655
232 9.5900 120 116 360 356 6/13/96 7/1/06 2,216,443
- ----------------------------------------------------------------------------------------------------------------------
16 8.4900 120 114 360 354 4/8/96 5/1/06 2,173,786
262 9.6000 84 79 300 295 5/28/96 6/1/03 2,218,443
273 8.5300 84 82 360 358 8/26/96 9/1/03 2,276,860
12 8.3750 84 77 300 293 3/29/96 4/1/03 2,179,676
43 8.7200 84 80 330 326 6/27/96 7/1/03 2,231,574
- ----------------------------------------------------------------------------------------------------------------------
281 8.9600 180 178 300 298 8/23/96 9/1/11 1,615,574
132 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
253 9.3800 120 118 360 358 8/2/96 9/1/06 2,163,668
209 8.8900 120 115 300 295 5/21/96 6/1/06 1,985,954
66 9.6400 300 297 360 357 7/25/96 8/1/21 973,370
- ----------------------------------------------------------------------------------------------------------------------
339 9.4200 120 119 300 299 9/16/96 10/1/06 1,942,629
51 8.7500 84 81 330 327 7/3/96 8/1/03 2,117,824
296 10.3000 240 240 240 240 10/9/96 11/1/16 NAP
128 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
138 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
113 9.7500 84 81 300 297 7/9/96 8/1/03 2,046,034
50 8.7500 84 81 300 297 7/3/96 8/1/03 2,005,401
292 9.6200 240 240 240 240 10/9/96 11/1/16 NAP
23 9.0700 84 79 360 355 5/9/96 6/1/03 2,083,665
349 9.5300 240 240 240 240 10/9/96 11/1/16 NAP
- ----------------------------------------------------------------------------------------------------------------------
293 9.3200 120 119 300 299 9/25/96 10/1/06 1,838,128
269 8.9400 180 178 300 298 8/13/96 9/1/11 1,444,918
75 8.8750 120 118 330 328 8/12/96 9/1/06 1,873,957
270 9.0700 84 82 360 358 8/13/96 9/1/03 2,017,055
53 8.7000 84 81 330 327 7/3/96 8/1/03 1,961,496
- ----------------------------------------------------------------------------------------------------------------------
47 9.0000 120 116 300 296 6/27/96 7/1/06 1,772,775
142 9.6250 120 119 324 323 9/5/96 10/1/06 1,829,154
259 9.0500 120 118 300 298 8/19/96 9/1/06 1,744,056
260 9.7400 240 238 240 238 8/12/96 9/1/16 NAP
249 9.0900 84 80 300 296 6/24/96 7/1/03 1,883,568
- ----------------------------------------------------------------------------------------------------------------------
59 9.0400 300 297 300 297 7/8/96 8/1/21 NAP
22 8.6250 84 79 276 271 5/6/96 6/1/03 1,785,796
346 8.8400 120 120 336 336 10/4/96 11/1/06 1,741,093
357 8.9300 120 120 300 300 10/4/96 11/1/06 1,656,480
175 9.2500 120 118 300 298 8/19/96 9/1/06 1,668,449
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- ------------------------
122 Anchored Retail
81 Multifamily
125 Unanchored Retail
24 Sec. 42
127 Anchored Retail
- ------------------------
133 Anchored Retail
126 Anchored Retail
130 Unanchored Retail
312 Multifamily
21 Multifamily
- ------------------------
158 Anchored Retail
139 Anchored Retail
331 Hospitality
156 Hospitality
1 Multifamily
- ------------------------
106 Unanchored Retail
136 Anchored Retail
330 Office
226 Multifamily
149 Anchored Retail
- ------------------------
17 Multifamily
168 Hospitality
316 Hospitality
295 Multifamily/Retail
45 Sec. 42
- ------------------------
251 Multifamily
258 Anchored Retail
358 Multifamily
223 Unanchored Retail
232 Industrial
- ------------------------
16 Multifamily
262 Unanchored Retail
273 Multifamily
12 Multifamily
43 Multifamily
- ------------------------
281 Mobile Home Park
132 Anchored Retail
253 Multifamily
209 Multifamily
66 Sec. 42
- ------------------------
339 Mobile Home Park
51 Multifamily
296 Hospitality
128 Unanchored Retail
138 Anchored Retail
- ------------------------
113 Office
50 Multifamily
292 Industrial
23 Multifamily
349 Hospitality
- ------------------------
293 Multifamily/Retail
269 Anchored Retail
75 Multifamily
270 Multifamily
53 Multifamily
- ------------------------
47 Multifamily
142 Anchored Retail
259 Multifamily
260 Hospitality
249 Multifamily
- ------------------------
59 Multifamily
22 Multifamily
346 Multifamily
357 Anchored Retail
175 Unanchored Retail
- ------------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
122 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
81 2 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
125 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
24 15 yr lock, open last 10 years
127 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
133 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
126 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
130 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
312 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
21 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
158 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
139 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
331 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
156 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
1 1 yr lock, >1% or YM through yr 6, open last 12 mos
- ----------------------------------------------------------------------------------------------------------------------------
106 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
136 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
330 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
226 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @ 1%, open last 3 months
149 4 yr lock, >1% or YM through yr 9, open last 12 mos
- ----------------------------------------------------------------------------------------------------------------------------
17 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
168 3 yr lock,>1% or YM through yr 10,4%,3%,2%,1% open last 12 mos
316 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
295 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
45 15 yr lock, open last 10 years
- ----------------------------------------------------------------------------------------------------------------------------
251 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
258 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
358 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
223 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
232 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
16 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
262 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
273 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
12 1 yr lock, >1% or YM through yr 6, open last 12 mos
43 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
281 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
132 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
253 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
209 5 yr lock, > 1% or YM through yr 9 3/4, open last 3 months
66 15 yr lock, open last 10 years
- ----------------------------------------------------------------------------------------------------------------------------
339 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
51 1 yr lock, >1% or YM through yr 6, open last 12 mos
296 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
128 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
138 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
113 5 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
50 1 yr lock, >1% or YM through yr 6, open last 12 mos
292 10 yr lock, yearly @ 8%,7, 6, 5, 4, 3, 2, 33 mos @ 1%, open last 3 mos
23 1 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
349 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
293 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
269 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
75 3 yr lock, >1% or YM through yr 9, open last 12 mos
270 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
53 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
47 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
142 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
259 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
260 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
249 3 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
59 5 yr lock, >1% or YM through yr 20, open last 5 years
22 1 yr lock, >1% or YM through yr 6, open last 12 mos
346 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
357 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
175 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
122 28,962 465,612 7,352 433,854 1.25 5,500,000 1996 51.09
81 23,196 1,062,980 657,495 351,819 1.26 4,800,000 1996 58.29
125 28,581 458,240 7,235 429,690 1.25 5,150,000 1996 53.84
24 23,551 839,037 427,126 374,951 1.33 3,400,000 1996 80.53
127 28,189 452,032 7,137 423,712 1.25 5,050,000 1996 54.16
- ---------------------------------------------------------------------------------------------------------------------------------
133 28,189 452,032 7,137 423,712 1.25 4,750,000 1996 57.58
126 27,808 445,989 7,042 417,891 1.25 4,900,000 1996 55.06
130 27,416 439,876 6,945 411,794 1.25 5,100,000 1996 52.16
312 21,056 588,125 252,602 335,523 1.33 3,400,000 1996 77.90
21 21,720 750,256 402,061 325,155 1.25 3,600,000 1996 73.35
- ---------------------------------------------------------------------------------------------------------------------------------
158 22,172 515,864 151,832 347,633 1.31 3,600,000 1996 73.32
139 27,035 434,714 6,864 404,873 1.25 4,950,000 1996 52.99
331 25,298 1,097,770 603,903 493,867 1.63 3,800,000 1996 68.42
156 25,306 858,122 379,901 431,696 1.42 3,910,000 1996 66.41
1 20,729 767,235 361,616 368,899 1.48 3,300,000 1995 78.44
- ---------------------------------------------------------------------------------------------------------------------------------
106 22,266 388,967 45,669 336,172 1.26 3,640,000 1996 71.05
136 26,643 427,530 6,750 400,113 1.25 4,750,000 1996 54.42
330 21,633 486,593 124,002 330,484 1.27 3,850,000 1996 66.88
226 19,954 503,550 148,813 309,018 1.29 3,600,000 1996 71.28
149 21,400 531,278 176,564 329,553 1.28 3,550,000 1996 71.83
- ---------------------------------------------------------------------------------------------------------------------------------
17 21,153 906,378 491,818 376,197 1.48 3,375,000 1996 74.58
168 26,106 1,158,840 663,852 448,634 1.43 3,700,000 1996 67.57
316 23,861 1,182,904 732,637 450,267 1.57 3,730,000 1996 67.02
295 20,707 499,639 160,167 335,593 1.35 3,480,000 1996 71.84
45 20,116 493,799 202,993 277,506 1.15 3,200,000 1996 77.95
- ---------------------------------------------------------------------------------------------------------------------------------
251 21,134 831,627 515,127 316,500 1.25 3,180,000 1996 78.41
258 22,897 568,697 214,830 353,868 1.29 3,800,000 1996 65.60
358 19,872 740,860 451,803 289,057 1.21 3,650,000 1996 67.12
223 21,983 548,865 167,115 356,172 1.35 3,600,000 1996 68.04
232 20,762 452,511 125,476 313,228 1.26 3,350,000 1996 72.99
- ---------------------------------------------------------------------------------------------------------------------------------
16 18,821 500,741 189,681 293,460 1.30 3,300,000 1995 73.97
262 21,576 504,520 119,267 373,325 1.44 3,600,000 1996 67.78
273 18,832 465,916 186,207 279,709 1.24 3,200,000 1996 76.23
12 19,530 797,367 456,676 312,091 1.33 3,350,000 1995 72.65
43 19,473 723,400 382,688 309,032 1.32 3,500,000 1996 69.34
- ---------------------------------------------------------------------------------------------------------------------------------
281 20,326 464,922 135,146 329,776 1.35 3,650,000 1996 66.46
132 24,716 396,979 6,268 370,699 1.25 4,500,000 1996 53.29
253 19,971 660,839 349,438 311,401 1.30 3,500,000 1996 68.50
209 19,960 963,088 666,249 296,839 1.24 3,250,000 1996 73.51
66 20,247 542,995 240,379 289,816 1.19 3,200,000 1996 74.24
- ---------------------------------------------------------------------------------------------------------------------------------
339 20,141 513,667 192,967 320,701 1.33 2,900,000 1996 79.93
51 18,521 661,533 358,103 277,830 1.25 3,220,000 1996 71.55
296 22,655 1,777,794 1,346,914 430,880 1.59 3,500,000 1996 65.71
128 23,562 378,690 5,979 353,071 1.25 4,500,000 1996 50.80
138 23,562 380,070 6,001 351,349 1.24 4,450,000 1996 51.37
- ---------------------------------------------------------------------------------------------------------------------------------
113 20,095 801,306 434,846 327,149 1.36 3,275,000 1996 68.69
50 18,432 608,916 313,226 276,490 1.25 3,080,000 1996 72.59
292 20,821 457,810 144,355 309,351 1.24 3,200,000 1996 69.22
23 17,983 408,552 117,844 282,208 1.31 3,160,000 1996 70.09
349 20,550 1,185,919 808,074 377,844 1.53 3,300,000 1996 66.67
- ---------------------------------------------------------------------------------------------------------------------------------
293 18,947 612,265 276,480 318,975 1.40 3,200,000 1996 68.69
269 18,163 397,929 85,223 293,613 1.35 2,900,000 1996 74.86
75 17,571 839,870 505,783 293,197 1.39 3,825,000 1996 56.57
270 17,408 707,448 355,719 351,729 1.68 2,700,000 1996 79.54
53 17,091 752,875 427,850 283,137 1.38 3,350,000 1996 63.74
- ---------------------------------------------------------------------------------------------------------------------------------
47 17,934 518,229 197,537 293,047 1.36 3,000,000 1996 70.98
142 18,212 413,353 112,668 274,854 1.26 3,200,000 1996 65.58
259 17,695 500,723 233,511 267,212 1.26 2,900,000 1996 72.29
260 19,905 771,443 366,173 405,270 1.70 3,485,000 1996 60.09
249 17,712 531,153 276,094 255,059 1.20 2,650,000 1996 78.78
- ---------------------------------------------------------------------------------------------------------------------------------
59 17,260 624,049 309,356 289,253 1.40 2,850,000 1986 71.74
22 17,137 594,563 306,563 266,400 1.30 2,600,000 1995 78.54
346 16,100 803,088 557,729 245,359 1.27 2,725,000 1996 73.39
357 16,688 359,954 75,490 267,370 1.34 2,700,000 1996 74.07
175 17,128 435,152 131,443 280,934 1.37 2,800,000 1996 71.31
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
122 NAP 1980 62,590 sqft 44.90/ sqft 100.00 14,050.00 0.10 per sq. ft.
81 53.77 1980 201 units 13,920.87/ unit 95.00 164,405.00 267 per unit
125 NAP 1994 50,000 sqft 55.46/ sqft 100.00 937.50 0.10 per sq. ft.
24 NAP 1965 176 units 15,557.13/ unit 99.00 0.00 210 per unit
127 NAP 1979 50,000 sqft 54.70/ sqft 100.00 99,053.75 0.10 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
133 NAP 1986 50,000 sqft 54.70/ sqft 100.00 3,750.00 0.10 per sq. ft.
126 NAP 1989 50,000 sqft 53.96/ sqft 100.00 20,016.25 0.10 per sq. ft.
130 NAP 1980 50,900 sqft 52.26/ sqft 100.00 12,603.75 0.10 per sq. ft.
312 74.72 1987 104 units 25,466.44/units 92.31 12,187.50 250 per unit
21 63.82 1975 96 units 27,506.62/ unit 95.00 74,875.00 240 per unit
- -----------------------------------------------------------------------------------------------------------------------
158 65.89 1991 39,671 sqft 66.54/ sqft 99.93 7,593.75 0.14 per sq. ft.
139 NAP 1981 59,250 sqft 44.27/ sqft 100.00 3,125.00 0.10 per sq. ft.
331 NAP 1993 65 rooms 40,000.00/room NAP 0.00 4% of gross rev.
156 48.95 1984 99 rooms 26,228.60/ room 69.50 2,812.50 4% of gross rev.
1 70.23 1970 144 units 17,975.65/ unit 97.89 12,468.75 255 per unit
- -----------------------------------------------------------------------------------------------------------------------
106 64.36 1972 70,515 sqft 36.68/ sqft 100.00 5,625.00 0.05 per sq. ft.
136 NAP 1993 50,000 sqft 51.70/ sqft 100.00 0.00 0.10 per sq. ft.
330 58.32 1995 25,516 sqft 100.92/sqft 100.00 0.00 0.15 per sq. ft.
226 68.38 1984 62 units 41,386.08/units 95.31 0.00 276 per unit
149 59.59 1988 76,635 sqft 33.27/ sqft 98.10 5,125.00 0.10 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
17 62.14 1966 169 units 14,893.99/ unit 85.00 0.00 227 per unit
168 NAP 1990 82 rooms 30,487.80/ room 80.00 22,125.00 4% of gross rev.
316 30.61 1972 103 rooms 24,271.84/room NAP 0.00 4% of gross rev.
295 59.38 1901 32,655 sqft 76.56/sqft 100.00 0.00 250 per unit
45 30.68 1995 76 units 32,822.05/ unit 95.00 0.00 175 per unit
- -----------------------------------------------------------------------------------------------------------------------
251 65.35 1969 214 units 11,651.21/units 93.46 52,250.00 280 per unit
258 47.30 1991 38,427 sqft 64.87/sqft 100.00 0.00 0.22 per sq. ft.
358 60.21 1972 160 units 15,312.50/units 99.38 0.00 250 per unit
223 57.68 1978 49,699 sqft 49.28/sqft 94.97 36,105.00 0.16 per sq. ft.
232 66.16 1990 54,193 sqft 45.12/sqft 91.05 0.00 0.15 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
16 65.87 1986 88 units 27,737.69/ unit 97.20 0.00 200 per unit
262 61.62 1991 20,343 sqft 119.94/sqft 96.61 0.00 0.15 per sq. ft.
273 71.15 1988 66 units 36,961.34/units 100.00 0.00 200 per unit
12 65.06 1980 143 units 17,018.68/ unit 95.00 2,856.25 200 per unit
43 63.76 1968 120 units 20,223.17/ unit 95.00 35,312.50 264 per unit
- -----------------------------------------------------------------------------------------------------------------------
281 44.26 1967 178 pads 13,627.08/pad 92.70 0.00 50 per pad
132 NAP 1985 49,950 sqft 48.01/ sqft 100.00 1,000.00 0.10per sq. ft.
253 61.82 1976 124 units 19,335.23/units 95.16 35,256.25 250 per unit
209 61.11 1973 200 units 11,944.68/units 93.00 58,473.00 250 per unit
66 30.42 1995 64 units 37,118.19/ unit 100.00 0.00 200 per unit
- -----------------------------------------------------------------------------------------------------------------------
339 66.99 1984 250 pad 9,272.28/pad 96.40 54,500.00 50 per pad
51 65.77 1985 128 units 17,999.30/ unit 98.20 1,250.00 200 per unit
296 NAP 1965 176 rooms 13,068.18/room NAP 41,500.00 4% of gross rev.
128 NAP 1992 50,000 sqft 45.72/ sqft 100.00 13,150.00 0.10 per sq. ft.
138 NAP 1979 63,083 sqft 36.24/ sqft 100.00 15,625.00 0.10 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
113 62.47 1969 91,366 sqft 24.62/ sqft 97.33 173,000.00 0.20 per sq. ft.
50 65.11 1971 96 units 23,288.55/ unit 98.78 44,000.00 200 per unit
292 NAP 1980 52,860 sqft 41.90/sqft 100.00 8,313.00 0.15 per sq. ft.
23 65.94 1963 34 units 65,145.03/ unit 100.00 0.00 250 per unit
349 NAP 1990 87 rooms 25,287.36/room NAP 19,600.00 4% of gross rev.
- -----------------------------------------------------------------------------------------------------------------------
293 57.44 Circa 1921 53,408 sqft 41.16/sqft 89.80 9,068.75 300 per unit
269 49.82 1987 51,678 sqft 42.01/sqft 97.52 34,300.00 0.24 per sq. ft.
75 48.99 1975 174 units 12,436.21/ unit 93.48 97,312.50 235 per unit
270 74.71 1987 140 units 15,340.55/units 90.00 51,447.50 175 per unit
53 58.55 1974 176 units 12,132.04/ unit 95.00 12,062.50 238 per unit
- -----------------------------------------------------------------------------------------------------------------------
47 59.09 1987 96 units 22,180.10/ unit 94.79 9,691.25 291 per unit
142 57.16 1969 96,790 sqft 21.68/ sqft 100.00 17,625.00 0.12 per sq. ft.
259 60.14 1968 74 units 28,327.98/units 100.00 18,437.50 325 per unit
260 NAP 1990 122 rooms 17,166.04/room NAP 0.00 4% of gross rev.
249 71.08 1975 116 units 17,997.86/units 97.41 0.00 250 per unit
- -----------------------------------------------------------------------------------------------------------------------
59 NAP 1975 120 units 17,037.58/ unit 92.50 46,250.00 212 per unit
22 68.68 1964 108 units 18,907.02/ unit 97.00 102,433.75 200 per unit
346 63.89 1963 185 units 10,810.81/units 95.14 37,480.00 250 per unit
357 61.35 Circa 1989 28,081 sqft 71.22/sqft 94.87 16,565.00 0.15 per sq. ft.
175 59.59 1985 34,152 sqft 58.46/ sqft 100.00 750.00 0.26 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Largest Retail Tenant
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
122 0.1150 Service Merchandise Inc. 62,590
81 0.1150
125 0.1150 Service Merchandise Inc. 50,000
24 0.1150
127 0.1150 Service Merchandise Inc. ("Shadow"-Best Buy; Michael; Hannaford) 50,000
- -------------------------------------------------------------------------------------------------------------------
133 0.1150 Service Merchandise Inc. ("Shadow"-Kroger; Marshall; Home Depot) 50,000
126 0.1150 Service Merchandise Inc. ("Shadow"-Walmart) 50,000
130 0.1150 Service Merchandise Inc. 50,900
312 0.1350
21 0.1500
- -------------------------------------------------------------------------------------------------------------------
158 0.1150 Thrifty Drug Store ("Shadow"-Ralph's) 19,300
139 0.1150 Service Merchandise Inc. (Shadow"-Mervyn's) 59,250
331 0.1150
156 0.1150
1 0.1150
- -------------------------------------------------------------------------------------------------------------------
106 0.1150 Rhodes Furniture 70,515
136 0.1150 Service Merchandise Inc. ("Shadow"-Builders square) 50,000
330 0.1150 Diversified 3,584
226 0.1350
149 0.1150 Publix 39,795
17 0.1150
- -------------------------------------------------------------------------------------------------------------------
168 0.1150
316 0.1150
295 0.1350 Aerosole/JCPenney 1,300
45 0.1150
251 0.1150
- -------------------------------------------------------------------------------------------------------------------
258 0.1150 The Grand Union Company 38,427
358 0.1350
223 0.1150 Piccolo's 5,100
232 0.1350 Teal Electronics Corp 31,211
16 0.1150
- -------------------------------------------------------------------------------------------------------------------
262 0.1150 Malibu Greens 8,587
273 0.1350
12 0.1150
43 0.1150
281 0.1150
- -------------------------------------------------------------------------------------------------------------------
132 0.1150 Service Merchandise Inc. 49,950
253 0.1150
209 0.1150
66 0.1150
339 0.1150
- -------------------------------------------------------------------------------------------------------------------
51 0.1150
296 0.1150
128 0.1150 Service Merchandise Inc. 50,000
138 0.1150 Service Merchandise Inc. 63,083
113 0.1500 Oncor 44,505
- -------------------------------------------------------------------------------------------------------------------
50 0.1150
292 0.1150 Allied Signal Aerospace 34,860
23 0.2000
349 0.1150
293 0.1150
- -------------------------------------------------------------------------------------------------------------------
269 0.1150 Harvey's Supermarkets 27,878
75 0.1150
270 0.1350
53 0.1150
- -------------------------------------------------------------------------------------------------------------------
47 0.1150
142 0.1150 Penn Traffic Company 65,690
259 0.1150
260 0.1150
249 0.1150
- -------------------------------------------------------------------------------------------------------------------
59 0.1150
22 0.1150
346 0.1150
357 0.1150 Day Spa ("Shadow"-Smith's Grocery) 5,102
175 0.1150 National 5 Supermarket 10,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- -------------------------------------------------------
11/30/2011 122
81
11/30/2011 125
24
11/30/2011 127
- -------------------------------------------------------
11/30/2011 133
11/30/2011 126
11/30/2011 130
312
21
- -------------------------------------------------------
5/31/2015 158
11/30/2011 139
331
156
1
- -------------------------------------------------------
10/31/2004 106
11/30/2011 136
12/14/1998 330
226
3/02/2008 149
- -------------------------------------------------------
17
168
316
10/30/2005 295
45
- -------------------------------------------------------
251
12/14/2018 258
358
1/10/2006 223
3/22/2000 232
- -------------------------------------------------------
16
1/31/2006 262
273
12
43
- -------------------------------------------------------
281
11/30/2011 132
253
209
66
- -------------------------------------------------------
339
51
296
11/30/2011 128
11/30/2011 138
- -------------------------------------------------------
2/28/1998 113
50
12/31/1997 292
23
349
- -------------------------------------------------------
293
6/30/2007 269
75
270
53
- -------------------------------------------------------
47
12/31/2014 142
259
260
249
- -------------------------------------------------------
59
22
346
7/20/1999 357
10/31/1998 175
- -------------------------------------------------------
Page 3
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
6 Casa Del Lago 3140 Kearsage Drive
212 Fountainview Lodge I & II Apts. 6015 Winsome & 6100 Fairdale
151 Kings Court Shopping Center 901 S. Kings Drive
261 Coca-Cola Building-Industrial 2540 W. Pennway
15 Lakewood 1542 Arcadia Drive
- -----------------------------------------------------------------------------------------------------
111 Cor-West Plaza Shopping Center 703 West Main Street
52 Millcreek 1823 Stadium Road
161 Valli Hi Shopping Center SE Corner of South Circle Dr. & Airport Rd.
246 K&S - Pioneer Village MHP 2901 West 63rd Avenue
348 Comfort Inn Columbia 7700 Two Notch Road
- -----------------------------------------------------------------------------------------------------
220 P & K-Olive Gardens Apartments 6500 - 6502 W. Olive Avenue
76 Kingswood Estates 1910 South Chipman Street
203 JMA - Brookmore Hollow Apartments 810 Brooks Avenue
20 Regency on Kennedy 4350 West Kennedy Blvd
320 Clackamas Corner 11750 SE 82nd Ave.
- -----------------------------------------------------------------------------------------------------
291 Days Inn Six Flags 95 South Service Road
280 Tiger Industrial Plaza 4901 & 4929 West Van Buren Street
216 P&K-Glendale Shadows 5902 W. Royal Palm Rd
214 Fountain Square Apartments 544 Camp Avenue
219 Mount View Business Park 20-90 Mount View Lane
- -----------------------------------------------------------------------------------------------------
119 Lynnfield Shopping Centre 584-592 Main Street
206 Clinton Industrial Park 7100-7251 Clinton Drive
150 Pelham 6 6 Logue Court
289 Days Inn North 4610 Rusina Rd.
272 KFS-Sunset Trails Apartments 959 Postal Way
- -----------------------------------------------------------------------------------------------------
99 Kensington Cottages 415 8th Street NW
46 Sunset Way I 15385 SW 73rd Terrace Circle
254 Colinas Business Park 4320 North Belt Line Road
3 Morningside 2401 Jammes Rd
112 Days Inn - Flagstaff 2735 South Woodlands Village Boulevard
- -----------------------------------------------------------------------------------------------------
282 Super 8 Motel 3617 N. Pan Am Expressway (aka I-35)
40 Colony Woods II 3030 Continental Colony Parkway #1608
233 EW - Sorrento Roselle Industrial Park 10635-37-39 Roselle Street
107 Tower Glen Shopping Center 2216 West County Road D
39 Valleybrook 169 Roscoe Road
- -----------------------------------------------------------------------------------------------------
325 CAP-Clubhouse Apartments 3 Clubhouse Circle
256 Bay Towers 1203 Market Street
338 Southgate/Meadowlark Mobile Home Park 6405 - 6601 Arden Road
115 163 / 174 Newbury Street 163 & 174 Newbury Street
109 Arcadia Lakes Shopping Center 6432 Two Notch Road
- -----------------------------------------------------------------------------------------------------
230 Silvercreek II Apartments 4619 W. 34th Street
231 Solarium Apartments 9275 LBJ Freeway
48 Marabou Mills I 3420 Marabou Mills Drive
221 Pecos Trail Office Compound 1660 Old Pecos Trail
247 Buckingham Manor 1110 & 1160 S. Joliet
- -----------------------------------------------------------------------------------------------------
250 Belfonti-Stonebridge Apartments 157-161 Pinney Street
74 Lindendale 3580 Lindendale Drive
114 Sims Creek Plaza 1695-1697 Indiantown Road
311 PETsMART 3195 Hempstead Turnpike
238 Woodwillow Townhomes 3601 Willow Springs Road
- -----------------------------------------------------------------------------------------------------
347 Park Springs Apartments 2002 West Irving Blvd.
279 American Trade Institute 6627 Maple Avenue
63 Dogwood Glenn II 2390 Woodglen Drive
7 Park Colony 11200 Huffmeister
160 Shaw Butte Center Corner of N. 7th Street & Thunderbird Road
- -----------------------------------------------------------------------------------------------------
239 Timbergrove Manor Apts. 1600 West T. C. Jester Blvd
286 Las Colinas Tech Center 2039 Walnut Hill Lane
79 Country View - Texas 6324 Baker Boulevard
5 Seville 1420 North Meridian Road
361 Magnolia Gardens 15, 17 & 19 Fordyce Court
- -----------------------------------------------------------------------------------------------------
319 Enfield Court Apartments 16541 Loch Katrine Road
211 First Line Apartments 1120 Red Bluff Road
28 Elsmere 1410 Cypress Avenue
323 CAP-Maplewood Apartments 1 Carlton Road
105 Plaza 59 10508 Bennett Road
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 Lake Havasu City AZ 86406 2,000,000 1,991,554 0.17 87.09
212 Houston TX 77057 1,971,700 1,963,142 0.17 87.26
151 Charlotte NC 28204 1,950,000 1,948,735 0.17 87.44
261 Kansas City MO 64108 1,950,000 1,946,543 0.17 87.61
15 Jacksonville FL 32207 1,950,000 1,938,105 0.17 87.78
- -----------------------------------------------------------------------------------------------
111 New Britain CT 06053 1,935,000 1,930,099 0.17 87.95
52 Wharton TX 77488 1,935,000 1,929,563 0.17 88.12
161 Colorado Springs CO 80909 1,870,000 1,868,400 0.16 88.28
246 Denver CO 80221 1,870,000 1,866,925 0.16 88.44
348 Columbia SC 29223 1,850,000 1,850,000 0.16 88.61
- -----------------------------------------------------------------------------------------------
220 Glendale AZ 85302 1,850,000 1,843,706 0.16 88.77
76 Owosso MI 48867 1,842,000 1,838,633 0.16 88.93
203 Rosenburg TX 77471 1,811,661 1,808,762 0.16 89.09
20 Tampa FL 33609 1,809,000 1,802,731 0.16 89.25
320 Portland OR 97266 1,800,000 1,800,000 0.16 89.41
- -----------------------------------------------------------------------------------------------
291 Austell GA 30001 1,800,000 1,797,705 0.16 89.56
280 Phoenix AZ 85043 1,800,000 1,796,755 0.16 89.72
216 Glendale AZ 85302 1,800,000 1,793,877 0.16 89.88
214 Gulfport MS 39501 1,800,000 1,791,971 0.16 90.04
219 Colorado Springs CO 80907 1,771,400 1,761,867 0.15 90.19
- -----------------------------------------------------------------------------------------------
119 Lynnfield MA 01940 1,761,000 1,756,483 0.15 90.35
206 Houston TX 77020 1,762,500 1,753,030 0.15 90.50
150 Greenville SC 29615 1,750,000 1,750,000 0.15 90.65
289 Colorado Springs CO 80907 1,720,000 1,720,000 0.15 90.80
272 Vista CA 92083 1,700,000 1,698,147 0.15 90.95
- -----------------------------------------------------------------------------------------------
99 Buffalo MN 55313 1,700,000 1,690,004 0.15 91.10
46 Miami FL 33193 1,693,000 1,686,728 0.15 91.25
254 Irving TX 75038 1,670,000 1,667,263 0.15 91.40
3 Jacksonville FL 32210 1,658,000 1,646,231 0.14 91.54
112 Flagstaff AZ 86001 1,650,000 1,645,843 0.14 91.69
- -----------------------------------------------------------------------------------------------
282 San Antonio TX 78219 1,650,000 1,645,659 0.14 91.83
40 Atlanta GA 30331 1,607,000 1,601,182 0.14 91.97
233 San Diego CA 92121 1,600,000 1,596,808 0.14 92.11
107 Roseville MN 55112 1,598,000 1,593,952 0.14 92.25
39 Newnan GA 30263 1,594,000 1,588,230 0.14 92.39
- -----------------------------------------------------------------------------------------------
325 Storrs CT 06268 1,571,500 1,570,032 0.14 92.53
256 Pascagoula MS 39567 1,550,000 1,543,761 0.14 92.66
338 Amarillo TX 79109 1,520,000 1,518,664 0.13 92.80
115 Boston MA 2116 1,515,000 1,510,074 0.13 92.93
109 Columbia SC 29206 1,500,000 1,496,039 0.13 93.06
- -----------------------------------------------------------------------------------------------
230 Houston TX 77092 1,500,000 1,488,771 0.13 93.19
231 Dallas TX 75243 1,500,000 1,480,739 0.13 93.32
48 Indianapolis IN 46214 1,475,000 1,469,678 0.13 93.45
221 Santa Fe NM 87501 1,468,300 1,463,765 0.13 93.58
247 Aurora CO 80012 1,454,300 1,449,070 0.13 93.71
- -----------------------------------------------------------------------------------------------
250 Ellington CT 06029 1,450,000 1,444,803 0.13 93.83
74 Columbus OH 43204 1,444,000 1,441,228 0.13 93.96
114 Jupiter FL 33458 1,450,000 1,440,338 0.13 94.09
311 Levittown NY 11546 1,440,000 1,440,000 0.13 94.21
238 Austin TX 78704 1,431,000 1,427,922 0.13 94.34
- -----------------------------------------------------------------------------------------------
347 Irving TX 75061 1,425,000 1,425,000 0.13 94.46
279 Dallas TX 75226 1,425,000 1,421,440 0.12 94.59
63 Indianapolis IN 46260 1,425,000 1,421,055 0.12 94.71
7 Houston TX 77065 1,425,000 1,414,925 0.12 94.84
160 Phoenix AZ 85022 1,410,000 1,408,843 0.12 94.96
- -----------------------------------------------------------------------------------------------
239 Houston TX 77008 1,405,000 1,402,714 0.12 95.09
286 Irving TX 75038 1,400,000 1,397,778 0.12 95.21
79 Haltom City TX 76118 1,400,000 1,397,545 0.12 95.33
5 Tallahassee FL 32303 1,380,000 1,371,005 0.12 95.45
361 New MIlford CT 06776 1,370,000 1,370,000 0.12 95.57
- -----------------------------------------------------------------------------------------------
319 Houston TX 77084 1,350,000 1,349,215 0.12 95.69
211 Pasadena TX 77506 1,350,000 1,343,858 0.12 95.81
28 Elsmere DE 19805 1,288,000 1,282,405 0.11 95.92
323 Storrs CT 06268 1,272,200 1,271,011 0.11 96.03
105 Dunkirk NY 14048 1,264,000 1,259,803 0.11 96.14
- -----------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 8.6250 300 293 360 353 3/26/96 4/1/21 766,036
212 8.4900 120 113 360 353 3/29/96 4/1/06 1,749,410
151 9.3750 120 119 330 329 9/24/96 10/1/06 1,703,101
261 9.0600 120 118 300 298 8/14/96 9/1/06 1,619,846
15 8.3125 84 78 300 294 4/5/96 5/1/03 1,732,420
- ----------------------------------------------------------------------------------------------------------------
111 9.3750 120 117 300 297 7/2/96 8/1/06 1,618,665
52 8.7500 84 81 300 297 7/3/96 8/1/03 1,730,799
161 9.2500 120 119 300 299 9/25/96 10/1/06 1,560,000
246 9.0200 84 81 360 357 7/10/96 8/1/03 1,753,375
348 9.7300 240 240 240 240 10/9/96 11/1/16 NAP
- ----------------------------------------------------------------------------------------------------------------
220 8.9100 120 114 360 354 4/30/96 5/1/06 1,654,247
76 8.8750 84 82 300 298 8/15/96 9/1/03 1,650,709
203 9.1500 120 117 360 357 7/1/96 8/1/06 1,626,853
20 8.8200 120 114 360 354 4/30/96 5/1/06 1,614,953
320 9.4600 120 120 300 300 10/2/96 11/1/06 1,508,520
- ----------------------------------------------------------------------------------------------------------------
291 10.2500 240 239 240 239 9/12/96 10/1/16 NAP
280 8.9600 120 118 300 298 8/30/96 9/1/06 1,491,854
216 8.9100 120 114 360 354 4/30/96 5/1/06 1,609,537
214 9.0900 180 175 300 295 5/16/96 6/1/11 1,202,726
219 9.0800 84 78 300 294 4/23/96 5/1/03 1,592,242
- ----------------------------------------------------------------------------------------------------------------
119 9.5000 120 116 330 326 6/6/96 7/1/06 1,541,703
206 9.0900 120 114 300 294 4/24/96 5/1/06 1,465,082
150 9.1875 120 120 300 300 10/4/96 11/1/06 1,457,869
289 10.3000 240 240 240 240 10/9/96 11/1/16 NAP
272 9.0300 120 118 360 358 8/26/96 9/1/06 1,523,374
- ----------------------------------------------------------------------------------------------------------------
99 9.5000 120 113 300 293 3/21/96 4/1/06 1,425,944
46 8.8400 84 80 300 296 6/27/96 7/1/03 1,516,389
254 9.5300 60 58 300 298 8/5/96 9/1/01 1,567,928
3 8.3500 84 77 300 293 3/12/96 4/1/03 1,473,878
112 10.3750 120 118 240 238 8/6/96 9/1/06 1,222,647
- ----------------------------------------------------------------------------------------------------------------
282 10.0400 240 238 240 238 8/23/96 9/1/16 NAP
40 8.9800 120 116 300 296 6/21/96 7/1/06 1,332,501
233 9.4900 120 116 360 356 6/13/96 7/1/06 1,445,096
107 9.3750 120 117 300 297 7/5/96 8/1/06 1,336,758
39 8.9800 120 116 300 296 6/21/96 7/1/06 1,321,722
- ----------------------------------------------------------------------------------------------------------------
325 8.7200 84 83 300 299 9/30/96 10/1/03 1,405,020
256 9.9200 240 237 240 237 7/31/96 8/1/16 NAP
338 9.0900 60 59 300 299 9/30/96 10/1/01 1,421,110
115 9.6250 120 116 300 296 6/7/96 7/1/06 1,274,172
109 9.1250 84 81 300 297 7/17/96 8/1/03 1,349,173
- ----------------------------------------------------------------------------------------------------------------
230 9.1200 240 235 240 235 5/14/96 6/1/16 NAP
231 9.4900 180 175 180 175 5/13/96 6/1/11 NAP
48 9.0000 120 116 300 296 6/27/96 7/1/06 1,223,605
221 9.9300 120 116 300 296 6/26/96 7/1/06 1,242,800
247 9.0200 60 56 300 296 6/12/96 7/1/01 1,358,746
- ----------------------------------------------------------------------------------------------------------------
250 9.0400 120 116 300 296 6/28/96 7/1/06 1,203,957
74 8.5800 120 118 300 298 8/12/96 9/1/06 1,186,266
114 8.7400 120 113 300 293 3/29/96 4/1/06 1,195,688
311 9.5200 120 120 300 300 10/3/96 11/1/06 1,208,379
238 9.1300 84 80 360 356 6/21/96 7/1/03 1,343,419
- ----------------------------------------------------------------------------------------------------------------
347 8.6800 120 120 300 300 10/7/96 11/1/06 1,173,423
279 9.6200 180 179 180 179 9/3/96 10/1/11 NAP
63 8.8400 120 117 300 297 7/23/96 8/1/06 1,177,803
7 8.3750 84 77 300 293 3/28/96 4/1/03 1,267,253
160 9.5000 84 83 300 299 9/4/96 10/1/03 1,274,979
- ----------------------------------------------------------------------------------------------------------------
239 9.0700 120 117 360 357 7/24/96 8/1/06 1,259,912
286 9.7200 240 238 300 298 8/29/96 9/1/16 597,226
79 9.1250 120 118 300 298 8/27/96 9/1/06 1,164,668
5 8.8750 84 77 300 293 3/20/96 4/1/03 1,236,687
361 8.7200 120 120 360 360 10/9/96 11/1/06 1,220,803
- ----------------------------------------------------------------------------------------------------------------
319 8.7000 84 83 360 359 9/20/96 10/1/03 1,261,092
211 8.9700 120 115 300 295 5/20/96 6/1/06 1,119,145
28 9.2500 120 115 300 295 5/20/96 6/1/06 1,074,481
323 8.7200 84 83 300 299 9/30/96 10/1/03 1,137,427
105 9.5000 120 116 300 296 6/28/96 7/1/06 1,060,231
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- --------------------------
6 Sec. 42
212 Multifamily
151 Unanchored Retail
261 Industrial
15 Multifamily
- --------------------------
111 Unanchored Retail
52 Multifamily
161 Unanchored Retail
246 Mobile Home Park
348 Hospitality
- --------------------------
220 Multifamily
76 Multifamily
203 Multifamily
20 Multifamily
320 Unanchored Retail
- --------------------------
291 Hospitality
280 Industrial
216 Multifamily
214 Multifamily
219 Industrial
- --------------------------
119 Unanchored Retail
206 Industrial
150 Office
289 Hospitality
272 Multifamily
- --------------------------
99 Assisted Living
46 Multifamily
254 Office
3 Multifamily
112 Hospitality
- --------------------------
282 Hospitality
40 Multifamily
233 Industrial
107 Unanchored Retail
39 Multifamily
- --------------------------
325 Multifamily
256 Assisted Living
338 Mobile Home Park
115 Multifamily/Retail
109 Unanchored Retail
- --------------------------
230 Multifamily
231 Multifamily
48 Multifamily
221 Office
247 Multifamily
- --------------------------
250 Multifamily
74 Multifamily
114 Unanchored Retail
311 Unanchored Retail
238 Multifamily
- --------------------------
347 Multifamily
279 Industrial
63 Multifamily
7 Multifamily
160 Unanchored Retail
- --------------------------
239 Multifamily
286 Office
79 Multifamily
5 Multifamily
361 Multifamily
- --------------------------
319 Multifamily
211 Multifamily
28 Multifamily
323 Multifamily
105 Unanchored Retail
- --------------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- -------------------------------------------------------------------------------------------
<S> <C>
6 15 yr lock, open last 10 years
212 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
151 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
261 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
15 1 yr lock, >1% or YM through yr 6, open last 12 mos
- -------------------------------------------------------------------------------------------
111 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
52 1 yr lock, >1% or YM through yr 6, open last 12 mos
161 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
246 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
348 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
220 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
76 2 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
203 5 yr lock, >1% or YM through yr 93/4, open last 3 months
20 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
320 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
291 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
280 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
216 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
214 8 yr lock, yearly @ 6%, 5.25, 4.5, 3.75, 3, 2.25, 9 mos @1.5%, open last 3 months
219 4 yr lock, yearly @ 4%, 3, 6 mos @ 2%, 3 mos @ 1%, open last 3 months
- -------------------------------------------------------------------------------------------
119 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
206 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
150 4 yr lock, >1% or YM through yr 9, open last 12 mos
289 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
272 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
99 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
46 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
254 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @ 1%, open last 3 months
3 1 yr lock, >1% or YM through yr 6, open last 12 mos
112 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
282 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
40 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
233 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
107 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
39 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
325 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
256 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
338 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
115 5 yr lock, >1% or YM through yr 9, open last 12 mos
109 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
230 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
231 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
48 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
221 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
247 3 yr lock, > 1%, or YM through yr 4 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
250 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
74 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
114 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
311 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
238 4 yr lock, yearly @ 4%, 3, 6 mos @ 2%, 3 mos @ 1%, open last 3 months
- -------------------------------------------------------------------------------------------
347 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
279 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
63 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
7 1 yr lock, >1% or YM through yr 6, open last 12 mos
160 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
239 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
286 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
79 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
5 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
361 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
319 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
211 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
28 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
323 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
105 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 15,556 434,310 185,875 231,635 1.24 3,030,000 1996 65.73
212 15,147 663,604 445,487 218,117 1.20 2,600,000 1996 75.51
151 16,500 387,037 99,252 262,317 1.32 2,900,000 1996 67.20
261 16,445 338,046 78,390 252,346 1.28 2,700,000 1996 72.09
15 15,456 548,762 264,324 262,838 1.42 2,550,000 1996 76.00
- -------------------------------------------------------------------------------------------------------------------------------
111 16,738 413,513 126,176 264,168 1.32 3,600,000 1996 53.61
52 15,908 519,276 256,461 241,215 1.26 2,580,000 1996 74.79
161 16,014 430,216 136,074 259,414 1.35 2,800,000 1996 66.73
246 15,073 383,450 153,762 229,688 1.27 2,500,000 1996 74.68
348 17,523 947,998 651,720 296,279 1.41 2,985,000 1996 61.98
- -------------------------------------------------------------------------------------------------------------------------------
220 14,766 503,867 266,653 237,214 1.34 2,500,000 1996 73.75
76 15,301 614,344 337,689 239,575 1.30 2,900,000 1995 63.40
203 14,773 519,177 306,446 218,486 1.23 2,500,000 1996 72.35
20 14,322 453,520 215,176 218,844 1.27 2,425,000 1996 74.34
320 15,677 420,145 99,488 302,914 1.61 3,200,000 1996 56.25
- -------------------------------------------------------------------------------------------------------------------------------
291 17,670 1,032,248 672,563 359,685 1.70 3,100,000 1996 57.99
280 15,056 346,438 105,191 230,009 1.27 2,400,000 1996 74.86
216 14,367 598,482 347,181 251,301 1.46 2,500,000 1995 71.76
214 15,217 486,870 223,004 263,866 1.45 2,515,000 1996 71.25
219 14,963 366,360 121,091 228,214 1.27 2,600,000 1996 67.76
- -------------------------------------------------------------------------------------------------------------------------------
119 15,057 356,946 97,052 234,885 1.30 2,600,000 1996 67.56
206 14,900 455,284 195,943 240,833 1.35 2,700,000 1996 64.93
150 14,911 353,656 74,720 254,650 1.42 3,450,000 1996 50.72
289 16,942 897,569 608,518 289,051 1.42 2,575,000 1996 66.80
272 13,715 371,278 149,826 221,452 1.35 2,550,000 1996 66.59
- -------------------------------------------------------------------------------------------------------------------------------
99 14,853 1,310,847 991,085 307,463 1.73 3,500,000 1996 48.29
46 14,023 602,748 340,089 233,459 1.39 2,500,000 1996 67.47
254 14,626 619,210 349,690 219,396 1.25 2,400,000 1996 69.47
3 13,183 533,765 269,660 241,705 1.53 2,250,000 1996 73.17
112 16,335 889,107 580,665 272,877 1.39 2,475,000 1996 66.50
- -------------------------------------------------------------------------------------------------------------------------------
282 15,967 870,542 586,148 284,394 1.48 2,950,000 1996 55.79
40 13,464 408,920 164,540 225,630 1.40 2,200,000 1996 72.78
233 13,442 295,100 80,524 202,614 1.26 2,140,000 1996 74.62
107 13,823 388,750 142,158 231,611 1.40 2,300,000 1996 69.30
39 13,355 369,414 121,988 228,797 1.43 2,125,000 1996 74.74
- -------------------------------------------------------------------------------------------------------------------------------
325 12,888 311,613 118,288 193,325 1.25 2,300,000 1996 68.26
256 14,876 898,090 672,366 225,724 1.26 2,810,000 1996 54.94
338 12,850 398,852 203,422 195,430 1.27 1,900,000 1996 79.93
115 13,368 329,042 101,491 216,622 1.35 2,250,000 1996 67.11
109 12,717 311,629 80,501 201,301 1.32 2,365,000 1995 63.26
- -------------------------------------------------------------------------------------------------------------------------------
230 13,612 673,123 465,293 207,830 1.27 2,100,000 1996 70.89
231 15,654 660,339 430,169 230,169 1.23 3,000,000 1996 49.36
48 12,378 398,250 169,552 206,855 1.39 2,035,000 1996 72.22
221 13,270 253,997 46,089 199,051 1.25 2,300,000 1996 63.64
247 12,224 385,213 201,840 183,373 1.25 1,900,000 1996 76.27
- -------------------------------------------------------------------------------------------------------------------------------
250 12,208 438,721 228,802 209,919 1.43 2,000,000 1996 72.24
74 11,705 346,189 130,022 197,687 1.41 1,900,000 1996 75.85
114 11,911 383,599 154,430 192,258 1.35 2,380,000 1996 60.52
311 12,601 349,034 111,102 225,476 1.49 2,100,000 1996 68.57
238 11,648 428,342 260,951 167,391 1.20 1,900,000 1996 75.15
- -------------------------------------------------------------------------------------------------------------------------------
347 11,648 491,637 278,566 213,071 1.52 1,900,000 1996 75.00
279 14,984 246,210 19,311 226,899 1.26 1,900,000 1996 74.81
63 11,803 355,706 148,278 188,101 1.33 1,900,000 1996 74.79
7 11,355 455,057 258,971 178,456 1.31 1,900,000 1995 74.47
160 12,319 332,419 112,221 199,779 1.35 2,250,000 1996 62.62
- -------------------------------------------------------------------------------------------------------------------------------
239 11,376 537,520 361,470 176,049 1.29 1,800,000 1996 77.93
286 12,447 351,560 124,451 189,043 1.27 2,600,000 1996 53.76
79 11,869 970,610 657,701 263,708 1.85 3,950,000 1996 35.38
5 11,463 395,964 183,699 195,277 1.42 1,840,000 1996 74.51
361 10,748 330,814 160,117 170,697 1.32 2,100,000 1996 65.24
- -------------------------------------------------------------------------------------------------------------------------------
319 10,572 337,528 179,925 157,603 1.24 1,700,000 1996 79.37
211 11,301 576,775 398,902 177,873 1.31 1,850,000 1996 72.64
28 11,030 835,802 600,010 189,928 1.43 2,650,000 1996 48.39
323 10,433 252,278 95,762 156,517 1.25 1,900,000 1996 66.90
105 11,044 403,121 166,713 185,573 1.40 2,900,000 1996 43.44
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6 25.28 1995 84 units 23,708.98/ unit 93.90 0.00 200 per unit
212 67.28 1969 134 units 14,650.31/units 93.28 585,677.00 250 per unit
151 58.73 1988 28,480 sqft 68.42/ sqft 95.40 6,250.00 0.15 per sq. ft.
261 59.99 1928 123,830 sqft 15.72/sqft 100.00 0.00 0.15 per sq. ft.
15 67.94 1965 108 units 17,945.41/ unit 93.28 3,325.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
111 44.96 1953 30,327 sqft 63.64/ sqft 100.00 25,732.50 0.11 per sq. ft.
52 67.09 1982 108 units 17,866.33/ unit 98.00 29,035.00 200 per unit
161 55.71 1969 58,988 sqft 31.67/ sqft 95.20 29,750.00 0.20 per sq. ft.
246 70.14 1958 105 pad 17,780.24/pad 97.14 0.00 79 per pad
348 NAP 1986 96 rooms 19,270.83/room NAP 0.00 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
220 66.17 1979 107 units 17,230.90/units 93.46 73,125.00 327 per unit
76 56.92 1972 120 units 15,321.94/ unit 100.00 9,375.00 309 per unit
203 65.07 1984 104 units 17,391.94/units 97.12 16,362.50 250 per unit
20 66.60 1969 78 units 23,111.94/ unit 100.00 2,375.00 250 per unit
320 47.14 1985 26,500 sqft 67.92/sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
291 NAP 1969 97 rooms 18,533.05/room NAP 62,938.00 4% of gross rev.
280 62.16 1981 103,042 sqft 17.44/sqft 100.00 0.00 0.15 per sq. ft.
216 64.38 1975 138 units 12,999.11/units 100.00 55,375.00 283 per unit
214 47.82 1971 108 units 16,592.33/units 94.44 6,075.00 250 per unit
219 61.24 1976 95,086 sqft 18.53/sqft 100.00 187,022.50 0.16 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
119 59.30 1956 23,176 sqft 75.79/ sqft 100.00 82,500.00 0.23 per sq. ft.
206 54.26 1964 182,113 sqft 9.63/sqft 98.31 28,562.50 0.15 per sq. ft.
150 42.26 1989 69,804 sqft 25.07/ sqft 75.18 28,352.50 0.10 per sq. ft.
289 NAP 1967 64 rooms 26,875.00/room NAP 28,031.25 4% of gross rev.
272 59.74 1992 42 units 40,432.08/units 100.00 0.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
99 40.74 1993 41 beds 41,219.60/ bed 85.36 675.00 300 per bed
46 60.66 1985 100 units 16,867.28/ unit 93.00 21,262.50 292 per unit
254 65.33 1980 62,114 sqft 26.84/sqft 94.21 0.00 0.15 per sq. ft.
3 65.51 1973 112 units 14,698.49/ unit 95.33 1,250.00 200 per unit
112 49.40 1990 57 rooms 28,874.45/ room 78.00 0.00 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
282 NAP 1966 92 rooms 17,887.59/room 60.00 56,943.75 4% of gross rev.
40 60.57 1987 75 units 21,349.10/ unit 90.67 6,050.00 250 per unit
233 67.53 1979 51,587 sqft 30.95/sqft 87.50 6,038.00 0.15 per sq. ft.
107 58.12 1987 26,420 sqft 60.33/ sqft 100.00 0.00 0.11 per sq. ft.
39 62.20 1987 72 units 22,058.74/ unit 91.67 5,687.50 270 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
325 61.09 1965 44 units 35,682.54/units 100.00 1,000.00 270 per unit
256 NAP 1963 79 beds 19,541.28/bed 94.94 0.00 250 per bed
338 74.80 1974 240 pad 6,327.77/pad 96.69 52,000.00 50 per pad
115 56.63 1887 11,950 sqft 126.37/ sqft 100.00 3,750.00 0.20 per sq. ft.
109 57.05 1986 36,926 sqft 40.51/ sqft 100.00 0.00 0.10 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
230 NAP 1971 148 units 10,059.27/units 91.28 0.00 250 per unit
231 NAP 1972 172 units 8,608.95/units 94.19 59,047.50 250 per unit
48 60.13 1986 86 units 17,089.28/ unit 93.18 8,571.25 254 per unit
221 54.03 1986 15,022 sqft 97.44/sqft 100.00 11,156.00 0.15 per sq. ft.
247 71.51 1969 84 units 17,250.83/units 92.86 4,666.25 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
250 60.20 1970 80 units 18,060.03/units 96.25 22,000.00 250 per unit
74 62.44 1987 78 units 18,477.29/ unit 89.74 6,412.50 240 per unit
114 50.24 1986 34,657 sqft 41.56/ sqft 100.00 0.00 0.30 per sq. ft.
311 57.54 1971 18,000 sqft 80.00/sqft 100.00 32,375.00 0.15 per sq. ft.
238 70.71 1983 60 units 23,798.70/units 93.33 64,100.00 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
347 61.76 1956 102 units 13,970.59/units 93.14 13,994.00 250 per unit
279 NAP 1959 43,635 sqft 32.58/sqft 100.00 0.00 0.15 per sq. ft.
63 61.99 1973 78 units 18,218.66/ unit 98.72 11,385.00 251 per unit
7 66.70 1979 86 units 16,452.62/ unit 98.00 28,118.75 205 per unit
160 56.67 1981 25,159 sqft 56.00/ sqft 97.00 0.00 0.18 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
239 70.00 1968 96 units 14,611.60/units 95.83 105,910.08 250 per unit
286 22.97 1979 60,125 sqft 23.25/sqft 100.00 0.00 0.04 per sq. ft.
79 29.49 1968 246 units 5,681.08/ unit 91.06 148,750.00 200 per unit
5 67.21 1972 62 units 22,112.98/ unit 93.55 36,640.00 274 per unit
361 58.13 1970 45 units 30,444.44/units 97.78 0.00 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
319 74.18 1982 60 units 22,486.92/units 95.56 28,750.00 290 per unit
211 60.49 1973 134 units 10,028.79/units 97.76 0.00 250 per unit
28 40.55 1962 156 units 8,220.55/ unit 96.00 68,750.00 294 per unit
323 59.86 1964 40 units 31,775.27/units 97.50 0.00 270 per unit
105 36.56 1966 68,907 sqft 18.28/ sqft 100.00 18,750.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Largest Retail Tenant
- --------------------------------------------------------------------------------------------------
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6 0.1150
212 0.1350
151 0.1150 Boone Fabrics 5,291
261 0.1150 National Auto Classics 24,135
15 0.1150
- --------------------------------------------------------------------------------------------------
111 0.1150 CVS 10,662
52 0.1150
161 0.1150 Walgreens 12,267
246 0.1350
348 0.1150
- --------------------------------------------------------------------------------------------------
220 0.1150
76 0.1150
203 0.1350
20 0.1150
320 0.1350 Fabricland 10,000
- --------------------------------------------------------------------------------------------------
291 0.1150
280 0.1150 Reuben's Furniture 48,776
216 0.1150
214 0.1150
219 0.1150 Pikes Peak Moving 14,442
- --------------------------------------------------------------------------------------------------
119 0.1150 Christy's 3,288
206 0.1150 Chemtrusion/I-Pac 58,410
150 0.1150 Scan Source 13,937
289 0.1150
272 0.1350
- --------------------------------------------------------------------------------------------------
99 0.1150
46 0.1150
254 0.1150 Cadworks, Inc. 10,522
3 0.1150
112 0.1150
- --------------------------------------------------------------------------------------------------
282 0.1150
40 0.1150
233 0.1350 San Diego Sports Collectibles / NAS Amirtemour 5,293
107 0.2000 Aerial Company 4,320
39 0.1150
- --------------------------------------------------------------------------------------------------
325 0.1150
256 0.1150
338 0.1150
115 0.1150 Concrete 1,000
109 0.1500 Advance Auto Parts 6,000
- --------------------------------------------------------------------------------------------------
230 0.1150
231 0.1150
48 0.1150
221 0.1150 Pecos Trail Exec. Suites 7,626
247 0.1150
- --------------------------------------------------------------------------------------------------
250 0.1150
74 0.1150
114 0.1150 Nick's Tomato Pie 8,000
311 0.1150 The Pet Food Giant 18,000
238 0.1150
- --------------------------------------------------------------------------------------------------
347 0.1150
279 0.1150 American Trade Institute 43,635
63 0.1150
7 0.1150
160 0.1150 Realty Executives 3,300
- --------------------------------------------------------------------------------------------------
239 0.1150
286 0.1150 Landis & Gyr Powers Inc. 14,688
79 0.2000
5 0.1150
361 0.1350
- --------------------------------------------------------------------------------------------------
319 0.1150
211 0.1150
28 0.1150
323 0.1150
105 0.1150 Brand Name Sales 20,974
- --------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- -------------------------------------------------------------------
6
212
3/31/2000 151
2/28/2000 261
15
- -------------------------------------------------------------------
1/31/2008 111
52
6/30/2041 161
246
348
- -------------------------------------------------------------------
220
76
203
20
4/30/1998 320
- -------------------------------------------------------------------
291
6/30/2009 280
216
214
7/01/1998 219
- -------------------------------------------------------------------
5/31/2001 119
4/14/1997 206
9/30/1998 150
289
272
- -------------------------------------------------------------------
99
46
12/31/2003 254
3
112
- -------------------------------------------------------------------
282
40
7/14/97 - 2/28/99 233
5/01/2001 107
39
- -------------------------------------------------------------------
325
256
338
9/01/1997 115
6/30/2001 109
- -------------------------------------------------------------------
230
231
48
8/31/2004 221
247
- -------------------------------------------------------------------
250
74
10/31/2001 114
10/14/2004 311
238
- -------------------------------------------------------------------
347
7/01/2011 279
63
7
5/31/1997 160
- -------------------------------------------------------------------
239
9/30/2000 286
79
5
361
- -------------------------------------------------------------------
319
211
28
323
3/01/2000 105
- -------------------------------------------------------------------
Page 4
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
Control
No. Property Name Address
- --------------------------------------------------------------------------------
55 Briar Hill 5946 54th Avenue North
310 Redbird Plaza Shopping Center 4099-4107 Camp Wisdom Road
205 Capital Tech Center 1611 N. Stemmons Freeway
19 The Ashford 115 South Lois Avenue
255 Grayridge Apartments 5625 Bissonnet Street
- --------------------------------------------------------------------------------
32 Mountain Top 48-A Forest Drive
78 Country View - Wisconsin 607 Reeve Drive
237 Westheimer House 5800 Wellington Drive
257 Pioneer Point Apartments 216 W. Pioneer Parkway
213 Friendship Square 1115 - 1195 Bridge Street
- --------------------------------------------------------------------------------
62 Aragon Woods 8152 Aragon Woods Drive
44 Heather Ridge 6200 Barnes Road South
217 Lakewood Village Apartments 200 E. Lakewood Drive
102 Norwest Bank Building 9719 North Hayden Road
10 Stonegate 217 White Drive
- --------------------------------------------------------------------------------
146 Allflex USA, Inc. 2805 E. 12th Street
54 Caribbean Towers 11100 62nd Avenue North
34 1512-24 Leland Avenue 1512-24 Leland Avenue
222 Pinecrest Apartments 2035 E. Pinetree Boulevard
64 Meadowood 820 Hospital Road
- --------------------------------------------------------------------------------
71 Spanish Oaks 3125 Clarksville Street
77 Ridgewood II 3863 Memorial Drive
208 Courtyard Apartments 15025 Saticoy Street
69 Old Archer Court 3001 SW Old Archer Road #29
26 Riverplace 102 North River Street
- --------------------------------------------------------------------------------
38 Spring Hollow 2703 N Buckner Blvd
41 Stillwater 1 Stillwater Court
31 Franklin 165 Franklin Street
72 Slate Run 248 S. Heincke Road
248 Westec Plaza 625 Digital Drive
- --------------------------------------------------------------------------------
96 801 Eastgate Drive 801 Eastgate Drive
14 Williamstown Bay III 3300 East Ramsey Avenue
100 G-5054 Miller Road G-5054 Miller Road
33 2540 Valentine Avenue 2540 Valentine Ave.
242 JMA - Woodcreek Village Apartments 3023 Woodcreek Lane
- --------------------------------------------------------------------------------
97 1700 East Dublin - Granville Road 1700 East Dublin - Granville Road
36 Greentree I 121 Covington Road
235 BCM-Westheimer Court Apts. 5820 Berkman Drive
95 5354 Dixie Highway 5354 Dixie Highway
104 4180 Plainfield Northeast 4180 Plainfield Northeast
- --------------------------------------------------------------------------------
103 4810 Outer Loop 4810 Outer Loop
117 Logan Healthcare Management Plaza 587 Washington Street
11 Villager 22 Wright Parkway
37 Greentree II 121 Covington Road
322 CAP-Millbrook Apartments 170 Spring Hill Road
- --------------------------------------------------------------------------------
321 CAP-Oakwood Apartments 114 South Eagleville Road
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 Kenneth City FL 33709 1,256,000 1,252,543 0.11 96.25
310 Dallas TX 75237 1,250,000 1,250,000 0.11 96.36
205 Carrollton TX 75006 1,253,800 1,247,390 0.11 96.47
19 Tampa FL 33609 1,238,000 1,233,710 0.11 96.58
255 Houston TX 77081 1,225,000 1,222,721 0.11 96.69
- ------------------------------------------------------------------------------------------------------
32 Bloomingdale NJ 07403 1,220,000 1,215,788 0.11 96.80
78 Waunakee WI 53597 1,199,000 1,197,560 0.11 96.90
237 Austin TX 78723 1,200,000 1,196,902 0.11 97.01
257 Arlington TX 76010 1,200,000 1,195,825 0.11 97.11
213 Brighton CO 80601 1,175,000 1,167,533 0.10 97.21
- ------------------------------------------------------------------------------------------------------
62 Indianapolis IN 46214 1,155,000 1,151,712 0.10 97.31
44 Jacksonville FL 32216 1,147,000 1,143,598 0.10 97.42
217 Nacogdoches TX 75961 1,120,000 1,114,871 0.10 97.51
102 Scottsdale AZ 85258 1,110,000 1,105,277 0.10 97.61
10 Tallahassee FL 32304 1,106,000 1,100,333 0.10 97.71
- ------------------------------------------------------------------------------------------------------
146 Irving TX 75063 1,100,000 1,097,190 0.10 97.80
54 Seminole FL 33542 1,100,000 1,096,972 0.10 97.90
34 Bronx NY 10472 1,100,000 1,096,220 0.10 98.00
222 Thomasville GA 31792 1,085,000 1,080,422 0.09 98.09
64 Franklin IN 46131 1,067,000 1,064,063 0.09 98.18
- ------------------------------------------------------------------------------------------------------
71 Paris TX 75460 1,061,000 1,058,885 0.09 98.28
77 Unicorporated Decatur GA 30032 1,053,000 1,051,002 0.09 98.37
208 Van Nuys CA 91405 1,050,000 1,047,918 0.09 98.46
69 Gainesville FL 32608 1,035,000 1,032,292 0.09 98.55
26 Janesville WI 53545 1,033,000 1,030,148 0.09 98.64
- ------------------------------------------------------------------------------------------------------
38 Dallas TX 75228 990,000 987,268 0.09 98.73
41 Savannah GA 31406 985,000 981,351 0.09 98.82
31 Bloomfield NJ 07003 925,000 913,000 0.08 98.90
72 Miamisburg OH 45342 900,000 898,312 0.08 98.98
248 Plano TX 75075 896,000 893,751 0.08 99.05
- ------------------------------------------------------------------------------------------------------
96 Cincinnati OH 45245 865,000 857,446 0.08 99.13
14 Cudahy WI 53110 850,000 846,987 0.07 99.20
100 Flint MI 48507 849,000 841,586 0.07 99.28
33 Bronx NY 10458 825,000 821,562 0.07 99.35
242 Houston TX 77345 820,000 818,671 0.07 99.42
- ------------------------------------------------------------------------------------------------------
97 Columbus OH 43229 741,000 734,529 0.06 99.49
36 Thomasville GA 31792 725,000 722,427 0.06 99.55
235 Austin TX 78723 720,000 718,141 0.06 99.61
95 Louisville KY 40216 683,000 677,035 0.06 99.67
104 Grand Rapids MI 48505 659,000 653,424 0.06 99.73
- ------------------------------------------------------------------------------------------------------
103 Louisville KY 40219 657,000 651,262 0.06 99.79
117 Weymouth MA 02188 630,000 627,952 0.06 99.84
11 Fort Walton Beach FL 32548 568,000 564,953 0.05 99.89
37 Thomasville GA 31792 546,000 544,049 0.05 99.94
322 Storrs CT 06268 436,000 435,592 0.04 99.98
- ------------------------------------------------------------------------------------------------------
321 Storrs CT 06268 257,300 257,059 0.02 100.00
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
55 8.8750 120 117 300 297 7/3/96 8/1/06 1,038,958
310 9.1400 120 120 300 300 10/2/96 11/1/06 1,040,231
205 9.3900 60 54 300 294 4/16/96 5/1/01 1,175,623
19 8.8200 120 114 360 354 4/30/96 5/1/06 1,105,203
255 8.7700 120 118 300 298 8/8/96 9/1/06 1,010,856
- ----------------------------------------------------------------------------------------------------------------
32 9.1250 120 115 330 325 5/22/96 6/1/06 1,060,343
78 8.5600 300 298 360 358 8/22/96 9/1/21 457,218
237 9.2600 120 117 300 297 7/1/96 8/1/06 1,001,291
257 9.2200 120 116 300 296 6/24/96 7/1/06 1,000,404
213 9.0300 120 113 300 293 3/26/96 4/1/06 975,399
- ----------------------------------------------------------------------------------------------------------------
62 8.6700 84 81 300 297 7/23/96 8/1/03 1,031,857
44 8.7200 84 80 330 326 6/27/96 7/1/03 1,051,609
217 8.9300 84 79 300 295 5/23/96 6/1/03 1,004,509
102 9.3750 120 115 300 295 5/21/96 6/1/06 928,537
10 8.8500 120 113 330 323 3/29/96 4/1/06 955,947
- ----------------------------------------------------------------------------------------------------------------
146 9.3750 180 179 180 179 9/16/96 10/1/11 NAP
54 8.8750 120 117 300 297 7/3/96 8/1/06 909,915
34 9.1500 120 115 330 325 5/22/96 6/1/06 956,520
222 9.3100 276 272 276 272 6/27/96 7/1/19 NAP
64 8.8750 120 117 300 297 7/23/96 8/1/06 882,618
- ----------------------------------------------------------------------------------------------------------------
71 9.2900 300 297 330 327 7/31/96 8/1/21 244,823
77 8.6500 120 118 300 298 8/21/96 9/1/06 866,487
208 9.5200 120 116 360 356 6/20/96 7/1/06 948,814
69 9.1800 120 117 300 297 7/30/96 8/1/06 862,081
26 9.0200 300 295 360 355 5/20/96 6/1/21 406,207
- ----------------------------------------------------------------------------------------------------------------
38 9.1100 120 116 330 326 6/11/96 7/1/06 860,186
41 8.8400 84 80 300 296 6/21/96 7/1/03 882,247
31 9.3750 180 175 180 175 5/20/96 6/1/11 NAP
72 8.7200 120 118 300 298 8/2/96 9/1/06 741,804
248 9.4300 60 57 300 297 7/25/96 8/1/01 840,450
- ----------------------------------------------------------------------------------------------------------------
96 9.3750 120 114 240 234 4/22/96 5/1/06 624,063
14 8.7100 300 294 360 354 4/4/96 5/1/21 327,437
100 9.3750 120 114 240 234 4/22/96 5/1/06 612,520
33 9.5000 120 115 300 295 5/22/96 6/1/06 692,002
242 9.0900 120 117 360 357 7/1/96 8/1/06 735,581
- ----------------------------------------------------------------------------------------------------------------
97 9.3750 120 114 240 234 4/22/96 5/1/06 534,602
36 9.1000 120 116 300 296 6/4/96 7/1/06 602,793
235 9.2600 120 117 300 297 7/1/96 8/1/06 600,774
95 9.3750 120 114 240 234 4/22/96 5/1/06 492,758
104 9.6250 120 114 240 234 4/22/96 5/1/06 478,717
- ----------------------------------------------------------------------------------------------------------------
103 9.3750 120 114 240 234 4/22/96 5/1/06 474,000
117 9.6250 84 80 300 296 6/10/96 7/1/03 570,652
11 8.6000 120 113 330 323 3/29/96 4/1/06 488,390
37 9.0600 120 116 300 296 6/4/96 7/1/06 453,557
322 8.7200 84 83 300 299 9/30/96 10/1/03 389,812
- ----------------------------------------------------------------------------------------------------------------
321 8.7200 84 83 300 299 9/30/96 10/1/03 230,043
</TABLE>
Control
No. Property Type
- --------------------------
55 Multifamily
310 Unanchored Retail
205 Office
19 Multifamily
255 Multifamily
- --------------------------
32 Multifamily
78 Sec. 42
237 Multifamily
257 Multifamily
213 Anchored Retail
- --------------------------
62 Multifamily
44 Multifamily
217 Multifamily
102 Unanchored Retail
10 Multifamily
- --------------------------
146 Industrial
54 Multifamily
34 Multifamily
222 Multifamily
64 Multifamily
- --------------------------
71 Multifamily
77 Multifamily
208 Multifamily
69 Multifamily
26 Sec. 42
- --------------------------
38 Multifamily
41 Multifamily
31 Multifamily
72 Multifamily
248 Office
- --------------------------
96 Unanchored Retail
14 Sec. 42
100 Unanchored Retail
33 Multifamily
242 Multifamily
- --------------------------
97 Unanchored Retail
36 Multifamily
235 Multifamily
95 Anchored Retail
104 Unanchored Retail
- --------------------------
103 Unanchored Retail
117 Unanchored Retail
11 Multifamily
37 Multifamily
322 Multifamily
- --------------------------
321 Multifamily
- --------------------------
Control
No. Prepayment Restrictions
- -------------------------------------------------------------------------------
55 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
310 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
205 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @1%, open last 3 months
19 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
255 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------
32 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
78 15 yr lock, open last 10 years
237 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
257 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
213 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
- -------------------------------------------------------------------------------
62 5 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
44 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
217 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
102 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
10 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------
146 4 yr lock, >1% or YM through yr 14 1/2, open last 6 mos
54 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
34 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
222 12 yr lock >1% or YM through yr 22 3/4, open last 3 months
64 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------
71 >1% or YM through yr 15, 5%,4%,3%,2%,1%, open last 5 years
77 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
208 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
69 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
26 15 yr lock, open last 10 years
- -------------------------------------------------------------------------------
38 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
41 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
31 4 yr lock, >1% or YM through yr 14 1/2, open last 6 mos
72 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
248 3 yr lock, > 1%, or YM through yr 4 3/4, open last 3 months
- -------------------------------------------------------------------------------
96 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
14 15 yr lock, open last 10 years
100 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
33 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
242 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------
97 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
36 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
235 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
95 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
104 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------
103 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
117 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
11 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
37 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
322 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- -------------------------------------------------------------------------------
321 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
55 10,433 414,458 213,930 183,928 1.47 2,000,000 1996 62.63
310 10,610 258,840 71,619 172,183 1.35 1,670,000 1996 74.85
205 10,859 289,424 108,977 162,888 1.25 2,200,000 1996 56.70
19 9,801 308,675 146,792 147,211 1.25 1,800,000 1996 68.54
255 10,088 512,856 341,510 171,346 1.42 1,850,000 1996 66.09
- ------------------------------------------------------------------------------------------------------------------------------------
32 10,107 373,813 203,394 158,179 1.30 1,700,000 1996 71.52
78 9,270 267,309 128,812 131,148 1.18 1,410,000 1996 84.93
237 10,285 525,530 353,306 172,224 1.40 1,600,000 1996 74.81
257 10,252 441,992 282,216 159,776 1.30 1,600,000 1996 74.74
213 9,885 280,002 106,790 158,158 1.33 1,600,000 1996 72.97
- ------------------------------------------------------------------------------------------------------------------------------------
62 9,433 316,823 144,859 153,134 1.35 1,540,000 1996 74.79
44 9,176 550,949 349,092 173,297 1.57 1,900,000 1996 60.19
217 9,345 311,334 155,953 155,381 1.39 1,500,000 1996 74.32
102 9,602 231,757 76,926 148,333 1.29 1,700,000 1996 65.02
10 8,949 279,223 116,308 147,389 1.37 1,475,000 1996 74.60
- ------------------------------------------------------------------------------------------------------------------------------------
146 11,404 217,621 28,790 171,032 1.25 1,600,000 1996 68.57
54 9,137 396,532 204,196 173,256 1.58 1,700,000 1996 64.53
34 9,132 372,467 198,050 157,739 1.44 1,500,000 1996 73.08
222 9,549 333,006 186,496 146,510 1.28 1,460,000 1996 74.00
64 8,863 272,415 115,535 141,223 1.33 1,550,000 1996 68.65
- ------------------------------------------------------------------------------------------------------------------------------------
71 8,913 479,886 296,067 153,019 1.43 1,700,000 1996 62.29
77 8,586 294,877 134,959 144,475 1.40 1,350,000 1996 77.85
208 8,844 288,758 141,175 147,583 1.39 1,550,000 1996 67.61
69 8,814 317,774 151,762 142,900 1.35 1,400,000 1996 73.74
26 8,327 254,538 129,827 117,011 1.17 1,360,000 1996 75.75
- ------------------------------------------------------------------------------------------------------------------------------------
38 8,191 341,058 193,636 128,972 1.31 1,460,000 1996 67.62
41 8,158 259,264 118,656 126,774 1.29 1,325,000 1996 74.06
31 9,589 482,949 247,958 219,241 1.91 2,500,000 1996 36.52
72 7,381 237,556 109,371 112,358 1.27 1,250,000 1996 71.86
248 7,785 205,185 82,081 116,758 1.25 1,200,000 1996 74.48
- ------------------------------------------------------------------------------------------------------------------------------------
96 7,992 180,357 9,018 158,607 1.65 1,725,000 1995 49.71
14 6,663 223,776 122,450 95,325 1.19 1,020,000 1995 83.04
100 7,845 157,677 7,884 142,886 1.52 1,350,000 1995 62.34
33 7,208 263,436 125,221 125,371 1.45 1,100,000 1996 74.69
242 6,651 243,743 135,194 108,549 1.36 1,060,000 1996 77.23
- ------------------------------------------------------------------------------------------------------------------------------------
97 6,847 142,888 7,144 123,210 1.50 1,300,000 1995 56.50
36 6,134 178,720 73,949 93,161 1.27 930,000 1996 77.68
235 6,171 218,137 124,086 94,051 1.27 900,000 1996 79.79
95 6,311 131,062 6,553 122,558 1.62 1,250,000 1995 54.16
104 6,197 141,608 7,080 126,850 1.71 1,300,000 1995 50.26
- ------------------------------------------------------------------------------------------------------------------------------------
103 6,071 175,340 8,767 156,464 2.15 1,660,000 1995 39.23
117 5,559 133,326 40,016 91,330 1.37 1,100,000 1996 57.09
11 4,497 175,974 92,487 72,531 1.34 710,000 1996 79.57
37 4,604 135,178 55,421 69,581 1.26 700,000 1996 77.72
322 3,576 86,460 32,813 53,648 1.25 630,000 1996 69.14
- ------------------------------------------------------------------------------------------------------------------------------------
321 2,110 51,034 19,373 31,661 1.25 345,000 1996 74.51
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 51.95 1972 83units 15,090.88/ unit 99.00 42,450.00 200per unit
310 62.29 1984 25,340sqft 49.33/sqft 100.00 0.00 0.15per sq. ft.
205 53.44 1985 51,920sqft 24.03/sqft 88.38 0.00 0.15per sq. ft.
19 61.40 1967 56units 22,030.53/ unit 98.21 1,000.00 262per unit
255 54.64 1970 152units 8,044.22/units 99.33 67,437.50 225per unit
- ------------------------------------------------------------------------------------------------------------------------------------
32 62.37 1965 40units 30,394.70/ unit 94.80 95,508.75 306per unit
78 32.43 1995 42units 28,513.33/ unit 90.48 0.00 175per unit
237 62.58 1971 86units 13,917.46/units 98.84 34,832.50 296per unit
257 62.53 1973 96units 12,456.51/units 96.00 30,312.50 265per unit
213 60.96 1978 32,326sqft 36.12/sqft 100.00 37,500.00 0.16per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
62 67.00 1986 70units 16,453.03/ unit 90.60 6,185.00 269per unit
44 55.35 1969 120units 9,529.98/ unit 92.00 91,500.00 238per unit
217 66.97 1973 72units 15,484.32/units 100.00 40,375.00 250per unit
102 54.62 1985 10,053sqft 109.95/ sqft 100.00 0.00 0.15per sq. ft.
10 64.81 1972 69units 15,946.85/ unit 92.75 12,250.00 225per unit
- ------------------------------------------------------------------------------------------------------------------------------------
146 NAP 1986 59,500sqft 18.44/ sqft 100.00 7,687.50 0.22per sq. ft.
54 53.52 1973 72units 15,235.73/ unit 97.00 32,687.50 265per unit
34 63.77 1930 62units 17,680.96/ unit 97.00 687.50 269per unit
222 NAP 1978 80units 13,505.27/units 100.00 26,175.00 268per unit
64 56.94 1983 51units 20,863.99/ unit 95.10 29,782.50 307per unit
- ------------------------------------------------------------------------------------------------------------------------------------
71 14.40 1976 112units 9,454.33/ unit 88.40 34,500.00 275per unit
77 64.18 1983 52units 20,211.58/ unit 98.08 4,025.00 297per unit
208 61.21 1965 60units 17,465.30/units 95.00 14,372.50 225per unit
69 61.58 1978 72units 14,337.39/ unit 90.40 24,937.50 321per unit
26 29.87 1995 44units 23,412.45/ unit 100.00 0.00 175per unit
- ------------------------------------------------------------------------------------------------------------------------------------
38 58.92 1984 82units 12,039.86/ unit 97.56 52,200.00 225per unit
41 66.58 1982 53units 18,516.05/ unit 96.23 5,437.50 261per unit
31 NAP 1928 63units 14,492.06/ unit 100.00 12,000.00 250per unit
72 59.34 1985 49units 18,332.90/ unit 98.00 41,756.25 323per unit
248 70.04 1986 27,669sqft 32.30/sqft 100.00 0.00 0.15per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
96 36.18 1986 16,101sqft 53.25/ sqft 100.00 8,450.00 0.67per sq. ft.
14 32.10 1995 40units 21,174.68/ unit 97.50 0.00 150per unit
100 45.37 1980 15,814sqft 53.22/ sqft 100.00 17,549.00 0.37per sq. ft.
33 62.91 1930 38units 21,620.06/ unit 97.00 5,187.50 338per unit
242 69.39 1984 42units 19,492.17/units 100.00 0.00 250per unit
- ------------------------------------------------------------------------------------------------------------------------------------
97 41.12 1971 13,860sqft 53.00/ sqft 100.00 34,990.00 0.77per sq. ft.
36 64.82 1983 43units 16,800.63/ unit 100.00 78,945.90 270per unit
235 66.75 1968 40units 17,953.52/units 100.00 32,007.50 290per unit
95 39.42 1987 12,351sqft 54.82/ sqft 100.00 3,630.00 0.13per sq. ft.
104 36.82 1971 11,582sqft 56.42/ sqft 100.00 2,875.00 0.53per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
103 28.55 1988 11,830sqft 55.05/ sqft 100.00 9,703.00 0.70per sq. ft.
117 51.88 1984 9,900sqft 63.43/ sqft 100.00 3,250.00 0.20per sq. ft.
11 68.79 1974 33units 17,119.78/ unit 100.00 12,856.25 332per unit
37 64.79 1984 32units 17,001.54/ unit 90.63 79,594.90 318per unit
322 61.87 1975 12units 36,299.34/units 100.00 0.00 270per unit
- ------------------------------------------------------------------------------------------------------------------------------------
321 66.68 1964 10units 25,705.91/units 100.00 0.00 271per unit
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
----------------------------------------------------------------------------------------------------------
Servicing Area Leased % of Total Lease Control
Fees Name (Sq. Ft.) Area Leased Exp Date No.
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <S>
0.1150 55
0.1150 Pier 1 Imports 6,500 1/31/2000 310
0.1150 Triple T 8,200 1/31/2000 205
0.1150 19
0.1350 255
- ---------------------------------------------------------------------------------------------------------------------
0.1150 32
0.1150 78
0.1150 237
0.1150 257
0.1350 It's 99 Cents ("Shadow"-Safeway) 9,072 7/01/2000 213
- ---------------------------------------------------------------------------------------------------------------------
0.1150 62
0.1150 44
0.1150 217
0.2000 Norwest Bank 5,000 2/28/2000 102
0.1150 10
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Allflex 59,500 146
0.1150 54
0.1150 34
0.1150 222
0.1150 64
- ---------------------------------------------------------------------------------------------------------------------
0.2000 71
0.1150 77
0.1350 208
0.1150 69
0.1150 26
- ---------------------------------------------------------------------------------------------------------------------
0.2000 38
0.1150 41
0.1150 31
0.1150 72
0.1150 Digital Computers 14,332 5/31/2002 248
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Frank's Nursery & Crafts 17,264 96
0.1150 14
0.1150 Frank's Nursery & Crafts 18,670 100
0.1150 33
0.1350 242
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Frank's Nursery & Crafts 13,860 97
0.1150 36
0.1150 235
0.1150 Frank's Nursery & Crafts ("Shadow"-Winn Dixie) 15,012 95
0.1150 Frank's Nursery & Crafts 23,769 104
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Frank's Nursery & Crafts 14,442 103
0.1150 Logan Healtcare 5,300 3/31/2001 117
0.1150 11
0.1150 37
0.1150 322
- ---------------------------------------------------------------------------------------------------------------------
0.1150 321
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Anchor stores not included as part of Mortgaged Property
Page 5
<PAGE>
[Logo] State Street
Corporate Trust Department
Securities Administration
Report to Certificateholders
Merrill Lynch Mortgage Investors, Inc.
Mortgage Pass-Through Certificates
Series 1996-C2
Payment Date:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Certificate Summary
- ------------------------------------------------------------------------------------------------------------------------------------
Current Ending Outstanding
Pass-Through Original Beginning Interest Principal Principal Realized Ending Balance Appraisal
Class Cusip Rate Balance Balance Distribution Distribution Adjustments Losses Balance Factor Reduction
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1
- ------------------------------------------------------------------------------------------------------------------------------------
A-2
- ------------------------------------------------------------------------------------------------------------------------------------
A-3
- ------------------------------------------------------------------------------------------------------------------------------------
B
- ------------------------------------------------------------------------------------------------------------------------------------
C
- ------------------------------------------------------------------------------------------------------------------------------------
D
- ------------------------------------------------------------------------------------------------------------------------------------
E
- ------------------------------------------------------------------------------------------------------------------------------------
IO
- ------------------------------------------------------------------------------------------------------------------------------------
R
- ------------------------------------------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-1
<PAGE>
[Logo] State Street
Corporate Trust Department
Securities Administration
Report to Certificateholders
Merrill Lynch Mortgage Investors, Inc.
Mortgage Pass-Through Certificates
Series 1996-C2
Payment Date:
- ------------------------------------------------------------------
Principal Distribution Detail
- ------------------------------------------------------------------
Scheduled Principal Total Principal
Class Principal Adjustments Distribution
- ------------------------------------------------------------------
A-1
- ------------------------------------------------------------------
A-2
- ------------------------------------------------------------------
A-3
- ------------------------------------------------------------------
B
- ------------------------------------------------------------------
C
- ------------------------------------------------------------------
D
- ------------------------------------------------------------------
E
- ------------------------------------------------------------------
IO
- ------------------------------------------------------------------
R
- ------------------------------------------------------------------
Total
- ------------------------------------------------------------------
- --------------------------------------------------------------------------------
Interest Distribution Detail
- --------------------------------------------------------------------------------
Accrued Excess Prepayment Interest Net Cumulative Unpaid
Class Interest Interest Shortfall Recovery Distribution Interest Shortfall
- --------------------------------------------------------------------------------
A-1
- --------------------------------------------------------------------------------
A-2
- --------------------------------------------------------------------------------
A-3
- --------------------------------------------------------------------------------
B
- --------------------------------------------------------------------------------
C
- --------------------------------------------------------------------------------
D
- --------------------------------------------------------------------------------
E
- --------------------------------------------------------------------------------
IO
- --------------------------------------------------------------------------------
R
- --------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------
Disclaimer Notice
Notice: This report has been prepared by or based on information furnished to
State Street Bank and Trust Company ("State Street") by one or more third
parties (e.g., Servicer, Master Servicer, etc.). State Street shall not have and
does not undertake responsibility for the accuracy or completeness of
information provided by such third parties, and makes no representation or
warranty with respect to the accuracy or completeness thereof or the sufficiency
thereof for any particular purpose. State Street has not independently verified
information received from third parties, and shall have no liabilitiy for any
inaccuracies therein or caused thereby.
B-2
<PAGE>
[Logo] State Street
Corporate Trust Department
Securities Administration
Report to Certificateholders
Merrill Lynch Mortgage Investors, Inc.
Mortgage Pass-Through Certificates
Series 1996-C2
Payment Date:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Quick Reference
- -------------------------------------------------------------------------------------------
Pass-Through Principal Interest Realized Ending Balance
Class CUSIP Rate Distribution(1) Distribution(1) Losses(1) Factor(1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A-1
- -------------------------------------------------------------------------------------------
A-2
- -------------------------------------------------------------------------------------------
A-3
- -------------------------------------------------------------------------------------------
B
- -------------------------------------------------------------------------------------------
C
- -------------------------------------------------------------------------------------------
D
- -------------------------------------------------------------------------------------------
E
- -------------------------------------------------------------------------------------------
IO
- -------------------------------------------------------------------------------------------
R
- -------------------------------------------------------------------------------------------
</TABLE>
(1) represents distribution per certificate
- --------------------------------------------------------------
Principal Distribution per Certificate
- --------------------------------------------------------------
Scheduled Principal Total Principal
Class Principal Shortfall Distribution
- --------------------------------------------------------------
A-1
- --------------------------------------------------------------
A-2
- --------------------------------------------------------------
A-3
- --------------------------------------------------------------
B
- --------------------------------------------------------------
C
- --------------------------------------------------------------
D
- --------------------------------------------------------------
E
- --------------------------------------------------------------
IO
- --------------------------------------------------------------
R
- --------------------------------------------------------------
- --------------------------------------------------------------------------------
Interest Distribution per Certificate
- --------------------------------------------------------------------------------
Accrued Excess Prepayment Net Cumulative Unpaid
Class Interest Interest Shortfall Distribution Interest Shortfall
- --------------------------------------------------------------------------------
A-1
- --------------------------------------------------------------------------------
A-2
- --------------------------------------------------------------------------------
A-3
- --------------------------------------------------------------------------------
B
- --------------------------------------------------------------------------------
C
- --------------------------------------------------------------------------------
D
- --------------------------------------------------------------------------------
E
- --------------------------------------------------------------------------------
IO
- --------------------------------------------------------------------------------
R
- --------------------------------------------------------------------------------
B-3
<PAGE>
[Logo] State Street
Corporate Trust Department
Securities Administration
Report to Certificateholders
Merrill Lynch Mortgage Investors, Inc.
Mortgage Pass-Through Certificates
Series 1996-C2
Payment Date:
- --------------------------------------------------------------------------------
Aggregate of:
- --------------------------------------------------------------------------------
Principal Prepayments(other than Liquidation Proceeds)
Allocable Prepayment Interest Shortfalls
Servicing Compensation paid to or retained by Servicer in respect of the
related Due Period
Servicing Compensation paid to or retained by Special Servicer in respect of
the related Due Period
Servicing Advances and P&I Advances made by the Servicer
Servicing Advances and P&I Advances made by the Trustee
Amount of Interest to Holders reduced by Losses, Shortfalls,
and Appraisal Reductions
Amount of any remaining Interest Shortfalls
Any action taken by the Servicer/Special Servicer regarding "due-on-sale" or
"due-on-encumbrance" clause
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Collateral Information Current Period Current Period
Closing Beginning Ending
- --------------------------------------------------------------------------------
Loan Count
-----------------------------------------------
Principal Balance
-----------------------------------------------
Gross WAC
-----------------------------------------------
Net WAC
-----------------------------------------------
Stated Remaining Term to Maturity
-----------------------------------------------
- --------------------------------------------------------------------------------
Cumluative
Current Period to Date
- --------------------------------------------------------------------------------
Realized Losses
-----------------------------------------------
Additional Expense Losses
-----------------------------------------------
Appraisal Reductions
-----------------------------------------------
Beginning Principal Negative Principal Ending
Collateral Balance Distributions Amortization Losses Collateral Balance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-4
<PAGE>
State Street Bank and Trust Company
Corporate Trust Department
P.O. Box 778
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Current Scheduled Principal Balances
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Scheduled % of Tot Scheduled % of Tot Wghtd Avg Wghtd Avg Wghtd Avg
Prin Bal Count Mtg Loans Ending Balance Prin Bal DSCR Mtg Rate Mos. to Mat.
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 257,059+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$1,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$2,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$3,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$4,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$5,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$6,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$7,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$8,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$9,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$10,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$15,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$20,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
$35,000,000+ 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
Total 0 0.00 $0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------
</TABLE>
The average Scheduled Principal Balance
of the Mortgage Loans is $0.00
B-5
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Property Type
-------------------------------
Closing
-------------------------------
Property Scheduled % of Tot
Type Count Ending Balance Prin Bal
- --------------------------------------------------
Health Care 0 $0.00 0.00
- --------------------------------------------------
Hospitality 0 $0.00 0.00
- --------------------------------------------------
Industrial 0 $0.00 0.00
- --------------------------------------------------
Mixed-Use (1) 0 $0.00 0.00
- --------------------------------------------------
Mobile Home Park 0 $0.00 0.00
- --------------------------------------------------
Multi-Family 0 $0.00 0.00
- --------------------------------------------------
Office 0 $0.00 0.00
- --------------------------------------------------
Anchored Retail 0 $0.00 0.00
- --------------------------------------------------
Unanchored Retail 0 $0.00 0.00
- --------------------------------------------------
Total 0 $0.00 0.00
- --------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Current
- ---------------------------------------------------------------------------------------------------------------------------------
Property Scheduled % of Tot Wghtd Avg Wghtd Avg Wghtd Avg Wghtd Avg Wghtd Avg Average
Type Count Ending Balance Prin Bal DSCR Mtg Rate Mos. to Mat. Occupancy % LoanAmt/Unit Property Size
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Health Care 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Hospitality 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Industrial 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Mixed-Use (1) 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Mobile Home Park 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Multi-Family 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Office 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Anchored Retail 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Unanchored Retail 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total 0 $0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All Mixed-Use are combined Multifamily & Retail properties.
B-6
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Geographic Locations
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Closing Current
------------------------------- --------------------------------
Geographic Scheduled % of Tot Scheduled % of Tot
Location Count Ending Balance Prin Bal Count Ending Balance Prin Bal
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Texas 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
California 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Florida 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
New York 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
New Jersey 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Ohio 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Pennsylvania 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Oregon 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Nevada 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
North Carolina 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Connecticut 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Washington 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Colorado 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Maryland 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Indiana 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Virginia 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Georgia 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Arizona 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Massachusetts 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Missouri 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Tennessee 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Wisconsin 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Michigan 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
South Carolina 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Iowa 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
New Mexico 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Minnesota 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Illinois 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Louisiana 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Delaware 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
District of Columbia 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Mississippi 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Kansas 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Alabama 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Oklahoma 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Kentucky 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
Total 0 $0.00 0.00 0 $0.00 0.00
- --------------------------------------------------------------------------------------
</TABLE>
B-7
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Mortgage Interest Rates
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Closing Current
- ---------------------------------------------- ------------------------------------------------------------------------------------
Scheduled % of Tot Scheduled % of Tot Wghtd Avg Wghtd Avg Wghtd Avg Wghtd Avg Rem
Note Rate Count Ending Balance Prin Bal Count Ending Balance Prin Bal LTV Mtg Rate Mos. to Mat. Amort Term
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.313%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
8.500%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
8.750%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
9.000%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
9.250%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
9.500%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
9.750%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10.000%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
10.250%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Wghtd Avg: 0.00
Weighted Averages include all classifications referenced above.
B-8
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Most Current Debt Service Coverage Ratio
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Closing Current
- ----------------------------------------- -----------------------------------------------------------------------------------------
Coverage Scheduled % of Tot Scheduled % of Tot Wghtd Avg Wghtd Avg Wghtd Avg Wghtd Avg Rem
Ratio Count Ending Balance Prin Bal Count Ending Balance Prin Bal Most Current LTV Mtg Rate Mos. to Mat. Amort Term
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.15x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.20x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.25x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.30x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.35x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.40x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.45x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.50x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.55x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.60x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.70x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
1.80x+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-9
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Most Current Loan to Value Ratio
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Closing Current
- ------------------------------------------------------------------------------------------------------------------------------------
Scheduled % of Tot Scheduled % of Tot Wghtd Avg Wghtd Avg Wghtd Avg Wghtd Avg Rem
LTV Count Ending Balance Prin Bal Count Ending Balance Prin Bal Most Current DSCR Mtg Rate Mos. to Mat. Amort Term
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35.38%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
50.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
55.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
60.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
65.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
70.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
75.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
80.01%+ 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total 0 $0.00 0.00 0 $0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-10
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Distribution of Remaining Term to Stated Maturity (All Loans)
<TABLE>
<CAPTION>
-------------------------------------------------------------------
Closing Current
- ------------------------------------------------------------------------------------
Months to Scheduled % of Tot Scheduled % of Tot
Stated Maturity Count Ending Balance Prin Bal Count Ending Balance Prin Bal
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
34+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
60+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
84+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
96+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
120+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
132+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
180+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
240+ 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
Total 0 $0.00 0.00 0 $0.00 0.00
- ------------------------------------------------------------------------------------
</TABLE>
Wghted Avg of Remaining Term: 00.00 months
Weighted Averages include all classifications referenced above.
B-11
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Seasoning of Mortgage Loans
------------------------------------------
Current
- -----------------------------------------------------------------
Number Scheduled % of Tot
Of Months Count Ending Balance Prin Bal
- -----------------------------------------------------------------
0+ 0 $0.00 0.00
- -----------------------------------------------------------------
24+ 0 $0.00 0.00
- -----------------------------------------------------------------
48+ 0 $0.00 0.00
- -----------------------------------------------------------------
72+ 0 $0.00 0.00
- -----------------------------------------------------------------
96+ 0 $0.00 0.00
- -----------------------------------------------------------------
120+ 0 $0.00 0.00
- -----------------------------------------------------------------
144+ 0 $0.00 0.00
- -----------------------------------------------------------------
168+ 0 $0.00 0.00
- -----------------------------------------------------------------
192+ 0 $0.00 0.00
- -----------------------------------------------------------------
216+ 0 $0.00 0.00
- -----------------------------------------------------------------
240+ 0 $0.00 0.00
- -----------------------------------------------------------------
264+ 0 $0.00 0.00
- -----------------------------------------------------------------
288+ 0 $0.00 0.00
- -----------------------------------------------------------------
312+ 0 $0.00 0.00
- -----------------------------------------------------------------
336+ 0 $0.00 0.00
- -----------------------------------------------------------------
Total 0 $0.00 0.00
- -----------------------------------------------------------------
B-12
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Updated Mortgage Loan Schedule (Part 1 of ___)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Closing Current
- -------------------------------------------------------------------------------------------------------------------------------
Loan Property Loan Sched Prin Note Amort Sched Monthly Sched Prin Note Sched Monthly
ID Name City State Type Balance Rate Term Term P & I Pymt Balance Rate Term Amort P & I Pymt
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 XX XX XX 0 $0.00 0.00 0 0 $0.00 $0.00 0.00 0 0 $0.00
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Loan Type Code: 01=Balloon Loan, 02=Fully Amortizing Loan
B-13
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Updated Mortgage Loan Schedule (Part 2 of ___)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Most Current
- ----------------------------------------------------------------------------------------------------------------------------
Loan Property Prop Total Total Replacement Capital Leasing Tenant Date of Last
ID Name State Type Revenues Expenses Reserves Expenditures Commissions Improvements NOI Finan Stmt DSCR
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 XX XX 0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 00/00/00 0.00
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------
Most Current
- --------------------------------------------------------------------------------------
Loan Appraised Appraisal Appraised Occupancy Occupancy Reserves at Reserves
ID Value Date LTV % % Date Closing Current
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0 $0.00 00/00/00 0.00 0.00% 00/00/00 0.00 0.00
- --------------------------------------------------------------------------------------
</TABLE>
B-14
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Updated Mortgage Loan Schedule (Part 3 of ___)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Performance History
- ------------------------------------------------------------------------------------------------------------------------------------
Loan Property Current Loan Payoff Number of Times Since Closing
ID Name Status Date 30-59 days Delinq 60-89 days Delinq 90+ days Delinq Spec Serviced Workout/Mod Mod Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 XX 0 00/00/00 0 0 0 0 0 00/00/00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------------------------
Performance History
- -------------------------------------------------
Number of Times Since Closing
Loan -----------------------------------------
ID Mod Date Foreclosure Bankruptcy REO
- -------------------------------------------------
0 00/00/00 0 0 0
- -------------------------------------------------
Current Loan Status Code: 01= Specially Serviced, 02 = In Process of
Foreclosure, 03 = Bankruptcy, 04 =REO, 05= Prepaid in Full, 06=DPO,
07=Foreclosure Sale, 08=Bankruptcy Sale, 09=REO Disposition,
10=Modification/Workout
B-15
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Aggregate Delinquency/Prepayment/Specially Serviced History
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Delinquent 30-59 Days Delinquent 60-89 Days Delinquent 90+Days Foreclosure/Bankruptcy Liquidated/REO
Distribution --------------------- --------------------- ------------------ ---------------------- --------------
Date # Act Balance # Act Balance # Act Balance # Act Balance # Act Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
00/00/00 0 $0.00 0 $0.00 0 $0.00 0 $0.00 0 $0.00
</TABLE>
- --------------------------------------------------------------------------------
Modifications Specially Serviced Prepayments
Distribution -------------- -------------------- --------------------
Date # Act Balance # Act Balance # Act Balance
- --------------------------------------------------------------------------------
00/00/00 0 $0.00 0 $0.00 0 $0.00
B-16
<PAGE>
Corporate Trust Department Series:
P.O. Box 778 Report Id:
Boston, MA 02110 Doc Id:
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Delinquency Loan Detail Report
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
# Paid Current Outstanding Advance Loan Special
Disclosure Periods Through P & I Prop. Protection Description Status Servicer Foreclosure Bankruptcy REO
Control # Delinquent Date Advance Advances Code Code Transfer Date Date Date Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 0 00/00/00 $0.00 $0.00 00 00 00/00/00 00/00/00 00/00/00 00/00/00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Advance Description Code: 01=Loan in grace period, 02=Delinquent less than 1
month, 03=Delinquent 1 month, 04=Delinquent 2 months, 05=Delinquent 3+ months.
Loan Status Code: 01= Specially Serviced, 02 = In Process of Foreclosure, 03 =
Bankruptcy, 04 =REO, 05= Prepaid in Full, 06=DPO, 07=Foreclosure Sale,
08=Bankruptcy Sale, 09=REO Disposition, 10=Modification/Workout
B-17
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Specially Serviced Detail Report (Part 1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Payment Disclosure Transfer Balance at Beg. Sched. End Sched. % of End Note Maturity Remaining Property
Date Control # Date Transfer Date Balance Balance Pool Balance Rate Date Amort Term Type
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
00/00/00 0 00/00/00 $0.00 $0.00 $0.00 0.00% 0.00 00/00/00 00 00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------
Payment Specially Serv. NOI NOI
Date ST Stat Cd Amount Date DSCR
- -------------------------------------------------------------
00/00/00 XX 00 0.00 00/00/00 0.00
- -------------------------------------------------------------
Specially Serviced Status Code: 01=Request for waiver of Prepayment Penalty,
02=Payment default, 03=Request for Loan Modification or Workout, 04=Loan with
Borrower Bankruptcy, 05=Loan in Process of Foreclosure, 06=Loan now REO, 07=Loan
Paid Off, 08=Loan Returned to Master Servicer
Property Type Code: 01=Industrial/Warehouse, 02=Lodging, 03=Manufactured
Housing, 04=Multifamily, 05=Office, 06=Other Commercial, 07=Retail, 08=Senior
Housing, 09=Medical Office, 10=Mobile Home Park, 11=Anchored Retail, 12=Mixed
Use, 13=Office/Warehouse, 14=Specialty, 99=Unknown
B-18
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Specially Serviced Detail Report (Part 2)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Payment Disclosure Specially Serv. Site Inspection Phase I Appraisal Appraisal
Date Control # Stat Cd Date Date Date Value Comment
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
00/00/00 0 00 00/00/00 00/00/00 00/00/00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Specially Serviced Status Code: 01=Request for waiver of Prepayment Penalty,
02=Payment default, 03=Request for Loan Modification or Workout, 04=Loan with
Borrower Bankruptcy, 05=Loan in Process of Foreclosure, 06=Loan now REO, 07=Loan
Paid Off, 08=Loan Returned to Master Servicer
B-19
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
State Street Bank and Trust Company
Corporate Trust Department
Payment Date:
Historical Modified Loan Detail Report
- --------------------------------------------------------------------------------
Payment Disclosure Modification Modification Actual Scheduled
Date Control # Date Description Ending Balance Ending Balance
- --------------------------------------------------------------------------------
00/00/00 0 0.00 $0.00 $0.00
- --------------------------------------------------------------------------------
----------------------------------------------------------------------
Original Terms Modified Terms
- --------------------------------------------------------------------------------
Payment Prin Note Amort P & I Prin Note Amort P & I
Date Balance Rate Term Term Pymt Balance Rate Term Term Pymt
- --------------------------------------------------------------------------------
00/00/00 $0.00 0.00% 0 0 $0.00 0.00 0.00% 0 0 $0.00
- --------------------------------------------------------------------------------
B-20
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
- --------------------------------------------------------------------------------
Balance Prepayment
Loan At Curtailment Payoff Prepaid Penalty
Date ID Closing Amount Amount Balance Paid
- --------------------------------------------------------------------------------
00/00/00 0 $0.00 $0.00 $0.00 $0.00 $0.00
- --------------------------------------------------------------------------------
B-21
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Historical Realized Loss Detail Report
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Gross Proceeds Aggregate
Disclosure Appraisal Appraised Beg. Sched. Gross as a % of Liquidation
Distribution Date Control # Date Value Balance Proceeds Sched Prin Bal Expenses
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
00/00/00 0 00/00/00 $0.00 $0.00 $0.00 0.00% $0.00
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------------------------
Net Net Proceeds
Liquidation as a % of Realized
Distribution Date Proceeds Sched Prin Bal Loss
- ----------------------------------------------------------
00/00/00 $0.00 0.00 $0.00
- ----------------------------------------------------------
B-22
<PAGE>
State Street Bank and Trust Company Series:
Corporate Trust Department Report Id:
P.O. Box 778 Doc Id:
Boston, MA 02110
Customer Service
(617) 664-5433
MERRILL LYNCH MORTGAGE PASS-THROUGH CERTIFICATES
Series 1996-C2
Payment Date:
Historical Appraisal Reductions
- --------------------------------------------------------------------------------
Date of Appraisal
Loan Appraisal Reduction
Date ID Reduction Amount
- --------------------------------------------------------------------------------
00/00/00 0 00/00/00 $0.00
- --------------------------------------------------------------------------------
B-23
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
Mortgage Pass-Through Certificates
(Issuable in Series)
Merrill Lynch Mortgage Investors, Inc.
Depositor
----------------
The mortgage pass-through certificates (the "Offered Certificates") offered
hereby and by the supplements hereto (each, a "Prospectus Supplement") will be
offered from time to time in series. The Offered Certificates of each series,
together with any other mortgage pass-through certificates of such series, are
collectively referred to herein as the "Certificates."
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series, the
"Trust Fund") consisting primarily of a segregated pool of one or more of
various types of multifamily or commercial mortgage loans (the "Mortgage
Loans"), mortgage-backed securities ("MBS") that evidence interests in, or that
are secured by pledges of, one or more of various types of multifamily or
commercial mortgage loans, or a combination of Mortgage Loans and MBS
(collectively, "Mortgage Assets"). Mortgage Loans (or mortgage loans underlying
an MBS) may be delinquent or non-performing as of the date Certificates of a
series are issued, if so specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, the Trust Fund for a series of
Certificates may include letters of credit, insurance policies, guarantees,
reserve funds or other types of credit support, or any combination thereof (with
respect to any series, collectively, "Credit Support"), and currency or interest
rate exchange agreements and other financial assets, or any combination thereof
(with respect to any series, collectively, "Cash Flow Agreements"). See
"Description of the Trust Funds," "Description of the Certificates" and
"Description of Credit Support."
Each series of Certificates will consist of one or more classes of
Certificates, and such class or classes (including classes of Offered
Certificates) may (i) provide for the accrual of interest thereon based on a
fixed, variable or adjustable rate; (ii) be senior or subordinate to one or more
other classes of Certificates in entitlement to certain distributions on the
Certificates; (iii) be entitled to distributions of principal, with
disproportionately small, nominal or no distributions of interest; (iv) be
entitled to distributions of interest, with disproportionately small, nominal or
no distributions of principal; (v) provide for distributions of principal and/or
interest that commence only following the occurrence of certain events, such as
the retirement of one or more other classes of Certificates of such series; (vi)
provide for distributions of principal to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal to be made, subject to available funds, based on a specified principal
payment schedule or other methodology. See "Description of the Certificates."
Distributions in respect of the Certificates of each series will be made on
a monthly, quarterly, semi-annual or other periodic basis as specified in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, such distributions will be made only from the assets of
the related Trust Fund.
No Certificates of any series will represent an obligation of or interest
in the Depositor or any of its affiliates, except to the limited extent
described herein and in the related Prospectus Supplement. Neither the
Certificates of any series nor the assets in the related Trust Fund will be
guaranteed or insured by any governmental agency or instrumentality or by any
other person, unless otherwise provided in the related Prospectus Supplement.
The assets in each Trust Fund will be held in trust for the benefit of the
holders of the related series of Certificates (the "Certificateholders")
pursuant to a Pooling Agreement, as more fully described herein.
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments) on
the Mortgage Assets in the related Trust Fund and the timing of receipt of such
payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations." A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates."
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as a
"real estate mortgage investment conduit" (a "REMIC ") for federal income tax
purposes. See "Certain Federal Income Tax Consequences" herein.
----------
Prospective investors should consider the information set forth under "Risk
Factors" on page 16 of this Prospectus and such information as may be set forth
under the caption "Risk Factors" in the related Prospectus Supplement before
purchasing any offered certificate.
----------
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.
----------
Prior to issuance there will have been no market for the Certificates of
any series and there can be no assurance that a secondary market for any Offered
Certificates will develop or that, if it does develop, it will continue. See
"Risk Factors." This Prospectus may not be used to consummate sales of the
Offered Certificates of any series unless accompanied by the Prospectus
Supplement for such series.
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, as more fully
described under "Method of Distribution" herein and in the related Prospectus
Supplement.
November 5, 1996
<PAGE>
PROSPECTUS SUPPLEMENT
As more particularly described herein, each Prospectus Supplement will,
among other things, set forth, as and to the extent appropriate: (i) a
description of the class or classes of Offered Certificates of the related
series, including the payment provisions with respect to each such class, the
aggregate principal amount of each such class (the "Certificate Balance"), the
rate at which interest will accrue from time to time, if at all, with respect to
each such class (the "Pass-Through Rate") or the method of determining such
rate; (ii) information with respect to any other classes of Certificates of the
same series; (iii) the respective dates on which distributions are to be made to
Certificateholders; (iv) information as to the assets constituting the related
Trust Fund, including the general characteristics of the assets included
therein, including the Mortgage Assets and any Credit Support and Cash Flow
Agreements (with respect to the Certificates of any series, the "Trust Assets");
(v) the circumstances, if any, under which the related Trust Fund may be subject
to early termination; (vi) additional information with respect to the method of
distribution of such Offered Certificates; (vii) whether one or more REMIC
elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created; (viii) the initial percentage
ownership interest in the related Trust Fund to be evidenced by each class of
Certificates of such series; (ix) information concerning the trustee (as to any
series, the "Trustee") of the related Trust Fund; (x) information concerning the
master servicer (as to any series, the "Master Servicer") and any special
servicer (as to any series, the "Special Servicer") engaged to administer the
related Mortgage Assets; (xi) information as to the nature and extent of any
subordination in entitlement to distributions of any class of Certificates of
such series; and (xii) whether such Offered Certificates will be initially
issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to the
Offered Certificates of each series contain summaries of the material terms of
the documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional
Offices located as follows: Chicago Regional Office, 500 West Madison, 14th
Floor, Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, New York, New York 10048.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and any related Prospectus
Supplement and, if given or made, such information or representation must not be
relied upon. This Prospectus and any related Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the Offered Certificates, or an offer of the Offered Certificates to
any person in any state or other jurisdiction in which such offer would be
unlawful. The delivery of this Prospectus at any time does not imply that
information herein is correct as of any time subsequent to its date; however, if
any material change occurs while this Prospectus is required by law to be
delivered, this Prospectus will be amended or supplemented accordingly.
The related Master Servicer or Trustee will be required to mail to holders
of the Offered Certificates of each series periodic unaudited reports concerning
the related Trust Fund. If beneficial interests in a class of Offered
Certificates are being held and transferred in book-entry format through the
facilities of The Depository Trust Company ("DTC") as described herein, then
unless otherwise provided in the related Prospectus Supplement, such reports
will be sent on behalf of the related Trust Fund to a nominee of DTC as the
registered holder of the Offered Certificates. The means by which notices and
other communications are conveyed by DTC to its participating organizations, and
directly or indirectly through such participating organizations to the
beneficial owners of the applicable Offered Certificates, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. See "Description of the
Certificates--Reports to Certificateholders" and "--Book-Entry Registration and
Definitive Certificates," and "Description of the Pooling Agreements--Evidence
as to Compliance." The Depositor will file or cause to be filed with the
Commission such periodic reports with respect to each Trust Fund as are required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of an offering of Offered Certificates evidencing interests therein. The
Depositor, upon request, will provide or cause to be provided without charge to
each person to whom this Prospectus is delivered in connection with the offering
of one or more classes of Offered Certificates, a copy of any or all documents
or reports incorporated herein by reference, in each case to the extent such
documents or reports relate to one or more of such classes of such Offered
Certificates, other than the exhibits to such documents (unless such exhibits
are specifically incorporated by reference in such documents). Requests to the
Depositor should be directed in writing to its principal executive office at 250
Vesey Street, Fifteenth Floor, New York, New York 10281-1315, Attention:
Secretary, or by telephone at (212) 449-0336. The Depositor has determined that
its financial statements will not be material to the offering of any Offered
Certificates.
3
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT .................................................. 2
AVAILABLE INFORMATION .................................................. 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ...................... 3
SUMMARY OF PROSPECTUS .................................................. 8
RISK FACTORS ........................................................... 16
Limited Liquidity .................................................... 16
Limited Assets ....................................................... 16
Prepayments; Average Life of Certificates; Yields .................... 16
Limited Nature of Ratings ............................................ 17
Risks Associated with Certain Mortgage Loans and Mortgaged Properties 18
Balloon Payments; Borrower Default ................................... 19
Credit Support Limitations ........................................... 19
Leases and Rents ..................................................... 19
Environmental Risks .................................................. 20
ERISA Considerations ................................................. 20
Certain Federal Tax Considerations Regarding REMIC Residual
Certificates ....................................................... 20
Book-Entry Registration .............................................. 20
Delinquent and Non-Performing Mortgage Loans ......................... 21
DESCRIPTION OF THE TRUST FUNDS ......................................... 21
General .............................................................. 21
Mortgage Loans ....................................................... 21
General ............................................................ 21
Default and Loss Considerations with Respect to the Mortgage Loans . 22
Payment Provisions of the Mortgage Loans ........................... 23
Mortgage Loan Information in Prospectus Supplements ................ 23
MBS .................................................................. 24
Certificate Accounts ................................................. 24
Credit Support ....................................................... 24
Cash Flow Agreements ................................................. 25
YIELD AND MATURITY CONSIDERATIONS ...................................... 25
General .............................................................. 25
Pass-Through Rate .................................................... 25
Payment Delays ....................................................... 25
Certain Shortfalls in Collections of Interest ........................ 25
Yield and Prepayment Considerations .................................. 26
Weighted Average Life and Maturity ................................... 27
Controlled Amortization Classes and Companion Classes ................ 28
Other Factors Affecting Yield, Weighted Average Life and Maturity .... 28
Balloon Payments; Extensions of Maturity ........................... 28
Negative Amortization .............................................. 28
Foreclosures and Payment Plans ..................................... 29
Losses and Shortfalls on the Mortgage Assets ....................... 29
Additional Certificate Amortization ................................ 29
4
<PAGE>
Page
----
THE DEPOSITOR .......................................................... 30
USE OF PROCEEDS ........................................................ 30
DESCRIPTION OF THE CERTIFICATES ........................................ 30
General .............................................................. 30
Distributions ........................................................ 30
Distributions of Interest on the Certificates ........................ 31
Distributions of Certificate Principal ............................... 32
Distributions on the Certificates in Respect of Prepayment
Premiums or in Respect of Equity Participations .................... 32
Allocation of Losses and Shortfalls .................................. 32
Advances in Respect of Delinquencies ................................. 33
Reports to Certificateholders ........................................ 33
Voting Rights ........................................................ 34
Termination .......................................................... 34
Book-Entry Registration and Definitive Certificates .................. 35
DESCRIPTION OF THE POOLING AGREEMENTS .................................. 37
General .............................................................. 37
Assignment of Mortgage Loans; Repurchases ............................ 37
Representations and Warranties; Repurchases .......................... 38
Certificate Account .................................................. 39
General ............................................................ 39
Deposits ........................................................... 39
Withdrawals ........................................................ 40
Collection and Other Servicing Procedures ............................ 41
Modifications, Waivers and Amendments of Mortgage Loans .............. 41
Sub-Servicers ........................................................ 41
Special Servicers .................................................... 42
Realization Upon Defaulted Mortgage Loans ............................ 42
Hazard Insurance Policies ............................................ 43
Due-On-Sale and Due-On-Encumbrance Provisions ........................ 44
Servicing Compensation and Payment of Expenses ....................... 44
Evidence as to Compliance ............................................ 45
Certain Matters Regarding the Master Servicer and the Depositor ...... 45
Events of Default .................................................... 46
Rights Upon Event of Default ......................................... 46
Amendment ............................................................ 47
List of Certificateholders ........................................... 47
The Trustee .......................................................... 47
Duties of the Trustee ................................................ 47
Certain Matters Regarding the Trustee ................................ 48
Resignation and Removal of the Trustee ............................... 48
DESCRIPTION OF CREDIT SUPPORT .......................................... 48
General .............................................................. 48
Subordinate Certificates ............................................. 49
Cross-Support Provisions ............................................. 49
5
<PAGE>
Page
----
Insurance or Guarantees with Respect to Mortgage Loans ............... 49
Letter of Credit ..................................................... 49
Certificate Insurance and Surety Bonds ............................... 49
Reserve Funds ........................................................ 50
Credit Support with Respect to MBS ................................... 50
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS ................................ 50
General .............................................................. 50
Types of Mortgage Instruments ........................................ 51
Leases and Rents ..................................................... 51
Personalty ........................................................... 51
Junior Mortgages; Rights of Senior Lenders ........................... 51
Foreclosure .......................................................... 52
General ............................................................ 52
Foreclosure procedures vary from state to state .................... 52
Judicial Foreclosure ............................................... 52
Non-Judicial Foreclosure/Power of Sale ............................. 53
Limitations on the Rights of Mortgage Lenders ...................... 53
Rights of Redemption ............................................... 54
Anti-Deficiency Legislation ........................................ 54
Leasehold Considerations ........................................... 54
Bankruptcy Laws ...................................................... 55
Environmental Considerations ......................................... 56
General ............................................................ 56
Superlien Laws ..................................................... 56
CERCLA ............................................................. 56
Certain Other Federal and State Laws ............................... 56
Additional Considerations .......................................... 57
Due-On-Sale and Due-On-Encumbrance ................................... 57
Subordinate Financing ................................................ 57
Default Interest and Limitations on Prepayments ...................... 58
Applicability of Usury Laws .......................................... 58
Soldiers' and Sailors' Civil Relief Act of 1940 ...................... 58
Americans with Disabilities Act ...................................... 58
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ................................ 59
General .............................................................. 59
REMICs ............................................................... 59
Classification of REMICs ........................................... 59
Characterization of Investments in REMIC Certificates .............. 60
Tiered REMIC Structures ............................................ 60
Taxation of Owners of REMIC Regular Certificates ..................... 61
General ............................................................ 61
Original Issue Discount ............................................ 61
Market Discount .................................................... 63
Premium ............................................................ 64
Realized Losses .................................................... 64
6
<PAGE>
Page
----
Taxation of Owners of REMIC Residual Certificates .................... 64
General ............................................................ 64
Taxable Income of the REMIC ........................................ 65
Basis Rules, Net Losses and Distributions .......................... 66
Excess Inclusions .................................................. 67
Noneconomic REMIC Residual Certificates ............................ 68
Mark-to-Market Rules ............................................... 69
Possible Pass-Through of Miscellaneous Itemized Deductions ......... 69
Sales of REMIC Certificates ........................................ 70
Prohibited Transactions Tax and Other Taxes ........................ 70
Tax and Restrictions on Transfers of REMIC Residual
Certificates to Certain Organizations ............................ 71
Termination ........................................................ 72
Reporting and Other Administrative Matters ......................... 72
Backup Withholding with Respect to REMIC Certificates .............. 73
Foreign Investors in REMIC Certificates ............................ 73
Grantor Trust Funds .................................................. 73
Classification of Grantor Trust Funds .............................. 73
Characterization of Investments in Grantor Trust Certificates ........ 74
Grantor Trust Fractional Interest Certificates ..................... 74
Grantor Trust Strip Certificates ................................... 74
Taxation of Owners of Grantor Trust Fractional Interest Certificates . 74
General ............................................................ 74
If Stripped Bond Rules Apply ....................................... 75
If Stripped Bond Rules Do Not Apply ................................ 76
Market Discount .................................................... 78
Premium ............................................................ 79
Taxation of Owners of Grantor Trust Strip Certificates ............. 79
Possible Application of Proposed Contingent Payment Rules .......... 80
Sales of Grantor Trust Certificates ................................ 80
Grantor Trust Reporting ............................................ 81
Backup Withholding ................................................. 81
Foreign Investors .................................................. 81
STATE AND OTHER TAX CONSEQUENCES ..................................... 81
ERISA CONSIDERATIONS ................................................. 81
General ............................................................ 81
Plan Asset Regulations ............................................. 82
Prohibited Transaction Exemptions .................................. 82
LEGAL INVESTMENT ..................................................... 84
METHOD OF DISTRIBUTION ............................................... 85
LEGAL MATTERS ........................................................ 85
FINANCIAL INFORMATION ................................................ 86
RATING ............................................................... 86
INDEX OF PRINCIPAL DEFINITIONS ....................................... 87
7
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
Title of Certificates .... Mortgage Pass-Through Certificates, issuable in
series (the "Certificates").
Depositor ................ Merrill Lynch Mortgage Investors, Inc., a
wholly-owned limited purpose subsidiary of Merrill
Lynch Mortgage Capital Inc. (the "Depositor"). See
"The Depositor."
Master Servicer .......... The master servicer (the "Master Servicer"), if any,
for a series of Certificates will be named in the
related Prospectus Supplement and may be an
affiliate of the Depositor. See "Description of
the Pooling Agreements--Collection and Other
Servicing Procedures."
Special Servicer ......... The special servicer (the "Special Servicer"), if
any, for a series of Certificates will be named,
or the circumstances under which a Special
Servicer will be appointed will be described, in
the related Prospectus Supplement. See
"Description of the Pooling Agreements--Special
Servicers."
Trustee .................. The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee."
The Trust Assets ......... Each series of Certificates will represent in the
aggregate the entire beneficial ownership interest
in a Trust Fund consisting primarily of:
A. Mortgage Assets ..... The Mortgage Assets with respect to each series of
Certificates will, in general, consist of a pool
of mortgage loans (collectively, the "Mortgage
Loans") secured by liens on, or security interests
in, (i) residential properties consisting of five
or more rental or cooperatively-owned dwelling
units (the "Multifamily Properties") or (ii)
office buildings, shopping centers, retail stores,
hotels or motels, nursing homes, hospitals or
other health-care related facilities, mobile home
parks, warehouse facilities, mini-warehouse
facilities or self-storage facilities, industrial
plants, mixed use or other types of
income-producing properties or unimproved land
(the "Commercial Properties"). If so specified in
the related Prospectus Supplement, a Trust Fund
may include Mortgage Loans secured by liens on
real estate projects under construction. If so
specified in the related Prospectus Supplement,
some Mortgage Loans may be delinquent or
non-performing as of the date of their deposit
into the related Trust Fund. The Mortgage Loans
will not be guaranteed or insured by the
Depositor, any of its affiliates or, unless
otherwise specified in the Prospectus Supplement,
by any governmental agency or instrumentality or
other person.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for accrual of interest thereon at an
interest rate (a "Mortgage Rate") that is fixed
over its term or that adjusts from time to time,
or that may be converted at the borrower's
election from an adjustable to a fixed Mortgage
Rate, or from a fixed to
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
an adjustable Mortgage Rate, (ii) may provide for
level payments to maturity or for payments that
adjust from time to time to accommodate changes in
the Mortgage Rate or to reflect the occurrence of
certain events, and may permit negative
amortization, (iii) may be fully amortizing over
its term to maturity, or may provide for little or
no amortization over its term and thus require a
balloon payment on its stated maturity date, (iv)
may contain a prohibition on prepayment or require
payment of a premium or a yield maintenance
penalty in connection with a prepayment and (v)
may provide for payments of principal, interest or
both, on due dates that occur monthly, quarterly,
semi-annually or at such other interval as is
specified in the related Prospectus Supplement.
Unless otherwise provided in the related
Prospectus Supplement, each Mortgage Loan will
have had an original term to maturity of not more
than 40 years, and will have been originated by a
person other than the Depositor. See "Description
of the Trust Funds--Mortgage Loans."
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets that
constitute a particular Trust Fund may also
include or consist solely of (i) private mortgage
participations, mortgage pass-through certificates
or other mortgage-backed securities or (ii)
certificates insured or guaranteed by the Federal
Home Loan Mortgage Corporation ("FHLMC"), the
Federal National Mortgage Association ("FNMA") or
the Governmental National Mortgage Association
("GNMA") or the Federal Agricultural Mortgage
Corporation ("FAMC") (collectively, the
mortgage-backed securities referred to in clauses
(i) and (ii), "MBS"), provided that each MBS will
evidence an interest in, or will be secured by a
pledge of, one or more mortgage loans that conform
to the descriptions of the Mortgage Loans
contained herein. See "Description of the Trust
Funds--MBS."
Each Mortgage Asset will be selected by the
Depositor for inclusion in a Trust Fund from among
those purchased, either directly or indirectly,
from a prior holder thereof (a "Mortgage Asset
Seller"), which prior holder may or may not be the
originator of such Mortgage Loan or the issuer of
such MBS and may be an affiliate of the Depositor.
B. Certificate Account . Each Trust Fund will include one or more accounts
(collectively, the "Certificate Account")
established and maintained on behalf of the
Certificateholders into which the person or
persons designated in the related Prospectus
Supplement will, to the extent described herein
and in such Prospectus Supplement, deposit all
payments and collections received or advanced with
respect to the Mortgage Assets and other assets in
the Trust Fund. A Certificate Account may be
maintained as an interest bearing or a
non-interest bearing account, and funds held
therein may be held as cash or invested in certain
short-term, investment grade obligations, in each
case as described in the related Prospectus
Supplement. See "Description of the Trust
Funds--Certificate Accounts" and "Description of
the Pooling Agreements--Certificate Account."
C. Credit Support ...... If so provided in the related Prospectus Supplement,
partial or full protection against certain
defaults and losses on the Mortgage Assets in the
related Trust Fund may be provided to one or more
classes of Certificates of the related series in
the form of subordination of one or more
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
other classes of Certificates of such series,
which other classes may include one or more
classes of Offered Certificates, or by one or more
other types of credit support, such as a letter of
credit, insurance policy, guarantee, reserve fund
or another type of credit support, or a
combination thereof (any such coverage with
respect to the Certificates of any series, "Credit
Support"). The amount and types of any Credit
Support, the identification of the entity
providing it (if applicable) and related
information will be set forth in the related
Prospectus Supplement. See "Risk Factors--Credit
Support Limitations," "Description of the Trust
Funds--Credit Support" and "Description of Credit
Support."
D. Cash Flow
Agreements ........ If so provided in the related Prospectus Supplement,
a Trust Fund may include guaranteed investment
contracts pursuant to which moneys held in the
funds and accounts established for the related
series will be invested at a specified rate. The
Trust Fund may also include certain other
agreements, such as interest rate exchange
agreements, interest rate cap or floor agreements,
currency exchange agreements or similar agreements
designed to reduce the effects of interest rate or
currency exchange rate fluctuations on the
Mortgage Assets or on one or more classes of
Certificates. The principal terms of any such
guaranteed investment contract or other agreement
(any such agreement, a "Cash Flow Agreement"),
including, without limitation, provisions relating
to the timing, manner and amount of payments
thereunder and provisions relating to the
termination thereof, will be described in the
Prospectus Supplement for the related series. In
addition, the related Prospectus Supplement will
contain certain information that pertains to the
obligor under any such Cash Flow Agreement. See
"Description of the Trust Funds--Cash Flow
Agreements."
Description of
Certificates ........... Each series of Certificates will be issued in one or
more classes pursuant to a pooling and servicing
agreement or other agreement specified in the
related Prospectus Supplement (in either case, a
"Pooling Agreement") and will represent in the
aggregate the entire beneficial ownership interest
in the related Trust Fund.
Each series of Certificates will consist of one or
more classes of Certificates, and such class or
classes (including classes of Offered
Certificates) may (i) be senior (collectively,
"Senior Certificates") or subordinate
(collectively, "Subordinate Certificates") to one
or more other classes of Certificates in
entitlement to certain distributions on the
Certificates; (ii) be entitled to distributions of
principal, with disproportionately small, nominal
or no distributions of interest (collectively,
"Stripped Principal Certificates"); (iii) be
entitled to distributions of interest, with
disproportionately small, nominal or no
distributions of principal (collectively,
"Stripped Interest Certificates"); (iv) provide
for distributions of principal and/or interest
that commence only after the occurrence of certain
events, such as the retirement of one or more
other classes of Certificates of such series; (v)
provide for distributions of principal to be made,
from time to time or for designated periods, at a
rate that is faster (and, in some cases,
substantially faster) or slower (and, in some
cases, substantially slower) than the rate at
which payments or other collections of principal
are received on the Mortgage Assets in the related
Trust Fund; or (vi) pro-
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
vide for distributions of principal to be made,
subject to available funds, based on a specified
principal payment schedule or other methodology.
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain REMIC Residual Certificates (as defined
below), will have a stated principal amount (a
"Certificate Balance"); and each class of
Certificates, other than certain classes of
Stripped Principal Certificates and certain REMIC
Residual Certificates, will accrue interest on its
Certificate Balance or, in the case of certain
classes of Stripped Interest Certificates, on a
notional amount ("Notional Amount"), based on a
fixed, variable or adjustable interest rate (a
"Pass-Through Rate"). The related Prospectus
Supplement will specify the Certificate Balance,
Notional Amount and Pass-Through Rate for each
class of Offered Certificates, as applicable, or,
in the case of a variable or adjustable
Pass-Through Rate, the method for determining the
Pass-Through Rate.
The Certificates will not be guaranteed or insured
by the Depositor or any of its affiliates, by any
governmental agency or instrumentality or by any
other person, unless otherwise provided in the
related Prospectus Supplement. See "Risk
Factors--Limited Assets" and "Description of the
Certificates."
Distributions of Interest
on the Certificates ..... Interest on each class of Offered Certificates
(other than certain classes of Stripped Principal
Certificates and Stripped Interest Certificates
and certain REMIC Residual Certificates) of each
series will accrue at the applicable Pass-Through
Rate on the Certificate Balance or, in the case of
certain classes of Stripped Interest Certificates,
the Notional Amount thereof outstanding from time
to time and will be distributed to
Certificateholders as provided in the related
Prospectus Supplement (each of the specified dates
on which distributions are to be made, a
"Distribution Date"). Distributions of interest
with respect to one or more classes of
Certificates (collectively, "Accrual
Certificates") may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates, and interest accrued with respect to
a class of Accrual Certificates prior to the
occurrence of such an event will either be added
to the Certificate Balance thereof or otherwise
deferred. Distributions of interest with respect
to one or more classes of Certificates may be
reduced to the extent of certain delinquencies,
losses and other contingencies described herein
and in the related Prospectus Supplement. See
"Risk Factors--Prepayments; Average Life of
Certificates; Yields," "Yield and Maturity
Considerations," and "Description of the
Certificates--Distributions of Interest on the
Certificates."
Distributions of
Certificate Principal .. Each class of the Certificates of each series (other
than certain classes of Stripped Interest
Certificates and/or REMIC Residual Certificates)
will have a Certificate Balance which, as of any
date, will represent the maximum amount that the
holders thereof are then entitled to receive in
respect of principal from future cash flow on the
Mortgage Assets in the related Trust Fund. Unless
otherwise specified in the related Prospectus
Supplement, the initial aggregate Certificate
Balance of all
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
classes of a series of Certificates will not
exceed the outstanding principal balance of the
related Mortgage Assets as of a specified date
(the "Cut-off Date"), after application of
scheduled payments due on or before such date,
whether or not received. As and to the extent
described in the related Prospectus Supplement,
distributions of principal with respect to each
series of Certificates will be made on each
Distribution Date to the holders of the class or
classes of Certificates of such series entitled
thereto until the Certificate Balances of such
Certificates have been reduced to zero.
Distributions of principal with respect to one or
more classes of Certificates (i) may be made at a
rate that is faster (and, in some cases,
substantially faster) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (ii) may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates of the same series, or may be made at
a rate that is slower (and, in some cases,
substantially slower) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (iii) may be made, subject to
available funds, based on a specified principal
payment schedule (any such class, a "Controlled
Amortization Class"); and (iv) may be contingent
on the specified principal payment schedule for a
Controlled Amortization Class of the same series
and the rate at which payments and other
collections of principal on the Mortgage Assets in
the related Trust Fund are received (any such
class, a "Companion Class"). Unless otherwise
specified in the related Prospectus Supplement,
distributions of principal of any class of
Certificates will be made on a pro rata basis
among all of the Certificates of such class. See
"Description of the Certificates--Distributions of
Certificate Principal."
Advances ................. If and to the extent provided in the related
Prospectus Supplement, the Master Servicer and/or
other specified person will be obligated to make,
or have the option of making, certain advances
with respect to delinquent scheduled payments of
principal and/or interest on the Mortgage Loans in
the related Trust Fund. Any such advances made
with respect to a particular Mortgage Loan will be
reimbursable from subsequent recoveries in respect
of such Mortgage Loan and otherwise to the extent
described herein and in the related Prospectus
Supplement. If and to the extent provided in the
Prospectus Supplement for a series of
Certificates, the Master Servicer or other
specified person will be entitled to receive
interest on its advances for the period that they
are outstanding, payable from amounts in the
related Trust Fund. See "Description of the
Certificates--Advances in Respect of
Delinquencies." If a Trust Fund includes MBS, any
comparable advancing obligation of a party to the
related Pooling Agreement, or of a party to the
related MBS Agreement, will be described in the
related Prospectus Supplement.
Termination .............. If so specified in the related Prospectus
Supplement, a series of Certificates may be
subject to optional early termination by means of
the repurchase of the Mortgage Assets in the
related Trust Fund by the party or parties
specified therein, under the circumstances and in
the manner set forth therein. If so provided in
the related Prospectus Supplement, upon the
reduction of the Certificate Balance of a
specified
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
class or classes of Certificates by a specified
percentage or amount, a party specified therein
may be authorized or required to solicit bids for
the purchase of all of the Mortgage Assets of the
Trust Fund, or of a sufficient portion of such
Mortgage Assets to retire such class or classes,
under the circumstances and in the manner set
forth therein. See "Description of the
Certificates--Termination."
Registration of Book-Entry
Certificates ........... If so provided in the related Prospectus Supplement,
one or more classes of the Offered Certificates of
any series will be offered in book-entry format
(collectively, "Book-Entry Certificates") through
the facilities of The Depository Trust Company
("DTC"). Each class of Book-Entry Certificates
will be initially represented by one or more
Certificates registered in the name of a nominee
of DTC. No person acquiring an interest in a class
of Book-Entry Certificates (a "Certificate Owner")
will be entitled to receive a Certificate of such
class in fully registered, definitive form (a
"Definitive Certificate"), except under the
limited circumstances described herein. See "Risk
Factors--Book-Entry Registration" and "Description
of the Certificates--Book-Entry Registration and
Definitive Certificates."
Tax Status of the
Certificates ........... The Certificates of each series will constitute
either (i)"regular interests" ("REMIC Regular
Certificates") and "residual interests" ("REMIC
Residual Certificates") in a Trust Fund, or a
designated portion thereof, treated as a REMIC
under Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "Code"), or (ii)
interests ("Grantor Trust Certificates") in a
Trust Fund treated as a grantor trust under
applicable provisions of the Code.
A. REMIC ............... REMIC Regular Certificates generally will be treated
as debt obligations of the applicable REMIC for
federal income tax purposes. In general, to the
extent the assets and income of the REMIC are
treated as qualifying assets and income under the
following sections of the Code, REMIC Regular
Certificates owned by a real estate investment
trust will be treated as "real estate assets" for
purposes of Section 856(c)(5)(A) of the Code and
interest income therefrom will be treated as
"interest on obligations secured by mortgages on
real property" for purposes of Section
856(c)(3)(B) of the Code. In addition, REMIC
Regular Certificates will be "qualified mortgages"
within the meaning of Section 860G(a)(3) of the
Code. Moreover, if 95% or more of the assets and
the income of the REMIC qualify for any of the
foregoing treatments, the REMIC Regular
Certificates will qualify for the foregoing
treatments in their entirety. However, REMIC
Regular Certificates owned by a thrift institution
will constitute assets described in Section
7701(a)(19)(C) of the Code only if so specified in
the related Prospectus Supplement. Holders of
REMIC Regular Certificates must report income with
respect thereto on the accrual method, regardless
of their method of tax accounting generally.
Holders of any class of REMIC Regular Certificates
issued with original issue discount generally will
be required to include the original issue discount
in income as it accrues, which will be determined
using an initial prepayment assumption and taking
into account, from time to time, actual
prepayments occurring at a rate different than the
prepayment assumption.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
See "Certain Federal Income Tax Consequences--
REMICs--Taxation of Owners of REMIC Regular
Certificates."
REMIC Residual Certificates generally will be
treated as representing an interest in qualifying
assets and income to the same extent described
above for institutions subject to Sections
856(c)(5)(A) and 856(c)(3)(B) of the Code, but not
for purposes of Section 7701(a)(19)(C) of the Code
unless otherwise stated in the related Prospectus
Supplement. A portion (or, in certain cases, all)
of the income from REMIC Residual Certificates (i)
may not be offset by any losses from other
activities of the holder of such REMIC Residual
Certificates, (ii) may be treated as unrelated
business taxable income for holders of REMIC
Residual Certificates that are subject to tax on
unrelated business taxable income (as defined in
Section 511 of the Code), and (iii) may be subject
to foreign withholding rules. See "Certain Federal
Income Tax Consequences--REMICs--Taxation of
Owners of REMIC Residual Certificates."
B. Grantor Trust ....... Unless otherwise provided in the related Prospectus
Supplement, Grantor Trust Certificates may be
either Certificates that have a Certificate
Balance and a Pass-Through Rate or that are
Stripped Principal Certificates (collectively,
"Grantor Trust Fractional Interest Certificates"),
or may be Stripped Interest Certificates.
Owners of Grantor Trust Fractional Interest
Certificates will be treated for federal income
tax purposes as owners of an undivided pro rata
interest in the assets of the related Trust Fund,
and generally will be required to report their pro
rata share of the entire gross income (including
amounts incurred as servicing or other fees and
expenses) from the Mortgage Assets and will be
entitled, subject to certain limitations, to
deduct their pro rata shares of any servicing or
other fees and expenses incurred during the year.
Holders of Grantor Trust Fractional Interest
Certificates generally will be treated as owning
an interest in qualifying assets and income under
Sections 856(c)(5)(A), 856(c)(3)(B) and 860G(a)(3)
of the Code, but will not be so treated for
purposes of Section 7701(a)(19)(C) of the Code
unless otherwise stated in the related Prospectus
Supplement.
It is unclear whether Stripped Interest Certificates
will be treated as representing an ownership
interest in qualifying assets and income under
Sections 856(c)(5)(A) and 856(c)(3)(B) of the
Code, although the policy considerations
underlying those Sections suggest that such
treatment should be available. However, such
Certificates will not be treated as representing
an ownership interest in assets described in
Section 7701(a)(19)(C) of the Code unless
otherwise stated in the related Prospectus
Supplement. The taxation of holders of Stripped
Interest Certificates is uncertain in various
respects, including in particular the method such
holders should use to recover their purchase price
and to report their income with respect to such
Stripped Interest Certificates. See "Certain
Federal Income Tax Consequences--Grantor Trust
Funds."
Investors are advised to consult their tax advisors
and to review "Certain Federal Income Tax
Consequences" herein and in the related Prospectus
Supplement.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
ERISA Considerations ..... Fiduciaries of employee benefit plans and certain
other retirement plans and arrangements, including
individual retirement accounts, annuities, Keogh
plans, and collective investment funds and
separate accounts in which such plans, accounts,
annuities or arrangements are invested, that are
subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975
of the Code, should carefully review with their
legal advisors whether the purchase or holding of
Offered Certificates could give rise to a
transaction that is prohibited or is not otherwise
permissible either under ERISA or Section 4975 of
the Code. See "ERISA Considerations" herein and in
the related Prospectus Supplement.
Legal Investment ......... The Offered Certificates of any series will
constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market
Enhancement Act of 1984 only if so specified in
the related Prospectus Supplement. Investors whose
investment authority is subject to legal
restrictions should consult their own legal
advisors to determine whether and to what extent
the Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the related Prospectus Supplement.
Rating ................... At their respective dates of issuance, each class of
Offered Certificates will be rated not lower than
investment grade by one or more nationally
recognized statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein and in the
related Prospectus Supplement.
- --------------------------------------------------------------------------------
15
<PAGE>
RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following factors and any
other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
Limited Liquidity
Merrill Lynch, Pierce, Fenner & Smith Incorporated, itself or through one
or more of its affiliates, currently expects to make a secondary market in the
Offered Certificates of each series, but has no obligation to do so. However,
there can be no assurance that a secondary market for the Offered Certificates
of any series will develop or, if it does develop, that it will provide holders
with liquidity of investment or will continue for as long as such Certificates
remain outstanding. Furthermore, because, among other things, the timing of
receipt of payments with respect to a pool of multifamily or commercial mortgage
loans may be substantially more difficult to predict than that of a pool of
single family mortgage loans, any such secondary market that does develop may
provide less liquidity to investors than any comparable market for securities
that evidence interests in single-family mortgage loans.
The primary source of continuing information regarding the Offered
Certificates of any series, including information regarding the status of the
related Mortgage Assets and any Credit Support for such Certificates, will be
the periodic reports to Certificateholders delivered pursuant to the related
Pooling Agreement as described herein under the heading "Description of the
Certificates--Reports to Certificateholders." There can be no assurance that any
additional continuing information regarding the Offered Certificates of any
series will be available through any other source, and the limited nature of
such information may adversely affect the liquidity thereof, even if a secondary
market for such Certificates does develop.
Except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination."
Limited Assets
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Certificates of any series nor the Mortgage Assets in the related
Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other
person; and no Offered Certificate of any series will represent a claim against
or security interest in the Trust Funds for any other series. Accordingly, if
the related Trust Fund has insufficient assets to make payments on such
Certificates, no other assets will be available for payment of the deficiency.
Additionally, certain amounts on deposit from time to time remaining in certain
funds or accounts constituting part of a Trust Fund, including the Certificate
Account and any accounts maintained as Credit Support, may be withdrawn under
certain conditions that will be described in the related Prospectus Supplement,
for purposes other than the payment of principal of or interest on the related
series of Certificates. If so provided in the Prospectus Supplement for a series
of Certificates consisting of one or more classes of Subordinate Certificates,
on any Distribution Date in respect of which losses or shortfalls in collections
on the Mortgage Assets have been incurred, the amount of such losses or
shortfalls will be borne first by one or more classes of the Subordinate
Certificates, and, thereafter, by the remaining classes of Certificates in the
priority and manner and subject to the limitations specified in such Prospectus
Supplement.
Prepayments; Average Life of Certificates; Yields
For a number of reasons, including the difficulty of predicting the rate of
prepayments on the Mortgage Loans in a particular Trust Fund, the amount and
timing of distributions of principal and/or interest on the Offered Certificates
of the related series may be highly unpredictable. Prepayments on the Mortgage
Loans in any Trust Fund will result in a faster rate of principal payments on
one or more classes of the related Certificates than if payments on such
Mortgage Loans were made as scheduled. Thus, the prepayment experience on the
Mortgage Loans may affect the average life of each class of such Certificates,
including a class of Offered Certificates. The rate of principal payments on
pools of mortgage loans varies among pools and from time to time is influenced
by a variety of economic,
16
<PAGE>
demographic, geographic, social, tax, legal and other factors. For example, if
prevailing interest rates fall significantly below the Mortgage Rates borne by
the Mortgage Loans included in a Trust Fund, principal prepayments are likely to
be higher than if prevailing rates remain at or above the rates borne by those
Mortgage Loans. Conversely, if prevailing interest rates rise significantly
above the Mortgage Rates borne by the Mortgage Loans included in a Trust Fund,
principal prepayments thereon are likely to be lower than if prevailing interest
rates remain at or below the rates borne by those Mortgage Loans. There can be
no assurance as to the rate of prepayments on the Mortgage Loans in any Trust
Fund or that such rate will conform to any model described herein or in any
Prospectus Supplement. As a result, depending on the anticipated rate of
prepayment for the Mortgage Loans in any Trust Fund, the retirement of any class
of Certificates of the related series could occur significantly earlier or later
than expected.
The extent to which prepayments on the Mortgage Loans in any Trust Fund
ultimately affect the average life of any class of Certificates of the related
series will depend on the terms of such Certificates. A class of Certificates,
including a class of Offered Certificates, may provide that on any Distribution
Date the holders of such Certificates are entitled to a pro rata share of the
prepayments (including prepayments occasioned by defaults) on the Mortgage Loans
in the related Trust Fund that are distributable on such date, to a
disproportionately large share (which, in some cases, may be all) of such
prepayments, or to a disproportionately small share (which, in some cases, may
be none) of such prepayments. A class of Certificates that entitles the holders
thereof to a disproportionately large share of prepayments enhances the risk of
early retirement of such class ("call risk") if the rate of prepayment is faster
than anticipated; while a class of Certificates that entitles the holders
thereof to a disproportionately small share of prepayments enhances the risk of
an extended average life of such class ("extension risk") if the rate of
prepayment is slower than anticipated. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
classes of Certificateholders of any series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A series of Certificates may include one or more Controlled Amortization
Classes that will be entitled to receive principal distributions according to a
specified principal payment schedule. Although prepayment risk cannot be
eliminated entirely for any class of Certificates, it can be reduced
substantially in the case of a Controlled Amortization Class so long as the
actual rate of prepayments on the Mortgage Loans in the related Trust Fund
remains relatively constant at the rate, or within the range of rates, of
prepayment used to establish the specific principal payment schedule for such
Certificates. However, the reduction of prepayment risk afforded to a Controlled
Amortization Class comes at the expense of one or more Companion Classes of the
same series, any of which Companion Classes may also be a class of Offered
Certificates. In general, and as more specifically described in the related
Prospectus Supplement, a Companion Class will entitle the holders thereof to a
disproportionately large share of prepayments on the Mortgage Loans in the
related Trust Fund when the rate of prepayment is relatively fast, and to a
disproportionately small share of those prepayments when the rate of prepayment
is relatively slow, and thus absorbs some (but not all) of the "call risk"
and/or "extension risk" that would otherwise affect the related Controlled
Amortization Class if all payments of principal of the Mortgage Loans were
allocated on a pro rata basis.
A series of Certificates may also include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recoup its original investment
under some prepayment scenarios. An investor should consider, in the case of any
Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of any Offered Certificate purchased at a premium, the riskthat a
faster than anticipated rate of principal payments could result in an actual
yield to such investor that is lowerthan the anticipated yield. See "Yield and
Maturity Considerations" herein and, if applicable, in the related Prospectus
Supplement.
Limited Nature of Ratings
Any rating assigned by a Rating Agency to a class of Offered Certificates
will reflect only its assessment of the likelihood that holders of Certificates
of such class will receive payments to which such Certificateholders are
entitled
17
<PAGE>
under the related Pooling Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the related Mortgage
Loans will be made, the degree to which the rate of such prepayments might
differ from that originally anticipated or the likelihood of early optional
termination of the related Trust Fund. Neither will such rating address the
possibility that prepayments on the related Mortgage Loans at a higher or lower
rate than anticipated by an investor may cause such investor to experience a
lower than anticipated yield or that an investor that purchases an Offered
Certificate at a significant premium might fail to recoup its initial investment
under certain prepayment scenarios.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of the Certificates of such
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
can be given that those values will not decline in the future. See "Description
of Credit Support" and "Rating."
Risks Associated with Certain Mortgage Loans and Mortgaged Properties
Mortgage loans made on the security of multifamily or commercial property
may entail risks of delinquency and foreclosure, and risks of loss in the event
thereof, that are greater than similar risks associated with loans made on the
security of single-family property. See "Description of the Trust
Funds--Mortgage Loans." The ability of a borrower to repay a loan secured by an
income-producing property typically is dependent primarily upon the successful
operation of such property rather than upon the existence of independent income
or assets of the borrower; thus, the value of an income-producing property is
directly related to the net operating income derived from such property. If the
net operating income of the property is reduced (for example, if rental or
occupancy rates decline or real estate tax rates or other operating expenses
increase), the borrower's ability to repay the loan may be impaired. A number of
the Mortgage Loans may be secured by liens on owner-occupied Mortgaged
Properties or on Mortgaged Properties leased to a single tenant. Accordingly, a
decline in the financial condition of the borrower or single tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
Mortgaged Property may be adversely affected by risks generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; acts of
God; and other factors beyond the control of a Master Servicer.
In addition, additional risk may be presented by the type and use of a
particular Mortgaged Property. For instance, specialty properties (such as
hotels, health care facilities, self-storage facilities and restaurants) are
often characterized by substantial operating risk associated with the particular
industry or business that is in addition to traditional real estate risk. Also,
specialty properties frequently are of such design that they may not be readily
converted to alternative uses if that industry or business declines.
It is anticipated that some or all of the Mortgage Loans included in any
Trust Fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to those Mortgage Loans, recourse in the event
of borrower default will be limited to the specific real property and other
assets, if any, that were pledged to secure the Mortgage Loan. However, even
with respect to those Mortgage Loans that provide for recourse against the
borrower and its assets generally, there can be no assurance that enforcement of
such recourse provisions will be practicable, or that the assets of the borrower
will be sufficient to permit a recovery in respect of a defaulted Mortgage Loan
in excess of the liquidation value of the related Mortgaged Property.
Further, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
18
<PAGE>
Balloon Payments; Borrower Default
Certain of the Mortgage Loans included in a Trust Fund may not be fully
amortizing (or may not amortize at all) over their terms to maturity and, thus,
will require substantial principal payments (that is, balloon payments) at their
stated maturity. Mortgage Loans of this type involve a greater degree of risk
than self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to fully refinance the
loan or to sell the related Mortgaged Property at a price sufficient to permit
the borrower to make the balloon payment. The ability of a borrower to
accomplish either of these goals will be affected by a number of factors,
including the value of the related Mortgaged Property, the level of available
mortgage rates at the time of sale or refinancing, the borrower's equity in the
related Mortgaged Property, the financial condition and operating history of the
borrower and therelated Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaidand Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by commercial or
multifamily, as the case may be, real properties generally.
If and to the extent specified in the related Prospectus Supplement, in
order to maximize recoveries on defaulted Mortgage Loans, the Master Servicer or
a Special Servicer will be permitted (within prescribed limits) to extend and
modify Mortgage Loans that are in default or as to which a payment default is
imminent. While a Master Servicer generally will be required to determine that
any such extension or modification is reasonably likely to produce a greater
recovery on a present value basis than liquidation, there can be no assurance
that any such extension or modification will in fact increase the present value
of receipts from or proceeds of the affected Mortgage Loans.
Credit Support Limitations
The Prospectus Supplement for the Offered Certificates of each series will
describe any Credit Support provided with respect thereto. Use of Credit Support
will be subject to the conditions and limitations described herein and in the
related Prospectus Supplement. Moreover, such Credit Support may not cover all
potential losses or risks; for example, Credit Support may or may not cover
fraud or negligence by a mortgage loan originator or other parties.
A series of Certificates may include one or more classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce the
risk to holders of Senior Certificates of delinquent distributions or ultimate
losses, the amount of subordination will be limited and may decline under
certain circumstances. In addition, if principal payments on one or more classes
of Certificates of a series are made in a specified order of priority, any
limits with respect to the aggregate amount of claims under any related Credit
Support may be exhausted before the principal of the lower priority classes of
Certificates of such series has been fully repaid. As a result, the impact of
losses and shortfalls experienced with respect to the Mortgage Assets may fall
primarily upon those classes of Certificates having a lower priority of payment.
Moreover, if a form of Credit Support covers more than one series of
Certificates, holders of Certificates of one series will be subject to the risk
that such Credit Support will be exhausted by the claims of the holders of
Certificates of one or more other series.
The amount of any applicable Credit Support supporting one or more classes
of Offered Certificates, including the subordination of one or more classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and other
factors. There can, however, be no assurance that the loss experience on the
related Mortgage Assets will not exceed such assumed levels. See "--Limited
Nature of Ratings," "Description of the Certificates" and "Description of Credit
Support."
Leases and Rents
The Mortgage Loans included in any Trust Fund typically will be secured by
an assignment of leases and rents pursuant to which the borrower assigns to the
lender its right, title and interest as landlord under the leases of the related
Mortgaged Property, and the income derived therefrom, as further security for
the related Mortgage Loan, while retaining a license to collect rents for so
long as there is no default. If the borrower defaults, the license terminates
and the lender is entitled to collect rents. Some state laws may require that
the lender take possession of the Mortgaged Property and obtain a judicial
appointment of a receiver before becoming entitled to collect the rents. In
addition, if bankruptcy or similar proceedings are commenced by or in respect of
the borrower, the lender's ability to collect the rents may be adversely
affected. See "Certain Legal Aspects of Mortgage Loans--Leases and Rents."
19
<PAGE>
Environmental Risks
Under the laws of certain states, contamination of real property may give
rise to a lien on the property to assure the costs of cleanup. In several
states, such a lien has priority over an existing mortgage lien on such
property.In addition, under the laws of some states and under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), a lender may be liable, as an "owner" or "operator," for costs of
addressing releases or threatened releases of hazardous substances at a
property, if agents or employees of the lender have become sufficiently involved
in the operations of the borrower, regardless of whether or not the
environmental damage or threat was caused by the borrower or a prior owner. A
lender also risks such liability on foreclosure of the mortgage. See "Certain
Legal Aspects of Mortgage Loans--Environmental Considerations." If a Trust Fund
includes Mortgage Loans and the related Prospectus Supplement does not otherwise
specify, the related Pooling Agreement will contain provisions generally to the
effect that the Master Servicer, acting on behalf of the Trust Fund, may not
acquire title to a Mortgaged Property or assume control of its operation unless
the Master Servicer, based upon a report prepared by a person who regularly
conducts environmental audits, has made the determination that it is appropriate
to do so, as described under "Description of the Pooling Agreements--Realization
Upon Defaulted Mortgage Loans." These provisions are designed to reduce
substantially the risk of liability for costs associated with remediation of a
hazardous environmental condition, but there can be no assurance in a given case
that those risks can be eliminated entirely.
ERISA Considerations
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of such plans. Due to the complexity of
regulations that govern such plans, prospective investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Offered Certificates of any
series. See "ERISA Considerations."
Certain Federal Tax Considerations Regarding REMIC Residual Certificates
Holders of REMIC Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their receipt
of cash payments, as described under "Certain Federal Income Tax
Consequences--REMICs." Accordingly, under certain circumstances, holders of
Offered Certificates that constitute REMIC Residual Certificates may have
taxable income and tax liabilities arising from such investment during a taxable
year in excess of the cash received during such period. The requirement that
holders of REMIC Residual Certificates report their pro rata share of the
taxable income and net loss of the REMIC will continue until the Certificate
Balances of all classes of Certificates of the related series have been reduced
to zero, even though holders of REMIC Residual Certificates have received full
payment of their stated interest and principal. A portion (or, in certain
circumstances, all) of such Certificateholder's share of the REMIC taxable
income may be treated as "excess inclusion" income to such holder, which (i)
generally will not be subject to offset by losses from other activities, (ii)
for a tax-exempt holder, will be treated as unrelated business taxable income
and (iii) for a foreign holder, will not qualify for exemption from withholding
tax. Individual holders of REMIC Residual Certificates may be limited in their
ability to deduct servicing fees and other expenses of the REMIC. In addition,
REMIC Residual Certificates are subject to certain restrictions on transfer.
Because of the special tax treatment of REMIC Residual Certificates, the taxable
income arising in a given year on a REMIC Residual Certificate will not be equal
to the taxable income associated with investment in a corporate bond or stripped
instrument having similar cash flow characteristics and pre-tax yield.
Therefore, the after-tax yield on a REMIC Residual Certificate may be
significantly less than that of a corporate bond or stripped instrument having
similar cash flow characteristics.
Book-Entry Registration
If so provided in the related Prospectus Supplement, one or more classes of
the Offered Certificates of any series will be issued as Book-Entry
Certificates. Each class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates are
issued, the Certificate Owners with respect to any class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("Participants"). In
addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. The means
by which notices and other communications are conveyed by
20
<PAGE>
DTC to its Participants, and directly and indirectly through such Participants
to Certificate Owners, will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Furthermore, as described herein, Certificate Owners may experience delays in
the receipt of payments on the Book-Entry Certificates, and the ability of any
Certificate Owner to pledge or otherwise take actions with respect to its
interest in the Book-Entry Certificates may be limited due to the lack of a
physical certificate evidencing such interest. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates."
Delinquent and Non-performing Mortgage Loans
If so provided in the related Prospectus Supplement, the Trust Fund for a
particular series of Certificates may include Mortgage Loans that are past due
or are non-performing as of the date they are deposited in the Trust Fund. If so
specified in the related Prospectus Supplement, the servicing of such Mortgage
Loans will be performed by a Special Servicer. Credit Support provided with
respect to a particular series of Certificates may not cover all losses related
to such delinquent or non-performing Mortgage Loans, and investors should
consider the risk that the inclusion of such Mortgage Loans in the Trust Fund
may adversely affect the rate of defaults and prepayments on the Mortgage Loans
in theTrust Fund and the yield on the Offered Certificates of such series. See
"Description of the Trust Funds--Mortgage Loans-General."
DESCRIPTION OF THE TRUST FUNDS
General
The primary assets of each Trust Fund will consist of (i) multifamily
and/or commercial mortgage loans (the "Mortgage Loans"), (ii) mortgage
participations, pass-through certificates or other mortgage-backed securities
("MBS") that evidence interests in, or that are secured by pledges of, one or
more of various types of multifamily or commercial mortgage loans or (iii) a
combination of Mortgage Loans and MBS (collectively, "Mortgage Assets"). Each
Trust Fund will be established by Merrill Lynch Mortgage Investors, Inc. (the
"Depositor"). Each Mortgage Asset will be selected by the Depositor for
inclusion in a Trust Fund from among those purchased, either directly or
indirectly, from a prior holder thereof (a "Mortgage Asset Seller"), which prior
holder may or may not be the originator of such Mortgage Loan or the issuer of
such MBS and may be an affiliate of the Depositor. The Mortgage Assets will not
be guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person. The discussion below under the
heading "--Mortgage Loans," unless otherwise noted, applies equally to mortgage
loans underlying any MBS included in a particular Trust Fund.
Mortgage Loans
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create liens on properties (the "Mortgaged
Properties") consisting of (i) residential properties consisting of five or more
rental or cooperatively-owned dwelling units in high-rise, mid-rise or garden
apartment buildings or other residential structures ("Multifamily Properties")
or (ii) office buildings, retail stores, hotels or motels, nursing homes,
hospitals or other health care-related facilities, mobile home parks, warehouse
facilities, mini-warehouse facilities, self-storage facilities, industrial
plants, mixed use or other types of income-producing properties or unimproved
land ("Commercial Properties"). The Multifamily Properties may include mixed
commercial and residential structures and may include apartment buildings owned
by private cooperative housing corporations ("Cooperatives"). Unless otherwise
specified in the related Prospectus Supplement, each Mortgage will create a
first priority mortgage lien on a Mortgaged Property. A Mortgage may create a
lien on a borrower's leasehold estate in a property; however, unless otherwise
specified in the related Prospectus Supplement, the term of any such leasehold
will exceed the term of the Mortgage Note by at least two years. Each Mortgage
Loan will have been originated by a person (the "Originator") other than the
Depositor.
If so specified in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans made on the security of real
estate projects under construction. In that case, the related Prospectus
Supplement will describe the procedures and timing for making disbursements from
construction reserve funds as portions of the related real estate project are
completed. In addition, the Mortgage Assets for a particular series of
Certificates may include Mortgage Loans that are delinquent or non-performing as
of the date such Certificates are
21
<PAGE>
issued. In that case, the related Prospectus Supplement will set forth, as to
each such Mortgage Loan, available information as to the period of such
delinquency or non-performance, any forbearance arrangement then in effect, the
condition of the related Mortgaged Property and the ability of the Mortgaged
Property to generate income to service the mortgage debt.
Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, some or all of the Mortgage Loans
included in a particular Trust Fund may be non-recourse loans, which means that,
absent special facts, recourse in the case of default will be limited to the
Mortgaged Property and such other assets, if any, that were pledged to secure
repayment of the Mortgage Loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important measure of the risk of default on
such a loan. Unless otherwise defined in the related Prospectus Supplement, the
"Debt Service Coverage Ratio" of a Mortgage Loan at any given time is the ratio
of (i) the Net Operating Income of the related Mortgaged Property for a
twelve-month period to (ii) the annualized scheduled payments on the Mortgage
Loan and on any other loan that is secured by a lien on the Mortgaged Property
prior to the lien of the related Mortgage. Unless otherwise defined in the
related Prospectus Supplement, "Net Operating Income" means, for any given
period, the total operating revenues derived from a Mortgaged Property during
such period, minus the total operating expenses incurred in respect of such
Mortgaged Property during such period other than (i) non-cash items such as
depreciation and amortization, (ii) capital expenditures and (iii) debt service
on loans (including the related Mortgage Loan) secured by liens on the Mortgaged
Property. The Net Operating Income of a Mortgaged Property will fluctuate over
time and may or may not be sufficient to cover debt service on the related
Mortgage Loan at any given time. As the primary source of the operating revenues
of a non-owner occupied income-producing property, rental income (and
maintenance payments from tenant-stockholders of a Cooperative) may be affected
by the condition of the applicable real estate market and/or area economy. In
addition, properties typically leased, occupied or used on a short-term basis,
such as certain health care-related facilities, hotels and motels, and
mini-warehouse and self-storage facilities, tend to be affected more rapidly by
changes in market or business conditions than do properties typically leased for
longer periods, such as warehouses, retail stores, office buildings and
industrial plants. Commercial Properties may be owner-occupied or leased to a
single tenant. Thus, the Net Operating Income of such a Mortgaged Property may
depend substantially on the financial condition of the borrower or the single
tenant, and Mortgage Loans secured by liens on such properties may pose greater
risks than loans secured by liens on Multifamily Properties or on multi-tenant
Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the risk of default on a Mortgage Loan. As may
be further described in the related Prospectus Supplement, in some cases leases
of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
the lessee is able to absorb operating expense increases while continuing to
make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
measure of risk of loss if a property must be liquidated following a default.
Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and the outstanding principal balance of any loan secured by a
lien on the related Mortgaged Property prior to the lien of the related
Mortgage, to (ii) the Value of such Mortgaged Property. The "Value" of a
Mortgaged Property, is generally its fair market value determined in an
appraisal obtained by the originator at the origination of such loan. The lower
the Loan-to-Value Ratio, the greater the percentage of the borrower's equity in
a Mortgaged Property, and thus the greater the cushion provided to the lender
against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the risk of liquidation loss in a pool of Mortgage Loans. For example, the value
of a Mortgaged Property as of the date of initial issuance of the related series
of Certificates may be less than the Value determined at loan origination, and
will likely continue to fluctuate
22
<PAGE>
from time to time based upon changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
based on the market comparison method (recent resale value of comparable
properties at the date of the appraisal), the cost replacement method (the cost
of replacing the property at such date), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or upon
a selection from or interpolation of the values derived from such methods. Each
of these appraisal methods can present analytical difficulties. It is often
difficult to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization rate.
Where more than one of these appraisal methods are used and provide
significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of default and loss risks, is even more
difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans there is no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Risks Associated with
Certain Mortgage Loans and Mortgaged Properties" and "--Balloon Payments;
Borrower Default."
Payment Provisions of the Mortgage Loans. Unless otherwise specified in the
related Prospectus Supplement, all of the Mortgage Loans will have had original
terms to maturity of not more than 40 years and will provide for scheduled
payments of principal, interest or both, to be made on specified dates ("Due
Dates") that occur monthly, quarterly or semi-annually. A Mortgage Loan (i) may
provide for accrual of interest thereon at an interest rate(a "Mortgage Rate")
that is fixed over its term or that adjusts from time to time, or that may be
converted at the borrower's election from an adjustable to a fixed Mortgage
Rate, or from a fixed to an adjustable Mortgage Rate,(ii) may provide for level
payments to maturity or for payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to reflect the occurrence of certain
events, and may permit negative amortization, (iii) may be fully amortizing over
its term to maturity, or may provide for little or no amortization over its term
and thus require a balloon payment on its stated maturity date, and (iv) may
contain a prohibition on prepayment (the period of such prohibition, a "Lock-out
Period" and its date of expiration, a "Lock-out Expiration Date") or require
payment of a premium or a yield maintenance penalty (a "Prepayment Premium") in
connection with a prepayment, in each case as described in the related
Prospectus Supplement. A Mortgage Loan may also contain a provision that
entitles the lender to a share of profits realized from the operation or
disposition of the Mortgaged Property (an "Equity Participation"), as described
in the related Prospectus Supplement. If holders of any class or classes of
Offered Certificates of a series will be entitled to all or a portion of an
Equity Participation, the related Prospectus Supplement will describe the Equity
Participation and the method or methods by which distributions in respect
thereof will be made to such holders.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans
which will generally be current as of a date specified in the related Prospectus
Supplement and which, to the extent then applicable and specifically known to
the Depositor, will include the following: (i) the aggregate outstanding
principal balance and the largest, smallest and average outstanding principal
balance of the Mortgage Loans, (ii) the type or types of property that provide
security for repayment of the Mortgage Loans, (iii) the original and remaining
terms to maturity of the Mortgage Loans, and the seasoning of the Mortgage
Loans, (iv) the earliest and latest origination date and maturity date and
weighted average original and remaining terms to maturity of the Mortgage Loans,
(v) the original Loan-to-Value Ratios of the Mortgage Loans,(vi) the Mortgage
Rates or range of Mortgage Rates and the weighted average Mortgage Rate borne by
the Mortgage Loans, (vii) the geographic distribution of the Mortgaged
Properties on a state-by-state basis, (viii) information with respect to the
prepayment provisions, if any, of the Mortgage Loans, (ix) with respect to
Mortgage Loans with adjustable Mortgage Rates ("ARM Loans"), the index or
indices upon which such adjustments are based, the adjustment dates, the range
of gross margins and the weighted average gross margin, and any limits on
Mortgage Rate adjustments at the time of any adjustment and over the life of the
ARM Loan, (x) Debt Service Coverage Ratios either at origination or as of a more
recent date (or both) and (xi) information regarding the payment characteristics
of the Mortgage Loans, including without limitation balloon payment and other
amortization provisions. In appropriate cases, the related Prospectus Supplement
will also contain certain information available to the Depositor that pertains
to the provisions of leases and the nature of tenants of the Mortgaged
Properties. If the Depositor is unable to tabulate the specific information
described above at the time Offered Certificates of a series are initially
offered, more general
23
<PAGE>
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
MBS
MBS may include (i) private (that is, not guaranteed or insured by the
United States or any agency or instrumentality thereof) mortgage participations,
mortgage pass-through certificates or other mortgage-backed securities or (ii)
certificates insured or guaranteed by FHLMC, FNMA, GNMA or FAMC, provided that
each MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer (the "MBS Issuer") of the MBS and/or the
servicer (the "MBS Servicer") of the underlying mortgage loans will have entered
into the MBS Agreement, generally with a trustee (the "MBS Trustee") or, in the
alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Servicer or the MBS Trustee on the
dates specified in the related Prospectus Supplement. The MBS Issuer or the MBS
Servicer or another person specified in the related Prospectus Supplement may
have the right or obligation to repurchase or substitute assets underlying the
MBS after a certain date or under other circumstances specified in the related
Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any Rating Agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available, (i) the aggregate
approximate initial and outstanding principal amount and type of the MBS to be
included in the Trust Fund, (ii) the original and remaining term to stated
maturity of the MBS, if applicable, (iii) the pass-through or bond rate of the
MBS or the formula for determining such rates, (iv) the payment characteristics
of the MBS, (v) the MBS Issuer, MBS Servicer and MBS Trustee, as applicable,
(vi) a description of the credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the servicing fees
payable under the MBS Agreement, (x) to the extent available to the Depositor,
the type of information in respect of the underlying mortgage loans described
under "--Mortgage Loans--Mortgage Loan Information in Prospectus Supplements"
and (xi) the characteristics of any cash flow agreements that relate to the MBS.
Certificate Accounts
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which the person or persons designated in the related
Prospectus Supplement will, to the extent described herein and in such
Prospectus Supplement, deposit all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund. A
Certificate Account may be maintained as an interest bearing or a non-interest
bearing account, and funds held therein may be held as cash or invested in
certain short-term, investment grade obligations, in each case as described in
the related Prospectus Supplement.
Credit Support
If so provided in the related Prospectus Supplement, partial or full
protection against certain defaults and losses on the Mortgage Assets in the
related Trust Fund may be provided to one or more classes of Certificates in the
related series in the form of subordination of one or more other classes of
Certificates in such series or by one or more other
24
<PAGE>
types of credit support, such as a letter of credit, insurance policy, guarantee
or reserve fund, among others, or by a combination thereof (any such coverage
with respect to the Certificates of any series, "Credit Support"). The amount
and types of Credit Support, the identity of the entity providing it (if
applicable) and related information with respect to each type of Credit Support,
if any, will be set forth in the Prospectus Supplement for the Offered
Certificates of each series. See "Risk Factors--Credit Support Limitations" and
"Description of Credit Support."
Cash Flow Agreements
If so provided in the related Prospectus Supplement, the Trust Fund may
include guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for the related series will be invested at a
specified rate. The Trust Fund may also include certain other agreements, such
as interest rate exchange agreements, interest rate cap or floor agreements,
currency exchange agreements or similar agreements designed to reduce the
effects of interest rate or currency exchange rate fluctuations on the Mortgage
Assets on one or more classes of Certificates. The principal terms of any such
guaranteed investment contract or other agreement (any such agreement, a "Cash
Flow Agreement"), and the identity of the Cash Flow Agreement obligor, will be
described in the related Prospectus Supplement.
YIELD AND MATURITY CONSIDERATIONS
General
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Prepayments;
Average Life of Certificates; Yields." The following discussion contemplates a
Trust Fund that consists solely of Mortgage Loans. While the characteristics and
behavior of mortgage loans underlying MBS can generally be expected to have the
same effect on the yield to maturity and/or weighted average life of a Class of
Certificates as will the characteristics and behavior of comparable Mortgage
Loans, the effect may differ due to the payment characteristics of the MBS. If a
Trust Fund includes MBS, the related Prospectus Supplement will discuss the
effect that the MBS payment characteristics may have on the yield to maturity
and weighted average lives of the Offered Certificates offered thereby.
Pass-Through Rate
The Certificates of any class within a series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to the Offered Certificates of any series will specify
the Pass-Through Rate for each class of such Certificates or, in the case of a
class of Offered Certificates with a variable or adjustable Pass-Through Rate,
the method of determining the Pass-Through Rate; the effect, if any, of the
prepayment of any Mortgage Loan on the Pass-Through Rate of one or more classes
of Offered Certificates; and whether the distributions of interest on the
Offered Certificates of any class will be dependent, in whole or in part, on the
performance of any obligor under a Cash Flow Agreement.
Payment Delays
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed through
to Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on or near the date they were due.
Certain Shortfalls in Collections of Interest
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest only for the period from the Due Date
of the preceding scheduled payment up to the date of such prepayment, instead of
for the full accrual period, that is, the period from the Due Date of the
preceding scheduled payment up to the Due Date for the next scheduled payment.
However, interest accrued on any series of Certificates and distributable
thereon on any Distribution Date will generally correspond to interest accrued
on the principal balance of Mortgage Loans for their respective full accrual
periods. Consequently, if a prepayment on any Mortgage Loan is distributable to
Certificateholders on a particular Distribution Date, but such prepayment is not
accompanied by interest thereon
25
<PAGE>
for the full accrual period, the interest charged to the borrower (net of
servicing and administrative fees) may be less (such shortfall, a "Prepayment
Interest Shortfall") than the corresponding amount of interest accrued and
otherwise payable on the Certificates of the related series. If and to the
extent that any such shortfall is allocated to a class of Offered Certificates,
the yield thereon will be adversely affected. The Prospectus Supplement for a
series of Certificates will describe the manner in which any such shortfalls
will be allocated among the classes of such Certificates. If so specified in the
related Prospectus Supplement, the Master Servicer will be required to apply
some or all of its servicing compensation for the corresponding period to offset
the amount of any such shortfalls. The related Prospectus Supplement will also
describe any other amounts available to offset such shortfalls. See "Description
of the Pooling Agreements--Servicing Compensation and Payment of Expenses."
Yield and Prepayment Considerations
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the principal balance (or Notional Amount, if applicable) of
such Certificate. The rate of principal payments on the Mortgage Loans will in
turn be affected by the amortization schedules thereof (which, in the case of
ARM Loans, will change periodically to accommodate adjustments to their Mortgage
Rates), the dates on which any balloon payments are due, and the rate of
principal prepayments thereon (including for this purpose, prepayments resulting
from liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Fund). Because the rate of principal prepayments on the Mortgage Loans in
any Trust Fund will depend on future events and a variety of factors (as
discussed more fully below), it is impossible to predict with assurance.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). Further, an investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans in the related Trust Fund could
result in an actual yield to such investor that is lower than the anticipated
yield and, in the case of any Offered Certificate purchased at a premium, the
risk that a faster than anticipated rate of principal payments could result in
an actual yield to such investor that is lower than the anticipated yield. In
general, the earlier a prepayment of principal on the Mortgage Loans is
distributed on an Offered Certificate purchased at a discount or premium (or, if
applicable, is allocated in reduction of the Notional Amount thereof), the
greater will be the effect on the investor's yield to maturity. As a result, the
effect on such investor's yield of principal payments (to the extent
distributable in reduction of the principal balance or Notional Amount of such
investor's Offered Certificates) occurring at a rate higher (or lower) than the
rate anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of principal
payments.
A class of Certificates, including a class of Offered Certificates, may
provide that on any Distribution Date the holders of such Certificates are
entitled to a pro rata share of the prepayments (including prepayments
occasioned by defaults) on the Mortgage Loans in the related Trust Fund that are
distributable on such date, to a disproportionately large share (which, in some
cases, may be all) of such prepayments, or to a disproportionately small share
(which, in some cases, may be none) of such prepayments. As and to the extent
described in the related Prospectus Supplement, the respective entitlements of
the various classes of Certificateholders of any series to receive payments
(and, in particular, prepayments) of principal of the Mortgage Loans in the
related Trust Fund may vary based on the occurrence of certain events (e.g., the
retirement of one or more classes of Certificates of such series) or subject to
certain contingencies (e.g., prepayment and default rates with respect to such
Mortgage Loans).
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be directly
related to the amortization of such Mortgage Assets or such classes of
Certificates, as the case may be. Thus, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates.
26
<PAGE>
The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a large group of multifamily or commercial mortgage loans. However, the extent
of prepayments of principal of the Mortgage Loans in any Trust Fund may be
affected by a number of factors, including, without limitation, the availability
of mortgage credit, the relative economic vitality of the area in which the
Mortgaged Properties are located, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. In addition, the rate of principal
payments on the Mortgage Loans in any Trust Fund may be affected by the
existence of Lock-out Periods and requirements that principal prepayments be
accompanied by Prepayment Premiums, and by the extent to which such provisions
may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. In addition, as prevailing market interest rates decline, even borrowers
with ARM Loans that have experienced a corresponding interest rate decline may
have an increased incentive to refinance for purposes of either (i) converting
to a fixed rate loan and thereby "locking in" such rate or (ii) taking advantage
of the initial "teaser rate" (a mortgage interest rate below what it would
otherwise be if the applicable index and gross margin were applied) on another
adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
will make no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
Weighted Average Life and Maturity
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Weighted average life
refers to the average amount of time that will elapse from the date of issuance
of an instrument until each dollar of the principal amount of such instrument is
repaid to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments, liquidations due
to default and purchases of Mortgage Loans out of the related Trust Fund), is
paid to such class. Prepayment rates on loans are commonly measured relative to
a prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment model.
CPR represents an assumed constant rate of prepayment each month (expressed as
an annual percentage) relative to the then outstanding principal balance of a
pool of loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of loans, with different
prepayment assumptions often expressed as percentages of SPA. For example, a
prepayment assumption of 100% of SPA assumes prepayment rates of 0.2% per annum
of the then outstanding principal balance of such loans in the first month of
the life of the loans and an additional 0.2% per annum in each month thereafter
until the thirtieth month. Beginning in the thirtieth month, and in each month
thereafter during the life of the loans, 100% of SPA assumes a constant
prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the Mortgage Loans included in any Trust Fund will conform to any particular
level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Certificates of such series and the percentage of the
initial Certificate Balance of each such class that would be outstanding on
specified Distribution Dates based on the
27
<PAGE>
assumptions stated in such Prospectus Supplement, including assumptions that
prepayments on the related Mortgage Loans are made at rates corresponding to
various percentages of CPR or SPA, or at such other rates specified in such
Prospectus Supplement. Such tables and assumptions will illustrate the
sensitivity of the weighted average lives of the Certificates to various assumed
prepayment rates and will not be intended to predict, or to provide information
that will enable investors to predict, the actual weighted average lives of the
Certificates.
Controlled Amortization Classes and Companion Classes
A series of Certificates may include one or more Controlled Amortization
Classes that are designed to provide increased protection against prepayment
risk by transferring that risk to one or more Companion Classes. Unless
otherwise specified in the related Prospectus Supplement, each Controlled
Amortization Class will either be a Planned Amortization Class (a "PAC") or a
Targeted Amortization Class (a "TAC"). In general, distributions of principal on
a PAC are made in accordance with a specified amortization schedule so long as
prepayments on the underlying Mortgage Loans occur within a specified range of
constant prepayment rates and, as described below, so long as one or more
Companion Classes remain to absorb excess cash flows and make up for shortfalls.
For example, if the rate of prepayments is significantly higher than expected,
the excess prepayments may retire the Companion Classes much earlier than
expected, thus leaving the PAC without further prepayment protection. A TAC is
similar to a PAC, but a TAC structure generally does not draw on Companion
Classes to make up cash flow shortfalls, and will generally not provide
protection to the TAC against the risk that prepayments occur more slowly than
expected.
In general, the reduction of prepayment risk afforded to a Controlled
Amortization Class comes at the expense of one or more Companion Classes of the
same series (any of which may also be a class of Offered Certificates) which
absorb a disproportionate share of the overall prepayment risk of a given
structure. As more particularly described in the related Prospectus Supplement,
the holders of a Companion Class will receive a disproportionately large share
of prepayments when the rate of prepayment exceeds the rate assumed in
structuring the Controlled Amortization Class, and (in the case of a Companion
Class that supports a PAC) a disproportionately small share of prepayments (or
no prepayments) when the rate of prepayment falls below that assumed rate. Thus,
as and to the extent described in the related Prospectus Supplement, a Companion
Class will absorb a disproportionate share of the risk that a relatively fast
rate of prepayments will result in the early retirement of the investment, that
is, "call risk," and, if applicable, the risk that a relatively slow rate of
prepayments will extend the average life of the investment, that is, "extension
risk" that would otherwise be allocated to the related Controlled Amortization
Class. Accordingly, Companion Classes can exhibit significant average life
variability.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage Loans
included in a particular Trust Fund may require that balloon payments be made at
maturity. Because the ability of a borrower to make a balloon payment typically
will depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property, there is a risk that Mortgage Loans that require balloon
payments may default at maturity, or that the maturity of such a Mortgage Loan
may be extended in connection with a workout. In the case of defaults, recovery
of proceeds may be delayed by, among other things, bankruptcy of the borrower or
adverse conditions in the market where the property is located. In order to
minimize losses on defaulted Mortgage Loans, the Master Servicer or a Special
Servicer, to the extent and under the circumstances set forth herein and in the
related Prospectus Supplement, may be authorized to modify Mortgage Loans that
are in default or as to which a payment default is imminent. Any defaulted
balloon payment or modification that extends the maturity of a Mortgage Loan may
delay distributions of principal on a class of Offered Certificates and thereby
extend the weighted average life of such Certificates and, if such Certificates
were purchased at a discount, reduce the yield thereon.
Negative Amortization. The weighted average life of a class of Certificates
can be affected by Mortgage Loans that permit negative amortization. In general,
such Mortgage Loans by their terms limit the amount by which scheduled payments
may adjust in response to changes in Mortgage Rates and/or provide that
scheduled payment amounts will adjust less frequently than the Mortgage Rates.
Accordingly, during a period of rising interest rates, the scheduled payment on
a Mortgage Loan that permits negative amortization may be less than the amount
necessary to amortize the loan fully over its remaining amortization schedule
and pay interest at the then applicable Mortgage Rate. In that case, the
Mortgage Loan balance would amortize more slowly than necessary to repay it over
such schedule and, if the amount of scheduled payment were less than the amount
necessary to pay current interest at the applicable Mortgage Rate, the loan
balance would negatively amortize to the extent of the amount of the interest
28
<PAGE>
shortfall. Conversely, during a period of declining interest rates, the
scheduled payment on such a Mortgage Loan may exceed the amount necessary to
amortize the loan fully over its remaining amortization schedule and pay
interest at the then applicable Mortgage Rate. In that case, the excess would be
applied to principal, thereby resulting in amortization at a rate faster than
necessary to repay the Mortgage Loan balance over such schedule.
A slower or negative rate of Mortgage Loan amortization would
correspondingly be reflected in a slower or negative rate of amortization for
one or more classes of Certificates of the related series. Accordingly, the
weighted average lives of Mortgage Loans that permit negative amortization (and
that of the classes of Certificates to which any such negative amortization
would be allocated or which would bear the effects of a slower rate of
amortization on such Mortgage Loans) may increase as a result of such feature. A
faster rate of Mortgage Loan amortization will shorten the weighted average life
of such Mortgage Loans and, correspondingly, the weighted average lives of those
classes of Certificates then entitled to a portion of the principal payments on
such Mortgage Loans. The related Prospectus Supplement will describe, if
applicable, the manner in which negative amortization in respect of the Mortgage
Loans in any Trust Fund is allocated among the respective classes of
Certificates of the related series.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings, may also have an
effect upon the payment patterns of particular Mortgage Loans and thus the
weighted average lives of and yields on the Certificates of the related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may result in reductions in the entitlements to interest and/or Certificate
Balances of one or more such classes of Certificates, or may be effected simply
by a prioritization of payments among such classes of Certificates. The yield to
maturity on a class of Subordinate Certificates may be extremely sensitive to
losses and shortfalls in collections on the Mortgage Loans in the related Trust
Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may range from none to all) of the
principal payments received on the Mortgage Assets in the related Trust Fund,
one or more classes of Certificates of any series, including one or more classes
of Offered Certificates of such series, may provide for distributions of
principal thereof from (i) amounts attributable to interest accrued but not
currently distributable on one or more classes of Accrual Certificates, (ii)
Excess Funds or (iii) any other amounts described in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
"Excess Funds" will, in general, represent that portion of the amounts
distributable in respect of the Certificates of any series on any Distribution
Date that represent (i) interest received or advanced on the Mortgage Assets in
the related Trust Fund that is in excess of the interest currently distributable
on the Certificates of such series, as well as any interest accrued but not
currently distributable on any Accrual Certificates of such series, or (ii)
Prepayment Premiums, payments from Equity Participations or any other amounts
received on the Mortgage Assets in the related Trust Fund that do not constitute
interest thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources would have any material effect on
the rate at which such Certificates are amortized.
29
<PAGE>
THE DEPOSITOR
Merrill Lynch Mortgage Investors, Inc., the Depositor, is a Delaware
corporation organized on June 13, 1986 as a wholly-owned limited purpose finance
subsidiary of Merrill Lynch Mortgage Capital Inc. (a wholly-owned indirect
subsidiary of Merrill Lynch & Co.). The Depositor maintains its principal office
at World Financial Center, North Tower-Fifteenth Floor, 250 Vesey Street, New
York, New York 10281-1315. Its telephone number is (212) 449-0336. The Depositor
does not have, nor is it expected in the future to have, any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor for general corporate purposes. The Depositor expects
to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates of each series will consist of one or more classes and
will represent the entire beneficial ownership interest in the Trust Fund
created pursuant to the related Pooling Agreement. Each series of Certificates
may consist of one or more classes of Certificates (including classes of Offered
Certificates) that (i) provide for the accrual of interest thereon at a fixed,
variable or adjustable rate; (ii) are senior (collectively, "Senior
Certificates") or subordinate (collectively, "Subordinate Certificates") to one
or more other classes of Certificates in entitlement to certain distributions on
the Certificates; (iii) are entitled to distributions of principal, with
disproportionately small, nominal or no distributions of interest (collectively,
"Stripped Principal Certificates"); (iv) are entitled to distributions of
interest, with disproportionately small, nominal or no distributions of
principal (collectively, "Stripped Interest Certificates"); (v) provide for
distributions of principal and/or interest thereon that commence only after the
occurrence of certain events, such as the retirement of one or more other
classes of Certificates of such series; (vi) provide for distributions of
principal to be made, from time to time or for designated periods, at a rate
that is faster (and, in some cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at which payments or other
collections of principal are received on the Mortgage Assets in the related
Trust Fund; or (vii) provide for distributions of principal to be made, subject
to available funds, based on a specified principal payment schedule or other
methodology.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the Certificate Balances or, in case of Stripped
Interest Certificates or REMIC Residual Certificates, Notional Amounts or
percentage interests, specified in the related Prospectus Supplement. As
provided in the related Prospectus Supplement, one or more classes of Offered
Certificates of any series may be issued in fully registered, definitive form
(such Certificates, "Definitive Certificates") or may be offered in book-entry
format (such Certificates, "Book-Entry Certificates") through the facilities of
The Depository Trust Company ("DTC"). The Offered Certificates of each series
(if issued as Definitive Certificates) may be transferred or exchanged, subject
to any restrictions on transfer described in the related Prospectus Supplement,
at the location specified in the related Prospectus Supplement, without the
payment of any service charge, other than any tax or other governmental charge
payable in connection therewith. Interests in a class of Book-Entry Certificates
will be transferred on the book-entry records of DTC and its participating
organizations. See "Risk Factors--Limited Liquidity," "--Limited Assets" and
"--Book-Entry Registration."
Distributions
Distributions on the Certificates of each series will be made by or on
behalf of the related Trustee or Master Servicer on each Distribution Date as
specified in the related Prospectus Supplement from the Available Distribution
Amount for such series and such Distribution Date. Unless otherwise provided in
the related Prospectus Supplement, the "Available Distribution Amount" for any
series of Certificates and any Distribution Date will refer to the total of all
payments or other collections (or advances in lieu thereof) on, under or in
respect of the Mortgage Assets and any
30
<PAGE>
other assets included in the related Trust Fund that are available for
distribution to the Certificateholders of such series on such date. The
particular components of the Available Distribution Amount for any series on
each Distribution Date will be more specifically described in the related
Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such
class. Payments will be made either by wire transfer in immediately available
funds to the account of a Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder has provided the
Trustee or other person required to make such payments with wiring instructions
(which may be provided in the form of a standing order applicable to all
subsequent distributions) no later than the date specified in the related
Prospectus Supplement (and, if so provided in the related Prospectus Supplement,
such Certificateholder holds Certificates in the requisite amount or
denomination specified therein), or by check mailed to the address of such
Certificateholder as it appears on the Certificate Register; provided, however,
that the final distribution in retirement of any class of Certificates (whether
Definitive Certificates or Book-Entry Certificates) will be made only upon
presentation and surrender of such Certificates at the location specified in the
notice to Certificateholders of such final distribution.
Distributions Of Interest On The Certificates
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain REMIC Residual Certificates that
have no Pass-Through Rate) may have a different Pass-Through Rate, which may be
fixed, variable or adjustable. The related Prospectus Supplement will specify
the Pass-Through Rate or, in the case of a variable or adjustable Pass-Through
Rate, the method for determining the Pass-Through Rate, for each class. Unless
otherwise specified in the related Prospectus Supplement, interest on the
Certificates of each series will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Distributions of interest in respect of the Certificates of any class
(other than any class of Certificates that will be entitled to distributions of
accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement ("Accrual
Certificates"), and other than any class of Stripped Principal Certificates or
REMIC Residual Certificates that is not entitled to any distributions of
interest) will be made on each Distribution Date based on the Accrued
Certificate Interest for such class and such Distribution Date, subject to the
sufficiency of the portion of the Available Distribution Amount allocable to
such class on such Distribution Date. Prior to the time interest is
distributable on any class of Accrual Certificates, the amount of Accrued
Certificate Interest otherwise distributable on such class will be added to the
Certificate Balance thereof on each Distribution Date. With respect to each
class of Certificates (other than certain classes of Stripped Interest
Certificates and REMIC Residual Certificates), "Accrued Certificate Interest"
for each Distribution Date will be equal to interest at the applicable
Pass-Through Rate accrued for a specified period (generally the period between
Distribution Dates) on the outstanding Certificate Balance thereof immediately
prior to such Distribution Date. Unless otherwise provided in the related
Prospectus Supplement, Accrued Certificate Interest for each Distribution Date
on Stripped Interest Certificates will be similarly calculated except that it
will accrue on a notional amount (a "Notional Amount") that is either (i) based
on the principal balances of some or all of the Mortgage Assets in the related
Trust Fund or (ii) equal to the Certificate Balances of one or more other
classes of Certificates of the same series. Reference to a Notional Amount with
respect to a class of Stripped Interest Certificates is solely for convenience
in making certain calculations and does not represent the right to receive any
distributions of principal. If so specified in the related Prospectus
Supplement, the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the Certificate Balance of) one or more classes of the Certificates of
a series will be reduced to the extent that any Prepayment Interest Shortfalls,
as described under "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest," exceed the amount of any sums (including, if and to
the extent specified in the related Prospectus Supplement, the Master Servicer's
servicing compensation) that are applied to offset such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the classes of Certificates of that series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Certificate Interest that is
31
<PAGE>
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the Certificate Balance of) a class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a class of Certificates by reason of the
allocation to such class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result in a corresponding
increase in the Certificate Balance of such class. See "Risk
Factors--Prepayments; Average Life of Certificates; Yields" and "Yield and
Maturity Considerations."
Distributions of Certificate Principal
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates of REMIC Residual Certificates) will have a
"Certificate Balance" which, at any time, will equal the then maximum amount
that the holders of Certificates of such class will be entitled to receive in
respect of principal out of the future cash flow on the Mortgage Assets and
other assets included in the related Trust Fund. The outstanding Certificate
Balance of a class of Certificates will be reduced by distributions of principal
made thereon from time to time and, if so provided in the related Prospectus
Supplement, further by any losses incurred in respect of the related Mortgage
Assets allocated thereto from time to time. In turn, the outstanding Certificate
Balance of a class of Certificates may be increased as a result of any deferred
interest on or in respect of the related Mortgage Assets that is allocated
thereto from time to time, and will be increased, in the case of a class of
Accrual Certificates prior to the Distribution Date on which distributions of
interest thereon are required to commence, by the amount of any Accrued
Certificate Interest in respect thereof (reduced as described above). Unless
otherwise provided in the related Prospectus Supplement, the initial aggregate
Certificate Balance of all classes of a series of Certificates will not be
greater than the aggregate outstanding principal balance of the related Mortgage
Assets as of the applicable Cut-off Date, after application of scheduled
payments due on or before such date, whether or not received. As and to the
extent described in the related Prospectus Supplement, distributions of
principal with respect to a series of Certificates will be made on each
Distribution Date to the holders of the class or classes of Certificates of such
series entitled thereto until the Certificate Balances of such Certificates have
been reduced to zero. Distributions of principal with respect to one or more
classes of Certificates may be made at a rate that is faster (and, in some
cases, substantially faster) than the rate at which payments or other
collections of principal are received on the Mortgage Assets in the related
Trust Fund, may not commence until the occurrence of certain events, such as the
retirement of one or more other classes of Certificates of the same series, or
may be made at a rate that is slower (and, in some cases, substantially slower)
than the rate at which payments or other collections of principal are received
on such Mortgage Assets. In addition, distributions of principal with respect to
one or more classes of Certificates (each such class, a "Controlled Amortization
Class") may be made, subject to available funds, based on a specified principal
payment schedule and, with respect to one or more classes of Certificates (each
such class, a "Companion Class"), may be contingent on the specified principal
payment schedule for a Controlled Amortization Class of the same series and the
rate at which payments and other collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless otherwise specified in the
related Prospectus Supplement, distributions of principal of any class of
Certificates will be made on a pro rata basis among all of the Certificates of
such class.
Distributions on the Certificates in Respect of Prepayment Premiums or in
Respect of Equity Participations
If so provided in the related Prospectus Supplement, Prepayment Premiums or
payments in respect of Equity Participations received on or in connection with
the Mortgage Assets in any Trust Fund will be distributed on each Distribution
Date to the holders of the class of Certificates of the related series entitled
thereto in accordance with the provisions described in such Prospectus
Supplement.
Allocation of Losses and Shortfalls
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may result in reductions in the entitlements to interest and/or in the
Certificate Balances of one or more such classes of Certificates, or may be
effected simply by a prioritization of payments among such classes of
Certificates.
32
<PAGE>
Advances in Respect of Delinquencies
If and to the extent provided in the related Prospectus Supplement, the
related Master Servicer and/or other specified person (including a provider of
Credit Support) may be obligated to advance, or have the option of advancing, on
or before each Distribution Date, from its or their own funds or from excess
funds held in the related Certificate Account that are not part of the Available
Distribution Amount for the related series of Certificates for such Distribution
Date, an amount up to the aggregate of any payments of principal (other than any
balloon payments) and interest that were due on or in respect of such Mortgage
Loans during the related Due Period and were delinquent on the related
Determination Date. Unless otherwise provided in the related Prospectus
Supplement, a "Due Period" is the period between Distribution Dates, and
scheduled payments on the Mortgage Loans in any Trust Fund that became due
during a given Due Period will, to the extent received by the related
Determination Date or advanced by the related Master Servicer or other specified
person, be distributed on the Distribution Date next succeeding such
Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made from the advancing person's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts received under any
instrument of Credit Support) respecting which such advances were made (as to
any Mortgage Loan, "Related Proceeds") and such other specific sources as may be
identified in the related Prospectus Supplement, including in the case of a
series that includes one or more classes of Subordinate Certificates,
collections on other Mortgage Loans in the related Trust Fund that would
otherwise be distributable to the holders of one or more classes of such
Subordinate Certificates. No advance will be required to be made by the Master
Servicer or by any other person if, in the good faith judgment of the Master
Servicer or such other person, such advance would not be recoverable from
Related Proceeds or another specifically identified source (any such advance, a
"Nonrecoverable Advance"); and, if previously made by a Master Servicer or
another person, a Nonrecoverable Advance will be reimbursable from any amounts
in the related Certificate Account prior to any distributions being made to the
related series of Certificateholders.
If advances have been made from excess funds in a Certificate Account, the
Master Servicer or other person that advanced such funds will be required to
replace such funds in the Certificate Account on any future Distribution Date to
the extent that funds then in the Certificate Account are insufficient to permit
full distributions to Certificateholders on such date. If so specified in the
related Prospectus Supplement, the obligation of a Master Servicer or other
specified person to make advances may be secured by a cash advance reserve fund
or a surety bond. If applicable, information regarding the characteristics of,
and the identity of any obligor on, any such surety bond, will be set forth in
the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest thereon for the
period that such advances are outstanding at the rate specified in such
Prospectus Supplement, and such entity will be entitled to payment of such
interest periodically from general collections on the Mortgage Loans in the
related Trust Fund prior to any payment to Certificateholders or as otherwise
provided in the related Pooling Agreement and described in such Prospectus
Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling Agreement or of a party
to the related MBS Agreement.
Reports to Certificateholders
On each Distribution Date, together with the distribution to the holders of
each class of the Offered Certificates of a series, a Master Servicer or
Trustee, as provided in the related Prospectus Supplement, will forward to each
such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of Certificates of such
class that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of Certificates of
such class that is allocable to Accrued Certificate Interest;
33
<PAGE>
(iii) the amount, if any, of such distribution to holders of
Certificates of such class that is allocable to (A) Prepayment Premiums and
(B) payments on account of Equity Participations;
(iv) the amount of servicing compensation received by the related
Master Servicer (and, if payable directly out of the related Trust Fund, by
any Special Servicer and any Sub-Servicer) and such other customary
information as such Master Servicer or the related Trustee, as the case may
be, deems necessary or desirable, or that a Certificateholder reasonably
requests, to enable Certificateholders to prepare their tax returns;
(v) the aggregate amount of advances included in such distribution,
and the aggregate amount of unreimbursed advances at the close of business
on such Distribution Date;
(vi) the aggregate principal balance of the related Mortgage Loans on,
or as of a specified date shortly prior to, such Distribution Date;
(vii) the number and aggregate principal balance of any Mortgage Loans
in respect of which (A) one scheduled payment is delinquent, (B) two
scheduled payments are delinquent, (C) three or more scheduled payments are
delinquent and (D) foreclosure proceedings have been commenced;
(viii) with respect to each Mortgage Loan that is delinquent in
respect of three or more scheduled payments, (A) the loan number thereof,
(B) the unpaid balance thereof, (C) whether the delinquency is in respect
of any balloon payment, (D) the aggregate amount of unreimbursed servicing
expenses and unreimbursed advances in respect thereof, (E) if applicable,
the aggregate amount of any interest accrued and payable to the related
Master Servicer, a Special Servicer and/or any other entity on related
servicing expenses and related advances, (F) whether a notice of
acceleration has been sent to the borrower and, if so, the date of such
notice and (G) a brief description of the status of any foreclosure
proceedings or negotiations with the borrower;
(ix) with respect to any Mortgage Loan liquidated during the related
Prepayment Period (that is, the specified period, generally equal in length
to the time period between Distribution Dates, during which prepayments and
other unscheduled collections on the Mortgage Loans in the related Trust
Fund must be received in order to be distributed on a particular
Distribution Date) in connection with a default thereon or by reason of
being purchased out of the related Trust Fund, (A) the loan number thereof,
(B) the manner in which it was liquidated, (C) the aggregate amount of
Liquidation Proceeds received, (D) the portion of such Liquidation Proceeds
payable or reimbursable to the related Master Servicer or a Special
Servicer in respect of such Mortgage Loan and (E) the amount of any loss to
Certificateholders;
(x) with respect to each Mortgaged Property acquired through
foreclosure, deed-in-lieu of foreclosure or otherwise (an "REO Property")
and included in the related Trust Fund as of the end of the related Due
Period or Prepayment Period, as applicable, (A) the loan number of the
related Mortgage Loan, (B) the date of acquisition, (C) the principal
balance of the related Mortgage Loan (calculated as if such Mortgage Loan
were still outstanding taking into account certain limited modifications to
the terms thereof specified in the related Pooling Agreement), (D) the
aggregate amount of unreimbursed servicing expenses and unreimbursed
advances in respect thereof and (E) if applicable, the aggregate amount of
interest accrued and payable to the related Master Servicer, a Special
Servicer and/or any other entity on related servicing expenses and related
advances;
(xi) with respect to any REO Property sold during the related
Prepayment Period, (A) the loan number of the related Mortgage Loan, (B)
the aggregate amount of sales proceeds, (C) the portion of such sales
proceeds payable or reimbursable to the related Master Servicer or a
Special Servicer in respect of such REO Property or the related Mortgage
Loan and (D) the amount of any loss to Certificateholders in respect of the
related Mortgage Loan;
(xii) the Certificate Balance or Notional Amount, as the case may be,
of each class of Certificates (including any class of Certificates not
offered hereby) at the close of business on such Distribution Date,
separately identifying any reduction in such Certificate Balance due to the
allocation of any losses in respect of the related Mortgage Loans and any
increase in the Certificate Balance of a class of Accrual Certificates in
the event that Accrued Certificate Interest has been added to such balance;
(xiii) the aggregate amount of principal prepayments made on the
Mortgage Loans during the related Prepayment Period;
(xiv) the amount deposited in or withdrawn from any reserve fund on
such Distribution Date, and the amount remaining on deposit in such reserve
fund as of the close of business on such Distribution Date;
34
<PAGE>
(xv) the amount of any Accrued Certificate Interest due but not paid
on such class of Offered Certificates at the close of business on such
Distribution Date;
(xvi) if such class of Offered Certificates has a variable
Pass-Through Rate or an adjustable Pass-Through Rate, the Pass-Through Rate
applicable thereto for such Distribution Date and, if determinable, for the
next succeeding Distribution Date; and
(xvii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a
surety bond, the amount of coverage under each such instrument as of the
close of business on such Distribution Date.
In the case of information furnished pursuant to subclauses (i)-(iv) above,
the amounts will be expressed as a dollar amount per minimum denomination of the
relevant class of Offered Certificates or per a specified portion of such
minimum denomination. The Prospectus Supplement for each series of Offered
Certificates will describe any additional information to be included in reports
to the holders of such Certificates.
Within a reasonable period of time after the end of each calendar year, the
related Master Servicer or Trustee, as the case may be, will be required to
furnish to each person who at any time during the calendar year was a holder of
an Offered Certificate a statement containing the information set forth in
subclauses (i)-(iv) above, aggregated for such calendar year or the applicable
portion thereof during which such person was a Certificateholder. Such
obligation will be deemed to have been satisfied to the extent that
substantially comparable information is provided pursuant to any requirements of
the Code as are from time to time in force. See, however, "Description of the
Certificates--Book-Entry Registration and Definitive Certificates."
If the Trust Fund for a series of Certificates includes MBS, the ability of
the related Master Servicer or Trustee, as the case may be, to include in any
Distribution Date Statement information regarding the mortgage loans underlying
such MBS will depend on the reports received with respect to such MBS. In such
cases, the related Prospectus Supplement will describe the loan-specific
information to be included in the Distribution Date Statements that will be
forwarded to the holders of the Offered Certificates of that series in
connection with distributions made to them.
Voting Rights
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes of
such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally have a right to vote only with respect to
required consents to certain amendments to the related Pooling Agreement and as
otherwise specified in the related Prospectus Supplement. See "Description of
the Pooling Agreements--Amendment." The holders of specified amounts of
Certificates of a particular series will have the collective right to remove the
related Trustee and also to cause the removal of the related Master Servicer in
the case of an Event of Default on the part of the Master Servicer. See
"Description of the Pooling Agreements--Events of Default," "--Rights Upon Event
of Default" and "--Resignation and Removal of the Trustee."
Termination
The obligations created by the Pooling Agreement for each series of
Certificates will terminate upon the payment (or provision for payment) to
Certificateholders of that series of all amounts held in the related Certificate
Account, or otherwise by the related Master Servicer or Trustee or by a Special
Servicer, and required to be paid to such Certificateholders pursuant to such
Pooling Agreement following the earlier of (i) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of all
property acquired upon foreclosure of any Mortgage Loan subject thereto and (ii)
the purchase of all of the assets of the related Trust Fund by the party
entitled to effect such termination, under the circumstances and in the manner
that will be described in the related Prospectus Supplement. Written notice of
termination of a Pooling Agreement will be given to each Certificateholder of
the related series, and the final distribution will be made only upon
presentation and surrender of the Certificates of such series at the location to
be specified in the notice of termination.
If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the repurchase
of the assets in the related Trust Fund by a party that will be specified
therein, under the circumstances and in the manner set forth therein. If so
provided in the related Prospectus Supplement, upon
35
<PAGE>
the reduction of the Certificate Balance of a specified class or classes of
Certificates by a specified percentage or amount, a party identified therein
will be authorized or required to solicit bids for the purchase of all the
assets of the related Trust Fund, or of a sufficient portion of such assets to
retire such class or classes, under the circumstances and in the manner set
forth therein.
Book-entry Registration and Definitive Certificates
If so provided in the related Prospectus Supplement, one or more classes of
the Offered Certificates of any series will be offered in book-entry format
through the facilities of The Depository Trust Company ("DTC"), and each such
class will be represented by one or more global Certificates registered in the
name of DTC or its nominee.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants," which maintain accounts with
DTC, include securities brokers and dealers (including Merrill Lynch, Pierce,
Fenner & Smith Incorporated), banks, trust companies and clearing corporations
and may include certain other organizations. DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each actual purchaser
of a Book-Entry Certificate (a "Certificate Owner") will in turn be recorded on
the records of Direct and Indirect Participants. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate Owners
are expected to receive written confirmations providing details of such
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interest in the Book-Entry Certificates will
be accomplished by entries made on the books of Participants acting on behalf of
Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except in
the event that use of the book-entry system for the Book-Entry Certificates of
any series is discontinued as described below.
DTC will not know the identity of actual Certificate Owners of the
Book-Entry Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Certificates are credited. The Participants
will remain responsible for keeping account of their holdings on behalf of their
customers. Notices and other communications conveyed by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants" accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of each such Participant (and not
of DTC, the Depositor or any Trustee or Master Servicer), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Under a book-entry system, Certificate Owners may receive payments after the
related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling Agreement) of a
Book-Entry Certificate will be the nominee of DTC, and the Certificate Owners
will not be recognized as Certificateholders under the Pooling Agreement.
Certificate Owners will be permitted to exercise the rights of
Certificateholders under the related Pooling Agreement only indirectly through
the
36
<PAGE>
Participants who in turn will exercise their rights through DTC. The Depositor
is informed that DTC will take action permitted to be taken by a
Certificateholder under a Pooling Agreement only at the direction of one or more
Participants to whose account with DTC interests in the Book-Entry Certificates
are credited.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain Certificate Owners, the ability of a
Certificate Owner to pledge its interest in Book-Entry Certificates to persons
or entities that do not participate in the DTC system, or otherwise take actions
in respect of its interest in Book-Entry Certificates, may be limited due to the
lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued in fully
registered, certificated form (as so issued, "Definitive Certificates") to
Certificate Owners or their nominees, rather than to DTC or its nominee, only if
(i) the Depositor advises the Trustee in writing that DTC is no longer willing
or able to properly discharge its responsibilities as depository with respect to
such Certificates and the Depositor is unable to locate a qualified successor or
(ii) the Depositor, at its option, elects to terminate the book-entry system
through DTC with respect to such Certificates. Upon the occurrence of either of
the events described in the preceding sentence, DTC will be required to notify
all Participants of the availability through DTC of Definitive Certificates.
Upon surrender by DTC of the certificate or certificates representing a class of
Book-Entry Certificates, together with instructions for reregistration, the
Trustee or other designated party will be required to issue to the Certificate
Owners identified in such instructions the Definitive Certificates to which they
are entitled, and thereafter the holders of such Definitive Certificates will be
recognized as Certificateholders under the related Pooling Agreement.
DESCRIPTION OF THE POOLING AGREEMENTS
General
The Certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the related Prospectus
Supplement (in either case, a "Pooling Agreement"). In general, the parties to a
Pooling Agreement will include the Depositor, the Trustee, the Master Servicer
and, in some cases, a Special Servicer appointed as of the date of the Pooling
Agreement. However, a Pooling Agreement that relates to a Trust Fund that
consists solely of MBS may not include a Master Servicer or other servicer as a
party. All parties to each Pooling Agreement under which Certificates of a
series are issued will be identified in the related Prospectus Supplement.
A form of a Pooling and Servicing Agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling Agreement will vary depending upon the nature of the
Certificates to be issued thereunder and the nature of the related Trust Fund.
The following summaries describe certain provisions that may appear in a Pooling
Agreement under which Certificates that evidence interests in Mortgage Loans
will be issued. The Prospectus Supplement for a series of Certificates will
describe any provision of the related Pooling Agreement that materially differs
from the description thereof contained in this Prospectus and, if the related
Trust Fund includes MBS, will summarize all of the material provisions of the
related Pooling Agreement. The summaries herein do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of the Pooling Agreement for each series of Certificates and the
description of such provisions in the related Prospectus Supplement. As used
herein with respect to any series, the term "Certificate" refers to all of the
Certificates of that series, whether or not offered hereby and by the related
Prospectus Supplement, unless the context otherwise requires. The Depositor will
provide a copy of the Pooling Agreement (without exhibits) that relates to any
series of Certificates without charge upon written request of a holder of a
Certificate of such series addressed to Merrill Lynch Mortgage Investors, Inc.,
World Financial Center, North Tower-Fifteenth Floor, 250 Vesey Street, New York,
New York 10281-1315. Attention: Secretary.
Assignment of Mortgage Loans; Repurchases
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans to
be included in the related Trust Fund, together with, unless otherwise specified
in the related Prospectus Supplement, all principal and interest to be received
on or with respect to such Mortgage Loans after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for the Mortgage Loans and the other
assets to be included in the Trust Fund for such series. Each Mortgage Loan will
be
37
<PAGE>
identified in a schedule appearing as an exhibit to the related Pooling
Agreement. Such schedule generally will include detailed information that
pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include the address of the related Mortgaged Property
and type of such property; the Mortgage Rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap information; the original
and remaining term to maturity; the original amortization term; the original and
outstanding principal balance; and the Loan-to-Value Ratio and Debt Service
Coverage Ratio as of the date indicated.
With respect to each Mortgage Loan to be included in a Trust Fund, the
Depositor will deliver (or cause to be delivered) to the related Trustee (or to
a custodian appointed by the Trustee) certain loan documents which, unless
otherwise specified in the related Prospectus Supplement, will include the
original Mortgage Note endorsed, without recourse, to the order of the Trustee,
the original Mortgage (or a certified copy thereof) with evidence of recording
indicated thereon and an assignment of the Mortgage to the Trustee in recordable
form. Unless otherwise provided in the related Prospectus Supplement, the
related Pooling Agreement will require that the Depositor or other party thereto
promptly cause each such assignment of Mortgage to be recorded in the
appropriate public office for real property records.
The related Trustee (or the custodian appointed by the Trustee) will be
required to review the Mortgage Loan documents within a specified period of days
after receipt thereof, and the Trustee (or the custodian) will hold such
documents in trust for the benefit of the Certificateholders of the related
series. Unless otherwise specified in the related Prospectus Supplement, if any
such document is found to be missing or defective, in either case such that
interests of the Certificateholders are materially and adversely affected, the
Trustee (or such custodian) will be required to notify the Master Servicer and
the Depositor, and the Master Servicer will be required to notify the relevant
Mortgage Asset Seller. In that case, and if the Mortgage Asset Seller cannot
deliver the document or cure the defect within a specified number of days after
receipt of such notice, then unless otherwise specified in the related
Prospectus Supplement, the Mortgage Asset Seller will be obligated to replace
the related Mortgage Loan or repurchase it from the Trustee at a price that will
be specified in the related Prospectus Supplement.
Representations and Warranties; Repurchases
Unless otherwise provided in the related Prospectus Supplement, the
Depositor will, with respect to each Mortgage Loan in the related Trust Fund,
make or assign certain representations and warranties, (the person making such
representations and warranties, the "Warranting Party") covering, by way of
example: (i) the accuracy of the information set forth for such Mortgage Loan on
the schedule of Mortgage Loans appearing as an exhibit to the related Pooling
Agreement; (ii) the enforceability of the related Mortgage Note and Mortgage and
the existence of title insurance insuring the lien priority of the related
Mortgage; (iii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iv) the
payment status of the Mortgage Loan. Each Warranting Party will be identified in
the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the related
Certificateholders. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Loan from the Trustee within a specified
period at a price that will be specified in the related Prospectus Supplement.
If so provided in the Prospectus Supplement for a series of Certificates, a
Warranting Party, in lieu of repurchasing a Mortgage Loan as to which a breach
has occurred, will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of such series of Certificates,
to replace such Mortgage Loan with one or more other mortgage loans, in
accordance with standards that will be described in the Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, this repurchase
or substitution obligation will constitute the sole remedy available to holders
of Certificates of any series for a breach of representation and warranty by a
Warranting Party. Moreover, neither the Depositor (unless it is the Warranting
Party) nor the Master Servicer will be obligated to purchase or replace a
Mortgage Loan if a Warranting Party defaults on its obligation to do so.
The dates as of which representations and warranties have been made by a
Warranting Party will be specified in the related Prospectus Supplement. In some
cases, such representations and warranties will have been made as of a date
prior to the date upon which the related series of Certificates is issued, and
thus may not address events that may
38
<PAGE>
occur following the date as of which they were made. However, the Depositor will
not include any Mortgage Loan in the Trust Fund for any series of Certificates
if anything has come to the Depositor's attention that would cause it to believe
that the representations and warranties made in respect of such Mortgage Loan
will not be accurate in all material respects as of such date of issuance.
Certificate Account
General. The Master Servicer and/or the Trustee will, as to each Trust
Fund, establish and maintain or cause to be established and maintained one or
more separate accounts for the collection of payments on the related Mortgage
Loans (collectively, the "Certificate Account"), which will be established so as
to comply with the standards of each Rating Agency that has rated any one or
more classes of Certificates of the related series. As described in the related
Prospectus Supplement, a Certificate Account may be maintained either as an
interest-bearing or a non-interest-bearing account, and the funds held therein
may be held as cash or invested in United States government securities and other
investment grade obligations specified in the related Pooling Agreement
("Permitted Investments"). Unless otherwise provided in the related Prospectus
Supplement, any interest or other income earned on funds in the Certificate
Account will be paid to the related Master Servicer or Trustee as additional
compensation. If permitted by such Rating Agency or Agencies and so specified in
the related Prospectus Supplement, a Certificate Account may contain funds
relating to more than one series of mortgage pass-through certificates and may
contain other funds representing payments on mortgage loans owned by the related
Master Servicer or serviced by it on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, the related Master Servicer,
Trustee or Special Servicer will be required to deposit or cause to be deposited
in the Certificate Account for each Trust Fund within a certain period following
receipt (in the case of collections and payments), the following payments and
collections received, or advances made, by the Master Servicer, the Trustee or
any Special Servicer subsequent to the Cut-off Date (other than payments due on
or before the Cut-off Date):
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including any default interest collected, in each case net of any portion
thereof retained by the Master Servicer, any Special Servicer or
Sub-Servicer as its servicing compensation or as compensation to the
Trustee;
(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan (other than proceeds applied to the restoration of
the property or released to the related borrower in accordance with the
customary servicing practices of the Master Servicer (or, if applicable, a
Special Servicer) and/or the terms and conditions of the related Mortgage
(collectively, "Insurance Proceeds") and all other amounts received and
retained in connection with the liquidation of defaulted Mortgage Loans or
property acquired in respect thereof, by foreclosure or otherwise
("Liquidation Proceeds"), together with the net operating income (less
reasonable reserves for future expenses) derived from the operation of any
Mortgaged Properties acquired by the Trust Fund through foreclosure or
otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates as
described under "Description of Credit Support";
(v) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(vi) any amounts paid under any Cash Flow Agreement, as described
under "Description of the Trust Funds--Cash Flow Agreements";
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or
any other specified person as described under "--Assignment of Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases,"
all proceeds of the purchase of any defaulted Mortgage Loan as described
under "--Realization Upon Defaulted Mortgage Loans," and all proceeds of
any Mortgage Asset purchased as described under "Description of the
Certificates--Termination" (all of the foregoing, also, "Liquidation
Proceeds");
39
<PAGE>
(viii) any amounts paid by the Master Servicer to cover Prepayment
Interest Shortfalls arising out of the prepayment of Mortgage Loans as
described under "--Servicing Compensation and Payment of Expenses";
(ix) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or a Special Servicer, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations on the Mortgage
Loans;
(x) all payments required to be deposited in the Certificate Account
with respect to any deductible clause in any blanket insurance policy
described under "--Hazard Insurance Policies";
(xi) any amount required to be deposited by the Master Servicer or the
Trustee in connection with losses realized on investments for the benefit
of the Master Servicer or the Trustee, as the case may be, of funds held in
the Certificate Account; and
(xii) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling Agreement and described in the
related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement and
described in the related Prospectus Supplement, a Master Servicer, Trustee or
Special Servicer may make withdrawals from the Certificate Account for each
Trust Fund for any of the following purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
(ii) to reimburse the Master Servicer or any other specified person
for unreimbursed amounts advanced by it as described under "Description of
the Certificates--Advances in Respect of Delinquencies," such reimbursement
to be made out of amounts received which were identified and applied by the
Master Servicer as late collections of interest (net of related servicing
fees) on and principal of the particular Mortgage Loans with respect to
which the advances were made or out of amounts drawn under any form of
Credit Support with respect to such Mortgage Loans;
(iii) to reimburse the Master Servicer or a Special Servicer for
unpaid servicing fees earned by it and certain unreimbursed servicing
expenses incurred by it with respect to Mortgage Loans in the Trust Fund
and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent Liquidation Proceeds and Insurance Proceeds
collected on the particular Mortgage Loans and properties, and net income
collected on the particular properties, with respect to which such fees
were earned or such expenses were incurred or out of amounts drawn under
any form of Credit Support with respect to such Mortgage Loans and
properties;
(iv) to reimburse the Master Servicer or any other specified person
for any advances described in clause (ii) above made by it and any
servicing expenses referred to in clause (iii) above incurred by it which,
in the good faith judgment of the Master Servicer or such other person,
will not be recoverable from the amounts described in clauses (ii) and
(iii), respectively, such reimbursement to be made from amounts collected
on other Mortgage Loans in the related Trust Fund or, if and to the extent
so provided by the related Pooling Agreement and described in the related
Prospectus Supplement, only from that portion of amounts collected on such
other Mortgage Loans that is otherwise distributable on one or more classes
of Subordinate Certificates of the related series;
(v) if and to the extent described in the related Prospectus
Supplement, to pay the Master Servicer, a Special Servicer or another
specified entity (including a provider of Credit Support) interest accrued
on the advances described in clause (ii) above made by it and the servicing
expenses described in clause (iii) above incurred by it while such remain
outstanding and unreimbursed;
(vi) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "--Realization
Upon Defaulted Mortgage Loans";
(vii) to reimburse the Master Servicer, the Depositor, or any of their
respective directors, officers, employees and agents, as the case may be,
for certain expenses, costs and liabilities incurred thereby, as and to the
extent described under "--Certain Matters Regarding the Master Servicer and
the Depositor";
40
<PAGE>
(viii) if and to the extent described in the related Prospectus
Supplement, to pay the fees of the Trustee;
(ix) to reimburse the Trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under
"--Certain Matters Regarding the Trustee";
(x) to pay the Master Servicer or the Trustee, as additional
compensation, interest and investment income earned in respect of amounts
held in the Certificate Account;
(xi) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any Mortgaged
Property acquired by the Trust Fund by foreclosure or otherwise;
(xii) if one or more elections have been made to treat the Trust Fund
or designated portions thereof as a REMIC, to pay any federal, state or
local taxes imposed on the Trust Fund or its assets or transactions, as and
to the extent described under "Certain Federal Income Tax
Consequences--REMICS--Prohibited Transactions Tax and Other Taxes";
(xiii) to pay for the cost of an independent appraiser or other expert
in real estate matters retained to determine a fair sale price for a
defaulted Mortgage Loan or a property acquired in respect thereof in
connection with the liquidation of such Mortgage Loan or property;
(xiv) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling Agreement for the benefit of
Certificateholders;
(xv) to make any other withdrawals permitted by the related Pooling
Agreement and described in the related Prospectus Supplement; and
(xvi) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
Collection and Other Servicing Procedures
The Master Servicer for any mortgage pool, directly or through
Sub-Servicers, will be required to make reasonable efforts to collect all
scheduled Mortgage Loan payments and will be required to follow such collection
procedures as it would follow with respect to mortgage loans that are comparable
to such Mortgage Loans and held for its own account, provided such procedures
are consistent with (i) the terms of the related Pooling Agreement and any
related instrument of Credit Support included in the related Trust Fund, (ii)
applicable law and (iii) the servicing standard specified in the Pooling
Agreement and in the related Prospectus Supplement (the "Servicing Standard").
The Master Servicer will also be required to perform other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts for payment of taxes, insurance premiums and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; conducting property inspections
on a periodic or other basis; managing Mortgaged Properties acquired through or
in lieu of foreclosure (each, an "REO Property"); and maintaining servicing
records relating to the Mortgage Loans. Unless otherwise specified in the
related Prospectus Supplement, the Master Servicer will be responsible for
filing and settling claims in respect of particular Mortgage Loans under any
applicable instrument of Credit Support. See "Description of Credit Support."
Modifications, Waivers And Amendments Of Mortgage Loans
A Master Servicer may agree to modify, waive or amend any term of any
Mortgage Loan serviced by it in a manner consistent with the Servicing Standard;
provided that, unless otherwise set forth in the related Prospectus Supplement,
the modification, waiver or amendment will not (i) affect the amount or timing
of any scheduled payments of principal or interest on the Mortgage Loan or (ii)
in the judgment of the Master Servicer, materially impair the security for the
Mortgage Loan or reduce the likelihood of timely payment of amounts due thereon.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer also may agree to any other modification, waiver or amendment if, in
its judgment (i) a material default on the Mortgage Loan has occurred or a
payment default is imminent and (ii) such modification, waiver or amendment is
reasonably likely to produce a greater recovery with respect to the Mortgage
Loan on a present value basis than would liquidation.
Sub-servicers
A Master Servicer may delegate its servicing obligations in respect of the
Mortgage Loans serviced by it to one or more third-party servicers (each, a
"Sub-Servicer"), but the Master Servicer will remain liable for such obligations
41
<PAGE>
under the related Pooling Agreement unless otherwise provided in the related
Prospectus Supplement. Unless otherwise provided in the related Prospectus
Supplement, each sub-servicing agreement between a Master Servicer and a
Sub-Servicer (a "Sub-Servicing Agreement") must provide that, if for any reason
the Master Servicer is no longer acting in such capacity, the Trustee or any
successor Master Servicer may assume the Master Servicer's rights and
obligations under such Sub-Servicing Agreement.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer will be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Master Servicer's compensation pursuant to the
related Pooling Agreement is sufficient to pay such fees. Each Sub-Servicer will
be reimbursed by the Master Servicer for certain expenditures which it makes,
generally to the same extent the Master Servicer would be reimbursed under a
Pooling Agreement. See "--Certificate Account" and "--Servicing Compensation and
Payment of Expenses."
Special Servicers
If and to the extent specified in the related Prospectus Supplement, a
special servicer (the "Special Servicer") may be a party to the related Pooling
Agreement or may be appointed by the Master Servicer or another specified party
to perform certain specified duties (for example, the servicing of defaulted
Mortgage Loans) in respect of the servicing of the related Mortgage Loans. The
Master Servicer will be liable for the performance of a Special Servicer only
if, and to the extent, set forth in such Prospectus Supplement.
Realization Upon Defaulted Mortgage Loans
A borrower's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and to otherwise maintain and insure the
related Mortgaged Property. In general, the related Master Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the borrower if cure is likely, inspect
the related Mortgaged Property and take such other actions as are consistent
with the Servicing Standard. A significant period of time may elapse before the
Master Servicer is able to assess the success of any such corrective action or
the need for additional initiatives.
The time within which the Master Servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Certificateholders may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the borrower, the presence of
an acceptable party to assume the Mortgage Loan and the laws of the jurisdiction
in which the Mortgaged Property is located. If a borrower files a bankruptcy
petition, the Master Servicer may not be permitted to accelerate the maturity of
the related Mortgage Loan or to foreclose on the Mortgaged Property for a
considerable period of time. See "Certain Legal Aspects of Mortgage Loans."
A Pooling Agreement may grant to the Master Servicer, a Special Servicer, a
provider of Credit Support and/or the holder or holders of certain classes of
Certificates of the related series a right of first refusal to purchase from the
Trust Fund, at a predetermined purchase price (which, if insufficient to fully
fund the entitlements of Certificateholders to principal and interest thereon,
will be specified in the related Prospectus Supplement), any Mortgage Loan as to
which a specified number of scheduled payments are delinquent. In addition,
unless otherwise specified in the related Prospectus Supplement, the Master
Servicer may offer to sell any defaulted Mortgage Loan if and when the Master
Servicer determines, consistent with the Servicing Standard, that such a sale
would produce a greater recovery on a present value basis than would liquidation
of the related Mortgaged Property. Unless otherwise provided in the related
Prospectus Supplement, the related Pooling Agreement will require that the
Master Servicer accept the highest cash bid received from any person (including
itself, an affiliate of the Master Servicer or any Certificateholder) that
constitutes a fair price for such defaulted Mortgage Loan. In the absence of any
bid determined in accordance with the related Pooling Agreement to be fair, the
Master Servicer will generally be required to proceed with respect to such
defaulted Mortgage Loan as described below.
If a default on a Mortgage Loan has occurred or, in the Master Servicer's
judgment, is imminent, the Master Servicer, on behalf of the Trustee, may at any
time institute foreclosure proceedings, exercise any power of sale
42
<PAGE>
contained in the related Mortgage, obtain a deed in lieu of foreclosure, or
otherwise acquire title to the related Mortgaged Property, by operation of law
or otherwise, if such action is consistent with the Servicing Standard. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
may not, however, acquire title to any Mortgaged Property or take any other
action that would cause the Trustee, for the benefit of Certificateholders of
the related series, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Master Servicer has previously determined, based on a report
prepared by a person who regularly conducts environmental audits (which report
will be an expense of the Trust Fund), that:
(i) either the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that taking such actions as
are necessary to bring the Mortgaged Property into compliance therewith is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions; and
(ii) either there are no circumstances or conditions present at the
Mortgaged Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or remediation
could be required under any applicable environmental laws and regulations
or, if such circumstances or conditions are present for which any such
action could be required, taking such actions with respect to the Mortgaged
Property is reasonably likely to produce a greater recovery on a present
value basis than not taking such actions. See "Certain Legal Aspects of
Mortgage Loans--Environmental Considerations."
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Master Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property within two years of acquisition, unless
(i) the Internal Revenue Service grants an extension of time to sell such
property or (ii) the Trustee receives an opinion of independent counsel to the
effect that the holding of the property by the Trust Fund for more than two
years after its acquisition will not result in the imposition of a tax on the
Trust Fund or cause the Trust Fund to fail to qualify as a REMIC under the Code
at any time that any Certificate is outstanding. Subject to the foregoing, the
Master Servicer will generally be required to solicit bids for any Mortgaged
Property so acquired in such a manner as will be reasonably likely to realize a
fair price for such property. If the Trust Fund acquires title to any Mortgaged
Property, the Master Servicer, on behalf of the Trust Fund, may retain an
independent contractor to manage and operate such property. The retention of an
independent contractor, however, will not relieve the Master Servicer of its
obligation to manage such Mortgaged Property in a manner consistent with the
Servicing Standard.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Master Servicer with respect to such Mortgage Loan, the Trust
Fund will realize a loss in the amount of such difference. The Master Servicer
will be entitled to reimburse itself from the Liquidation Proceeds recovered on
any defaulted Mortgage Loan, prior to the distribution of such Liquidation
Proceeds to Certificateholders, amounts that represent unpaid servicing
compensation in respect of the Mortgage Loan, unreimbursed servicing expenses
incurred with respect to the Mortgage Loan and any unreimbursed advances of
delinquent payments made with respect to the Mortgage Loan.
If any Mortgaged Property suffers damage that the proceeds, if any, of the
related hazard insurance policy are insufficient to fully restore, the Master
Servicer will not be required to expend its own funds to restore the damaged
property unless (and to the extent not otherwise provided in the related
Prospectus Supplement) it determines (i) that such restoration will increase the
proceeds to Certificateholders on liquidation of the Mortgage Loan after
reimbursement of the Master Servicer for its expenses and (ii) that such
expenses will be recoverable by it from related Insurance Proceeds or
Liquidation Proceeds.
Hazard Insurance Policies
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will require the related Master Servicer to cause each
Mortgage Loan borrower to maintain a hazard insurance policy that provides for
such coverage as is required under the related Mortgage or, if the Mortgage
permits the holder thereof to dictate to the borrower the insurance coverage to
be maintained on the related Mortgaged Property, such coverage as is consistent
with the requirements of the Servicing Standard. Unless otherwise specified in
the related Prospectus Supplement, such coverage generally will be in an amount
equal to the lesser of the principal balance owing on such Mortgage
43
<PAGE>
Loan and the replacement cost of the Mortgaged Property, but in either case not
less than the amount necessary to avoid the application of any co-insurance
clause contained in the hazard insurance policy. The ability of the Master
Servicer to assure that hazard insurance proceeds are appropriately applied may
be dependent upon its being named as an additional insured under any hazard
insurance policy and under any other insurance policy referred to below, or upon
the extent to which information concerning covered losses is furnished by
borrowers. All amounts collected by the Master Servicer under any such policy
(except for amounts to be applied to the restoration or repair of the Mortgaged
Property or released to the borrower in accordance with the Master Servicer's
normal servicing procedures and/or to the terms and conditions of the related
Mortgage and Mortgage Note) will be deposited in the related Certificate
Account. The Pooling Agreement may provide that the Master Servicer may satisfy
its obligation to cause each borrower to maintain such a hazard insurance policy
by maintaining a blanket policy insuring against hazard losses on all of the
Mortgage Loans in the related Trust Fund. If such blanket policy contains a
deductible clause, the Master Servicer will be required, in the event of a
casualty covered by such blanket policy, to deposit in the related Certificate
Account all sums that would have been deposited therein but for such deductible
clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin, domestic animals and certain other kinds of
risks.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
Due-On-Sale and Due-On-Encumbrance Provisions
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer will determine whether to exercise any right the Trustee may have under
any such provision in a manner consistent with the Servicing Standard. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be entitled to retain as additional servicing compensation any fee
collected in connection with the permitted transfer of a Mortgaged Property. See
"Certain Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance."
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a portion of the
interest payments on each Mortgage Loan in the related Trust Fund. Since that
compensation is generally based on a percentage of the principal balance of each
such Mortgage Loan outstanding from time to time, it will decrease in accordance
with the amortization of the Mortgage Loans. The Prospectus Supplement with
respect to a series of Certificates may provide that, as additional
compensation, the Master Servicer may retain all or a portion of late payment
charges, Prepayment Premiums, modification fees and other fees collected from
borrowers and any interest or other income that may be earned on funds held in
the Certificate Account. Any Sub-Servicer will receive a portion of the Master
Servicer's compensation as its sub-servicing compensation.
In addition to amounts payable to any Sub-Servicer, a Master Servicer may
be required, to the extent provided in the related Prospectus Supplement, to pay
from amounts that represent its servicing compensation certain expenses
44
<PAGE>
incurred in connection with the administration of the related Trust Fund,
including, without limitation, payment of the fees and disbursements of
independent accountants and payment of expenses incurred in connection with
distributions and reports to Certificateholders. Certain other expenses,
including certain expenses related to Mortgage Loan defaults and liquidations
and, to the extent so provided in the related Prospectus Supplement, interest on
such expenses at the rate specified therein, and the fees of the Trustee and any
Special Servicer, may be required to be borne by the Trust Fund.
If and to the extent provided in the related Prospectus Supplement, the
Master Servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any period to Prepayment Interest
Shortfalls. See "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest."
Evidence as to Compliance
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will require that, on or before a specified date in each year,
the Master Servicer cause a firm of independent public accountants to furnish a
statement to the Trustee to the effect that, based on an examination by such
firm conducted substantially in compliance with either the Uniform Single Audit
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC, the servicing by or on behalf of the Master Servicer of mortgage loans
under pooling and servicing agreements substantially similar to each other
(which may include the related Pooling Agreement) was conducted through the
preceding calendar year or other specified twelve-month period in compliance
with the terms of such agreements except for any significant exceptions or
errors in records that, in the opinion of such firm, either the Audit Program
for Mortgages serviced for FHLMC or paragraph 4 of the Uniform Single Audit
Program for Mortgage Bankers, as the case may be, requires it to report. Each
Pooling Agreement will also provide for delivery to the Trustee, on or before a
specified date in each year, of a statement signed by one or more officers of
the Master Servicer to the effect that the Master Servicer has fulfilled its
material obligations under the Pooling Agreement throughout the preceding
calendar year or other specified twelve-month period.
Unless otherwise provided in the related Prospectus Supplement, copies of
the annual accountants' statement and the statement of officers of a Master
Servicer will be made available to Certificateholders without charge upon
written request to the Master Servicer.
Certain Matters Regarding the Master Servicer and the Depositor
The Master Servicer under a Pooling Agreement may be an affiliate of the
Depositor and may have other normal business relationships with the Depositor or
the Depositor's affiliates. Unless otherwise specified in the Prospectus
Supplement for a series of Certificates, the related Pooling Agreement will
permit the Master Servicer to resign from its obligations thereunder only upon a
determination that such obligations are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it at the date of the Pooling Agreement. No such
resignation will become effective until the Trustee or a successor servicer has
assumed the Master Servicer's obligations and duties under the Pooling
Agreement. Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will also be required to maintain a fidelity bond and errors and
omissions policy that provides coverage against losses that may be sustained as
a result of an officer's or employee's misappropriation of funds, errors and
omissions or negligence, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling Agreement will further provide that none of the Master Servicer, the
Depositor and any director, officer, employee or agent of either of them will be
under any liability to the related Trust Fund or Certificateholders for any
action taken, or not taken, in good faith pursuant to the Pooling Agreement or
for errors in judgment; provided, however, that none of the Master Servicer, the
Depositor and any such person will be protected against any breach of a
representation, warranty or covenant made in such Pooling Agreement, or against
any expense or liability that such person is specifically required to bear
pursuant to the terms of such Pooling Agreement, or against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of obligations or duties thereunder or by reason
of reckless disregard of such obligations and duties. Unless otherwise specified
in the related Prospectus Supplement, each Pooling Agreement will further
provide that the Master Servicer, the Depositor and any director, officer,
employee or agent of either of them will be entitled to indemnification by the
related Trust Fund against any loss, liability or expense incurred in connection
with any legal action that relates to the Pooling Agreement or the related
45
<PAGE>
series of Certificates; provided, however, that such indemnification will not
extend to any loss, liability or expense (i) that such person is specifically
required to bear pursuant to the terms of such agreement, or is incidental to
the performance of obligations and duties thereunder and is not reimbursable
pursuant to the Pooling Agreement; (ii) incurred in connection with any breach
of a representation, warranty or covenant made in the Pooling Agreement; (iii)
incurred by reason of misfeasance, bad faith or gross negligence in the
performance of obligations or duties under the Pooling Agreement, or by reason
of reckless disregard of such obligations or duties; or (iv) incurred in
connection with any violation of any state or federal securities law. In
addition, each Pooling Agreement will provide that neither the Master Servicer
nor the Depositor will be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its respective responsibilities under
the Pooling Agreement and that in its opinion may involve it in any expense or
liability. However, each of the Master Servicer and the Depositor will be
permitted, in the exercise of its discretion, to undertake any such action that
it may deem necessary or desirable with respect to the enforcement and/or
protection of the rights and duties of the parties to the Pooling Agreement 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 Certificateholders, and the Master
Servicer or the Depositor, as the case may be, will be entitled to charge the
related Certificate Account therefor.
Any person into which the Master Servicer or the Depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the Master Servicer or the Depositor is a party, or any person succeeding to the
business of the Master Servicer or the Depositor, will be the successor of the
Master Servicer or the Depositor, as the case may be, under the related Pooling
Agreement.
Events Of Default
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling Agreement will
include (i) any failure by the Master Servicer to distribute or cause to be
distributed to Certificateholders, or to remit to the Trustee for distribution
to Certificateholders in a timely manner, any amount required to be so
distributed or remitted, which failure continues unremedied for five days after
written notice of such failure has been given to the Master Servicer by the
Trustee or the Depositor, or to the Master Servicer, the Depositor and the
Trustee by Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series); (ii) any failure by the Master Servicer duly to observe or
perform in any material respect any of its other covenants or obligations under
the Pooling Agreement which continues unremedied for sixty days after written
notice of such failure has been given to the Master Servicer by the Trustee or
the Depositor, or to the Master Servicer, the Depositor and the Trustee by
Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series; and (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings in respect of or
relating to the Master Servicer and certain actions by or on behalf of the
Master Servicer indicating its insolvency or inability to pay its obligations.
Material variations to the foregoing Events of Default (other than to add
thereto or shorten cure periods or eliminate notice requirements) will be
specified in the related Prospectus Supplement.
Rights Upon Event of Default
So long as an Event of Default under a Pooling Agreement remains
unremedied, the Depositor or the Trustee will be authorized, and at the
direction of Certificateholders entitled to not less than 51% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series, the Trustee will be required, to terminate all of the rights
and obligations of the Master Servicer as master servicer under the Pooling
Agreement, whereupon the Trustee will succeed to all of the responsibilities,
duties and liabilities of the Master Servicer under the Pooling Agreement
(except that if the Master Servicer is required to make advances in respect of
Mortgage Loan delinquencies, but the Trustee is prohibited by law from
obligating itself to do so, or if the related Prospectus Supplement so
specifies, the Trustee will not be obligated to make such advances) and will be
entitled to similar compensation arrangements. Unless otherwise specified in the
related Prospectus Supplement, if the Trustee is unwilling or unable so to act,
it may (or, at the written request of Certificateholders entitled to at least
51% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights for such series, it will be required to) appoint, or petition
a court of competent jurisdiction to appoint, a loan servicing institution that
(unless otherwise provided in the related Prospectus Supplement) is acceptable
to each Rating Agency that assigned ratings to the Offered Certificates of such
series to act as successor to the Master Servicer under the Pooling Agreement.
Pending such appointment, the Trustee will be obligated to act in such capacity.
46
<PAGE>
No Certificateholder will have the right under any Pooling Agreement to
institute any proceeding with respect thereto unless such holder previously has
given to the Trustee written notice of default and unless Certificateholders
entitled to at least 25% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights for the related series shall have
made written request upon the Trustee to institute such proceeding in its own
name as Trustee thereunder and shall have offered to the Trustee reasonable
indemnity, and the Trustee for sixty days (or such other period specified in the
related Prospectus Supplement) shall have neglected or refused to institute any
such proceeding. The Trustee, however, will be under no obligation to exercise
any of the trusts or powers vested in it by any Pooling Agreement or to make any
investigation of matters arising thereunder or to institute, conduct or defend
any litigation thereunder or in relation thereto at the request, order or
direction of any of the holders of Certificates of the related series, unless
such Certificateholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
Amendment
Each Pooling Agreement may be amended by the parties thereto, without the
consent of any of the holders of the related Certificates, (i) to cure any
ambiguity, (ii) to correct a defective provision therein or to correct, modify
or supplement any provision therein that may be inconsistent with any other
provision therein, (iii) to add any other provisions with respect to matters or
questions arising under the Pooling Agreement that are not inconsistent with the
provisions thereof, (iv) to comply with any requirements imposed by the Code or
(v) for any other purpose; provided that such amendment (other than an amendment
for the purpose specified in clause (iv) above) may not (as evidenced by an
opinion of counsel to such effect satisfactory to the Trustee) adversely affect
in any material respect the interests of any such holder. Unless otherwise
specified in the related Prospectus Supplement, each Pooling Agreement may also
be amended for any purpose by the parties, with the consent of
Certificateholders entitled to at least 51% (or such other percentage specified
in the related Prospectus Supplement) of the Voting Rights for the related
series allocated to the affected classes; provided, however, that unless
otherwise specified in the related Prospectus Supplement, no such amendment may
(i) reduce in any manner the amount of, or delay the timing of, payments
received or advanced on Mortgage Loans that are required to be distributed in
respect of any Certificate without the consent of the holder of such
Certificate, (ii) adversely affect in any material respect the interests of the
holders of any class of Certificates, in a manner other than as described in
clause (i), without the consent of the holders of all Certificates of such class
or (iii) modify the provisions of the Pooling Agreement described in this
paragraph without the consent of the holders of all Certificates of the related
series. However, unless otherwise specified in the related Prospectus
Supplement, the Trustee will be prohibited from consenting to any amendment of a
Pooling Agreement pursuant to which a REMIC election is to be or has been made
unless the Trustee shall first have received an opinion of counsel to the effect
that such amendment will not result in the imposition of a tax on the related
Trust Fund or cause the related Trust Fund to fail to qualify as a REMIC at any
time that the related Certificates are outstanding.
List of Certificateholders
Upon written request of any Certificateholder of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholder access, during normal
business hours, to the most recent list of Certificateholders of that series
then maintained by such person.
The Trustee
The Trustee under each Pooling Agreement will be named in the related
Prospectus Supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Depositor and its affiliates and with any Master
Servicer and its affiliates.
Duties of the Trustee
The Trustee for a series of Certificates will make no representation as to
the validity or sufficiency of the related Pooling Agreement, the Certificates
or any Mortgage Loan or related document and will not be accountable for the use
or application by or on behalf of any Master Servicer of any funds paid to the
Master Servicer or any Special Servicer in respect of the Certificates or the
Mortgage Loans, or any funds deposited into or withdrawn from the Certificate
Account or any other account by or on behalf of the Master Servicer or any
Special Servicer. If no Event of
47
<PAGE>
Default has occurred and is continuing, the Trustee will be required to perform
only those duties specifically required under the related Pooling Agreement.
However, upon receipt of any of the various certificates, reports or other
instruments required to be furnished to it pursuant to the Pooling Agreement,
the Trustee will be required to examine such documents and to determine whether
they conform to the requirements of the Pooling Agreement.
Certain Matters Regarding the Trustee
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for a series of Certificates will be entitled to indemnification, from
amounts held in the related Certificate Account, for any loss, liability or
expense incurred by the Trustee in connection with the Trustee's acceptance or
administration of its trusts under the related Pooling Agreement; provided,
however, that such indemnification will not extend to any loss, liability or
expense that constitutes a specific liability imposed on the Trustee pursuant to
the Pooling Agreement, or to any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence on the part of the Trustee in
the performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or duties, or as may arise from a breach
of any representation, warranty or covenant of the Trustee made therein. As and
to the extent described in the related Prospectus Supplement, the fees and
normal disbursements of any Trustee may be the expense of the related Master
Servicer or other specified person or may be required to be borne by the related
Trust Fund.
Resignation and Removal of the Trustee
The Trustee for a series of Certificates will be permitted at any time to
resign from its obligations and duties under the related Pooling Agreement by
giving written notice thereof to the Depositor. Upon receiving such notice of
resignation, the Depositor (or such other person as may be specified in the
related Prospectus Supplement) will be required to use its best efforts to
promptly appoint a successor trustee. If no successor trustee shall have
accepted an appointment within a specified period after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction to appoint a successor trustee.
If at any time the Trustee ceases to be eligible to continue as such under
the related Pooling Agreement, or if at any time the Trustee becomes incapable
of acting, or if certain events of (or proceedings in respect of) bankruptcy or
insolvency occur with respect to the Trustee, the Depositor will be authorized
to remove the Trustee and appoint a successor trustee. In addition, holders of
the Certificates of any series entitled to at least 51% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for such series may at any time (with or without cause) remove the Trustee and
appoint a successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
DESCRIPTION OF CREDIT SUPPORT
General
Credit Support may be provided with respect to one or more classes of the
Certificates of any series, or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a pool insurance policy or
guarantee insurance, the establishment of one or more reserve funds or another
method of Credit Support described in the related Prospectus Supplement, or any
combination of the foregoing. If so provided in the related Prospectus
Supplement, any form of Credit Support may provide credit enhancement for more
than one series of Certificates to the extent described therein.
Unless otherwise provided in the related Prospectus Supplement for a series
of Certificates, the Credit Support will not provide protection against all
risks of loss and will not guarantee payment to Certificateholders of all
amounts to which they are entitled under the related Pooling Agreement. If
losses or shortfalls occur that exceed the amount covered by the Credit Support
or that are not covered by the Credit Support, Certificateholders will bear
their allocable share of deficiencies. Moreover, if a form of Credit Support
covers more than one series of Certificates, holders of Certificates of one
series will be subject to the risk that such Credit Support will be exhausted by
the claims of the holders of Certificates of one or more other series before the
former receive their intended share of such coverage.
48
<PAGE>
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor under
any instrument of Credit Support, generally including (i) a brief description of
its principal business activities, (ii) its principal place of business, place
of incorporation and the jurisdiction under which it is chartered or licensed to
do business, (iii) if applicable, the identity of the regulatory agencies that
exercise primary jurisdiction over the conduct of its business and (iv) its
total assets, and its stockholders" equity or policyholders" surplus, if
applicable, as of a date that will be specified in the Prospectus Supplement.
See "Risk Factors--Credit Support Limitations."
Subordinate Certificates
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of (or may
be limited to) certain types of losses or shortfalls. The related Prospectus
Supplement will set forth information concerning the amount of subordination
provided by a class or classes of Subordinate Certificates in a series, the
circumstances under which such subordination will be available and the manner in
which the amount of subordination will be made available.
Cross-support Provisions
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of a series, Credit
Support may be provided by cross-support provisions requiring that distributions
be made on Senior Certificates evidencing interests in one group of Mortgage
Assets prior to distributions on Subordinate Certificates evidencing interests
in a different group of Mortgage Assets within the Trust Fund. The Prospectus
Supplement for a series that includes a cross-support provision will describe
the manner and conditions for applying such provisions.
Insurance or Guarantees with Respect to Mortgage Loans
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. To the extent material, a
copy of each such instrument will accompany the Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Certificates of the
related series.
Letter Of Credit
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or financial institution specified in such Prospectus Supplement (the "L/C
Bank"). Under a letter of credit, the L/C Bank will be obligated to honor draws
thereunder in an aggregate fixed dollar amount, net of unreimbursed payments
thereunder, generally equal to a percentage specified in the related Prospectus
Supplement of the aggregate principal balance of the Mortgage Assets on the
related Cut-off Date or of the initial aggregate Certificate Balance of one or
more classes of Certificates. If so specified in the related Prospectus
Supplement, the letter of credit may permit draws only in the event of certain
types of losses and shortfalls. The amount available under the letter of credit
will, in all cases, be reduced to the extent of the unreimbursed payments
thereunder and may otherwise be reduced as described in the related Prospectus
Supplement. The obligations of the L/C Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund. A copy of
any such letter of credit will accompany the Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Certificates of the
related series.
Certificate Insurance and Surety Bonds
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies and/or surety bonds
49
<PAGE>
provided by one or more insurance companies or sureties. Such instruments may
cover, with respect to one or more classes of Certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or determined
in the manner specified in the related Prospectus Supplement. A copy of any such
instrument will accompany the Current Report on Form 8-K to be filed with the
Commission within 15 days of issuance of the Certificates of the related series.
Reserve Funds
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of the collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, will be applied for the purposes, in the
manner, and to the extent specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, reserve funds may be established
to provide protection only against certain types of losses and shortfalls.
Following each Distribution Date, amounts in a reserve fund in excess of any
amount required to be maintained therein may be released from the reserve fund
under the conditions and to the extent specified in the related Prospectus
Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
Credit Support with Respect to MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the Mortgage Loans (or mortgage loans underlying any MBS)
is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. See "Description of the Trust
Funds--Mortgage Loans." For purposes of the following discussion, "Mortgage
Loan" includes a mortgage loan underlying an MBS.
General
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgage instruments." A mortgage instrument
creates a lien upon, or grants a title interest in, the real property covered
thereby, and represents the security for the repayment of the indebtedness
customarily evidenced by a promissory note. The priority of the lien created or
interest granted will depend on the terms of the mortgage instrument and, in
some cases, on the terms of separate subordination agreements or intercreditor
agreements with others that hold interests in the real property, the knowledge
of the parties to the mortgage instrument as to the existence of prior liens
and, generally, the order of
50
<PAGE>
recordation of the mortgage instrument in the appropriate public recording
office. However, the lien of a recorded mortgage instrument will generally be
subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In a mortgage,
the mortgagor grants a lien on the subject property in favor of the mortgagee. A
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property to the trustee, in trust, irrevocably until the
debt is paid, and generally with a power of sale. A deed to secure debt
typically has two parties. The borrower, or grantor, conveys title to the real
property to the grantee, or lender, generally with a power of sale, until such
time as the debt is repaid. In a case where the borrower is a land trust, there
would be an additional party to a mortgage instrument because legal title to the
property is held by a land trustee under a land trust agreement for the benefit
of the borrower. At origination of a mortgage loan involving a land trust, the
borrower generally executes a separate undertaking to make payments on the
mortgage note. The mortgagee's authority under a mortgage, the trustee's
authority under a deed of trust and the grantee's authority under a deed to
secure debt are governed by the express provisions of the related instrument,
the law of the state in which the real property is located, certain federal laws
and, in some deed of trust transactions, the directions of the beneficiary.
Leases And Rents
Mortgage instruments that encumber income-producing property often contain
or are accompanied by an assignment of rents and leases, pursuant to which the
borrower assigns to the lender the borrower's right, title and interest as
landlord under each lease and the income derived therefrom, while (unless rents
are to be paid directly to the lender) retaining a revocable license to collect
the rents for so long as there is no default. If the borrower defaults, the
license terminates and the lender is entitled to collect the rents. Local law
may require that the lender take possession of the property and/or obtain a
court-appointed receiver before becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the rates and must file
continuation statements, generally every five years, to maintain perfection of
such security interest. Even if the lender's security interest in room rates is
perfected under the UCC, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to collect the room
rates following a default.
Personalty
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection.
Junior Mortgages; Rights of Senior Lenders
Some of the Mortgage Loans included in a Trust Fund may be secured by
mortgage instruments that are subordinate to mortgage instruments held by other
lenders. The rights of the Trust Fund (and therefore the Certificateholders), as
holder of a junior mortgage instrument, are subordinate to those of the senior
lender, including the prior rights of the senior lender to receive rents, hazard
insurance and condemnation proceeds and to cause the Mortgaged Property to be
sold upon borrower's default and thereby extinguish the Trust Fund's junior lien
unless the Master Servicer or Special Servicer asserts its subordinate interest
in a property in a foreclosure litigation or satisfies the defaulted senior
loan. As discussed more fully below, in many states a junior lender may satisfy
a defaulted senior loan in full, adding the amounts expended to the balance due
on the junior loan. Absent a provision in the senior mortgage instrument or in a
subordination or intercreditor agreement, no notice of default is required to be
given to the junior lender.
51
<PAGE>
The form of the mortgage instrument used by many institutional lenders
confers on the lender the right both to receive all proceeds collected under any
hazard insurance policy and all awards made in connection with any condemnation
proceedings, and (subject to any limits imposed by applicable state law) to
apply such proceeds and awards to any indebtedness secured by the mortgage
instrument in such order as the lender may determine. Thus, if improvements on a
property are damaged or destroyed by fire or other casualty, or if the property
is taken by condemnation, the holder of the senior mortgage instrument will have
the prior right to collect any insurance proceeds payable under a hazard
insurance policy and any award of damages in connection with the condemnation
and to apply the same to the senior indebtedness. Accordingly, only the proceeds
in excess of the amount of senior indebtedness will be available to be applied
to the indebtedness secured by a junior mortgage instrument.
The form of mortgage instrument used by many institutional lenders
typically contains a "future advance" clause, which provides, in general, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage instrument. While
such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or an "optional" advance. If the lender is obligated to
advance the additional amounts, the advance may be entitled to receive the same
priority as the amounts advanced at origination, notwithstanding that
intervening junior liens may have been recorded between the date of recording of
the senior mortgage instrument and the date of the future advance, and
notwithstanding that the senior lender had actual knowledge of such intervening
junior liens at the time of the advance. Where the senior lender is not
obligated to advance the additional amounts and has actual knowledge of the
intervening junior liens, the advance may be subordinate to such intervening
junior liens. Priority of advances under a "future advance" clause rests, in
many other states, on state law giving priority to all advances made under the
loan agreement up to a "credit limit" amount stated in the recorded mortgage.
Another provision typically found in the form of mortgage instrument used
by many institutional lenders permits the lender to itself perform certain
obligations of the borrower (for example, the obligations to pay when due all
taxes and assessments on the property and, when due, all encumbrances, charges
and liens on the property that are senior to the lien of the mortgage
instrument, to maintain hazard insurance on the property, and to maintain and
repair the property) upon a failure of the borrower to do so, with all sums so
expended by the lender becoming part of the indebtednesss secured by the
mortgage instrument.
The form of mortgage instrument used by many institutional lenders
typically requires the borrower to obtain the consent of the lender in respect
of actions affecting the mortgaged property, including the execution of certain
new leases and the termination or modification of certain existing leases, the
performance of certain alterations to buildings forming a part of the mortgaged
property and the execution of managment and leasing agreements for the mortgaged
property. Tenants will often refuse to execute leases unless the lender executes
a written agreement with the tenant not to disturb the tenant's possession of
its premises in the event of a foreclosure. A senior lender may refuse to
consent to matters approved by a junior lender, with the result that the value
of the security for the junior mortgage instrument is diminished.
Foreclosure
General. Foreclosure is a legal procedure that allows the lender to recover
the borrower's mortgage debt by enforcing its rights and available legal
remedies under the mortgage instrument. If the borrower defaults in payment or
performance of its obligations under the note or mortgage instrument, the lender
has the right to institute foreclosure proceedings to sell the real property at
public auction to satisfy the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage instrument are judicial foreclosure, involving court
proceedings, and non-judicial foreclosure pursuant to a power of sale granted in
the mortgage instrument. Other foreclosure procedures are available in some
states, but they are either infrequently used or available only in limited
circumstances. A foreclosure action is subject to most of the delays and
expenses of other lawsuits if defenses are raised or counterclaims are
interposed, and sometimes requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally
52
<PAGE>
result from difficulties in locating defendants. When the lender's right to
foreclose is contested, the legal proceedings can be time-consuming. Upon
successful completion of a judicial foreclosure proceeding, the court generally
issues a judgment of foreclosure and appoints a referee or other officer to
conduct a public sale of the mortgaged property, the proceeds of which are used
to satisfy the judgment. Such sales are made in accordance with procedures that
vary from state to state.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument (in particular, a deed to
secure debt) if applicable law so permits. A power of sale under a deed of trust
allows a non-judicial public sale to be conducted generally following a request
from the beneficiary/lender to the trustee to sell the property upon default by
the borrower and after notice of sale is given in accordance with the terms of
the deed of trust and applicable state law. In some states, prior to such sale,
the trustee under the deed of trust must record a notice of default and notice
of sale and send a copy to the borrower and to any other party who has recorded
a request for a copy of a notice of default and notice of sale. In addition, in
some states the trustee must provide notice to any other party having an
interest of record in the real property, including junior lienholders. 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. The borrower or junior
lienholder may then have the right, during a reinstatement period required in
some states, to cure the default by paying the entire actual amount in arrears
(without regard to the acceleration of the indebtedness), plus the lender's
expenses incurred in enforcing the obligation. In other states, the borrower or
the junior lienholder is not provided a period to reinstate the loan, but has
only the right to pay off the entire debt to prevent the foreclosure sale.
Generally, state law governs the procedure for public sale, the parties entitled
to notice, the method of giving notice and the applicable time periods.
Limitations on the Rights of Mortgage Lenders. United States courts have
traditionally imposed general equitable principles to limit the remedies
available to lenders in foreclosure actions. These principles are generally
designed to relieve borrowers from the effects of mortgage defaults perceived as
harsh or unfair. Relying on such principles, a court may alter the specific
terms of a loan to the extent it considers necessary to prevent or remedy an
injustice, undue oppression or overreaching, or may require the lender to
undertake affirmative actions to determine the cause of the borrower's default
and the likelihood that the borrower will be able to reinstate the loan. In some
cases, courts have substituted their judgment for the lender's and have required
that lenders reinstate loans or recast payment schedules in order to accommodate
borrowers who are suffering from a temporary financial disability. In other
cases, courts have limited the right of the lender to foreclose in the case of a
non-monetary default, such as a failure to adequately maintain the mortgaged
property or an impermissible further encumbrance of the mortgaged property.
Finally, some courts have addressed the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that a borrower receive notice in addition to statutorily-prescribed
minimum notice. For the most part, these cases have upheld the reasonableness of
the notice provisions or have found that a public sale under a mortgage
instrument providing for a power of sale does not involve sufficient state
action to trigger constitutional protections.
Also, a third party may be unwilling to purchase a mortgaged property at a
public sale because of the difficulty in determining the exact status of title
to the property (due to, among other things, redemption rights that may exist)
and because of the possibility that physical deterioration of the property may
have occurred during the foreclosure proceedings. Potential buyers may also be
reluctant to purchase property at a foreclosure sale as a result of the 1980
decision of the United States Court of Appeals for the Fifth Circuit in Durrett
v. Washington National Insurance Company. The court in Durrett held that even a
non-collusive, regularly conducted foreclosure sale was a fraudulent transfer
under Section 67d of the former Bankruptcy Act (Section 548 of the Bankruptcy
Code, Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. SSSS 101-1330 (the
"Bankruptcy Code")) and, therefore, could be rescinded in favor of the
bankrupt's estate, if (i) the foreclosure sale was held while the debtor was
insolvent and not more than one year prior to the filing of the bankruptcy
petition and (ii) the price paid for the foreclosed property did not represent
"fair consideration" ("reasonably equivalent value" under the Bankruptcy Code).
Although the reasoning and result of Durrett were rejected by the United States
Supreme Court in May, 1994, the case could nonetheless be persuasive to a court
applying a state fraudulent conveyance law with provisions similar to those
construed in Durrett. For these reasons, it is common for the lender to purchase
the mortgaged property for an amount equal to the secured indebtedness and
accrued and unpaid interest plus the expenses of foreclosure, in which event the
borrower's debt will be extinguished. Thereafter, subject to the borrower's
right in some states to remain in possession during a redemption period, the
lender will become the owner of the property and have both the benefits and
burdens of
53
<PAGE>
ownership, including the obligation to pay debt service on any senior mortgage
loans, to pay taxes, to obtain casualty insurance and to make such repairs as
are necessary to render the property suitable for sale. The costs of operating
and maintaining a commercial or multifamily residential property may be
significant and may be greater than the income derived from that property. The
lender also will commonly obtain the services of a real estate broker and pay
the broker's commission in connection with the sale or lease 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. Moreover,
because of the expenses associated with acquiring, owning and selling a
mortgaged property, a lender could realize an overall loss on a mortgage loan
even if the mortgaged property is sold at foreclosure, or resold after it is
acquired through foreclosure, for an amount equal to the full outstanding
principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from the exercise of their "equity of redemption." The
doctrine of equity of redemption provides that, until the property encumbered by
a mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. In general, it is expected that some or all of
the Mortgage Loans in a particular Trust Fund may be nonrecourse loans, as to
which recourse in the case of default will be limited to the Mortgaged Property
and such other assets, if any, that were pledged to secure the Mortgage Loan.
However, even if a Mortgage Loan by its terms provides for recourse to the
borrower's other assets, a lender's ability to realize upon those assets may be
limited by state law. For example, in some states a lender cannot 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 former
borrower equal to the difference between the net amount realized upon the public
sale of the real property and the amount due to the lender. Other statutes may
require the lender to exhaust the security afforded under a mortgage 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 those states,
the lender, following judgment on such personal action, may be deemed to have
elected a remedy and thus may be precluded from foreclosing upon the security.
Consequently, lenders in those states where such an election of remedy provision
exists will usually proceed first against the security. Finally, other statutory
provisions, designed to protect borrowers from exposure to large deficiency
judgments that might result from bidding at below-market values at the
foreclosure sale, limit any deficiency judgment to the excess of the outstanding
debt over the fair market value of the property at the time of the sale.
Leasehold Considerations. Mortgage loans may be secured by a lien on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien on
the fee estate of the borrower. The most significant of these risks is that if
the borrower's leasehold were to be terminated (for example, as a result of a
lease default or the bankruptcy of the ground lessor or the borrower/ground
54
<PAGE>
lessee), the leasehold mortgagee would be left without its security. This risk
may be substantially lessened if the ground lease contains provisions protective
of the leasehold mortgagee, such as a provision that requires the ground lessor
to give the leasehold mortgagee notices of lessee defaults and an opportunity to
cure them, a provision that permits the leasehold estate to be assigned to and
by the leasehold mortgagee or the purchaser at a foreclosure sale, a provision
that gives the leasehold mortgagee the right to enter into a new ground lease
with the ground lessor on the same terms and conditions as the old ground lease
or a provision that prohibits the ground lessee/borrower from treating the
ground lease as terminated in the event of the ground lessor's bankruptcy and
rejection of the ground lease by the trustee for the debtor/ground lessor.
Certain mortgage loans, however, may be secured by liens on ground leases that
do not contain these provisions.
Bankruptcy Laws
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the reduction in the amount of each scheduled
payment, by means of a reduction in the rate of interest and/or an alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan), and/or by an extension (or shortening) of the term to maturity.
Some bankruptcy courts have approved plans, based on the particular facts of the
reorganization case, that effected the cure of a mortgage loan default by paying
arrearages over a number of years. Also, a bankruptcy court may permit a debtor,
through its rehabilitative plan, to reinstate a loan mortgage payment schedule
even if the lender has obtained a final judgment of foreclosure prior to the
filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of the secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under Section 362 of the
Bankruptcy Code, the lender will be stayed from enforcing the assignment, and
the legal proceedings necessary to resolve the issue could be time-consuming,
with resulting delays in the lender's receipt of the rents. However, the
Bankruptcy Code has recently been amended to provide that a lender's perfected
pre-petition security interest in leases, rents and hotel revenues continues in
the post-petition leases, rents and hotel revenues, unless a bankruptcy court
orders to the contrary "based on the equities of the case." Thus, unless a court
orders otherwise, revenues from a mortgaged property generated after the date
the bankruptcy petition is filed will constitute "cash collateral" under the
Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the mortgaged properties and the cash collateral is "adequately protected" as
such term is defined and interpreted under the Bankruptcy Code.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy proceeding relating to a
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (i)
assume the lease and retain it or assign it to a third party or (ii) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor with respect to its claim
55
<PAGE>
for damages for termination of the lease. The Bankruptcy Code also limits a
lessor's damages for lease rejection to the rent reserved under the lease
(without regard to acceleration) for the greater of one year, or 15%, not to
exceed three years, of the remaining term of the lease.
Environmental Considerations
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien."
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management of such mortgaged property or the operations of
the borrower. Such liability may exist even if the lender did not cause or
contribute to the contamination and regardless of whether the lender has
actually taken possession of a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. Excluded from CERCLA's definition of "owner" or
"operator," however, is a person "who without participating in the management of
the facility, holds indicia of ownership primarily to protect his security
interest."
In general, what constitutes sufficient management of a mortgaged property
or the business of a borrower to render the secured creditor exemption
unavailable to a lender is based upon judicial interpretation of the statutory
language, and court decisions have been inconsistent in this matter. In United
States v. Fleet Factors, 901 F.2d 1550 (11th Cir. 1990), cert. den. 498 U.S.
1046 (1991), the Court of Appeals for the Eleventh Circuit suggested that the
mere capacity of the lender to influence a borrower's disposal of hazardous
substances was sufficient participation in the management of the borrower's
business to deny the secured creditor exemption to the lender. However, in In
re:Bergsoe, 910 F.2d 668 (9th Cir. 1990), the Court of Appeals for the Ninth
Circuit disagreed with the Fleet Factors decision and held that there must be
some degree of "actual management" of a facility on the part of a lender in
order to bar its reliance on the secured creditor exemption. In addition,
certain cases decided in the First Circuit and the Fourth Circuit have held that
lenders were entitled to the secured creditor exemption, notwithstanding a
lender's taking title to a mortgaged property through foreclosure or deed in
lieu of foreclosure.
CERCLA's "innocent landowner" defense may be available to a lender that has
taken title to a mortgaged property and has performed an appropriate
environmental site assessment that does not disclose existing contamination and
that meets other requirements of the defense. However, it is unclear whether the
environmental site assessment must be conducted upon loan origination, prior to
foreclosure, or both, and uncertainty exists as to what kind of environmental
site assessment must be performed in order to qualify for the defense.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all of those statutes provide for a secured creditor exemption.
In addition, lenders may face potential liability for remediation of releases or
petroleum or hazardous substances from underground storage tanks under Subtitle
I of the federal Resource Conservation and Recovery Act ("RCRA"), if they are
deemed to be the "owners" or "operators" of facilities in which they have a
security interest or upon which they have foreclosed. On September 7, 1995, the
United States Environmental Protection Agency ('EPA") promulgated regulations
that limit, in certain circumstances, such liability for lenders who hold a
security interest in, or foreclose upon, facilities with underground tanks
containing petroleum. At this time, it is not known whether those regulations
will be the subject of a lawsuit seeking to overturn them. The regulations do
not apply to facilities with underground tanks that contain regulated substances
other than petroleum.
56
<PAGE>
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury, or damage to property) related to hazardous
environmental conditions on a property. While it may be more difficult to hold a
lender liable in such cases, unanticipated or uninsured liabilities of the
borrower may jeopardize the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling and Servicing Agreement will provide
that the Master Servicer, acting on behalf of the Trustee, may not acquire title
to a Mortgaged Property or take over its operation unless the Master Servicer,
based solely (as to environmental matters) on a report prepared by a person who
regularly conducts environmental audits, has made the determination that it is
appropriate to do so, as described under "The Pooling and Servicing
Agreements--Realization Upon Defaulted Mortgage Loans."
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
Due-On-Sale And Due-On-Encumbrance
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. By virtue, however, of the Garn-St Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing, among other matters, that "due-on-sale" clauses in certain
loans made after the effective date of the Garn Act are enforceable, within
certain limitations as set forth in the Garn Act and the regulations promulgated
thereunder), a Master Servicer may nevertheless have the right to accelerate the
maturity of a Mortgage Loan that contains a "due-on-sale" provision upon
transfer of an interest in the property, regardless of the Master Servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
Subordinate Financing
Certain of the Mortgage Loans may not restrict the ability of the borrower
to use the Mortgaged Property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower (as is frequently the case) and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior lenders
can impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
57
<PAGE>
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges that a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of any servicer to
collect full amounts of interest on certain of the Mortgage Loans. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts distributable to the holders of
the related series of Certificates, and would not be covered by advances or,
unless otherwise specified in the related Prospectus Supplement, any form of
Credit Support provided in connection with such Certificates. In addition, the
Relief Act imposes limitations that would impair the ability of the servicer to
foreclose on an affected Mortgage Loan during the borrower's period of active
duty status, and, under certain circumstances, during an additional three-month
period thereafter.
Americans with Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers that are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the
58
<PAGE>
financial resources of the affected site, owner, landlord or other applicable
person. The requirements of the ADA may also be imposed on a foreclosing lender
who succeeds to the interest of the borrower as owner or landlord. Since the
"readily achievable" standard may vary depending on the financial condition of
the owner or landlord, a foreclosing lender who is financially more capable than
the borrower of complying with the requirements of the ADA may be subject to
more stringent requirements than those to which the borrower is subject.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Offered
Certificates. This discussion is directed solely to Certificateholders that hold
the Certificates as capital assets within the meaning of Section 1221 of the
Internal Revenue Code of 1986 (the "Code") and it does not purport to discuss
all federal income tax consequences that may be applicable to particular
categories of investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special rules. Further, the authorities on
which this discussion, and the opinion referred to below, are based are subject
to change or differing interpretations, which could apply retroactively.
Taxpayers and preparers of tax returns (including those filed by any REMIC or
other issuer) should be aware that under applicable Treasury regulations a
provider of advice on specific issues of law is not considered an income tax
return preparer unless the advice (i) is given with respect to events that have
occurred at the time the advice is rendered and is not given with respect to the
consequences of contemplated actions, and (ii) is directly relevant to the
determination of an entry on a tax return. Accordingly, taxpayers should consult
their own tax advisors and tax return preparers regarding the preparation of any
item on a tax return, even where the anticipated tax treatment has been
discussed herein. In addition to the federal income tax consequences described
herein, potential investors should consider the state and local tax
consequences, if any, of the purchase, ownership and disposition of Offered
Certificates. See "State and Other Tax Consequences." Certificateholders are
advised to consult their own tax advisors concerning the federal, state, local
or other tax consequences to them of the purchase, ownership and disposition of
Offered Certificates.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the Master Servicer or the Trustee will elect to have
treated as a real estate mortgage investment conduit ("REMIC") under Sections
860A through 860G (the "REMIC Provisions") of the Code, and (ii) certificates
("Grantor Trust Certificates") representing interests in a Trust Fund ("Grantor
Trust Fund") as to which no such election will be made. The Prospectus
Supplement for each series of Certificates will indicate whether a REMIC
election (or elections) will be made for the related Trust Fund and, if such an
election is to be made, will identify all "regular interests" and "residual
interests" in the REMIC. For purposes of this tax discussion, references to a
"Certificateholder" or a "holder" are to the beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements, other than guaranteed
investment contracts, are included in a Trust Fund, the tax consequences
associated with such Cash Flow Agreements also will be disclosed in the related
Prospectus Supplement. See "Description of the Trust Funds--Cash Flow
Agreements."
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in Sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC Provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID Regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the Certificates.
REMICs
Classification of REMICs. Upon the issuance of each series of REMIC
Certificates, counsel to the Depositor will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling
Agreement, the related Trust Fund (or each applicable portion thereof) will
qualify as a REMIC and the REMIC Certificates offered with respect thereto will
be considered to evidence ownership of "regular interests" ("REMIC
59
<PAGE>
Regular Certificates") or "residual interests" ("REMIC Residual Certificates")
in that REMIC within the meaning of the REMIC Provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling Agreement with respect to each REMIC will include
provisions designed to maintain the Trust Fund's status as a REMIC under the
REMIC Provisions. It is not anticipated that the status of any Trust Fund as a
REMIC will be terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C)(v). Moreover, if 95% or more of the assets of the REMIC qualify
for any of the foregoing treatments at all times during a calendar year, the
REMIC Certificates will qualify for the corresponding status in their entirety
for that calendar year. Interest (including original issue discount) on the
REMIC Regular Certificates and income allocated to the class of REMIC Residual
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code. In addition, the REMIC Regular
Certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code. The determination as to the percentage of the REMIC's
assets that constitute assets described in the foregoing sections of the Code
will be made with respect to each calendar quarter based on the average adjusted
basis of each category of the assets held by the REMIC during such calendar
quarter. The Master Servicer or the Trustee will report those determinations to
Certificateholders in the manner and at the times required by the applicable
Treasury regulations.
The assets of the REMIC will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale and amounts in reserve accounts would be considered to be part of
the Mortgage Loans, or whether such assets (to the extent not invested in assets
described in the foregoing sections) otherwise would receive the same treatment
as the Mortgage Loans for purposes of all of the foregoing sections. In
addition, in some instances Mortgage Loans may not be treated entirely as assets
described in the foregoing sections. If so, the related Prospectus Supplement
will describe those Mortgage Loans that may not be so treated. The REMIC
Regulations do provide, however, that payments on Mortgage Loans held pending
distribution are considered part of the Mortgage Loans for purposes of Section
856(c)(5)(A) of the Code.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as REMICs ("Tiered REMICs") for federal income tax purposes. Upon the
issuance of any such series of REMIC Certificates, counsel to the Depositor will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the related Pooling Agreement, the Tiered REMICs will each qualify
as a REMIC and the REMIC Certificates issued by the Tiered REMICs, respectively,
will be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in the related REMIC within the meaning of the REMIC
Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code, and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
60
<PAGE>
Taxation of Owners of Remic Regular Certificates
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the method described below, in advance of the
receipt of the cash attributable to such income. In addition, Section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
Mortgage Loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the
"Committee Report") indicates that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate must be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "Prepayment Assumption") used in
reporting original issue discount for each series of REMIC Regular Certificates
will be consistent with this standard and will be disclosed in the related
Prospectus Supplement. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Prepayment Assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "Closing Date"), the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest."
"Qualified stated interest" includes interest that is unconditionally payable at
least annually at a single fixed rate, at a "qualified floating rate," or at an
"objective rate," a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate," or a
combination of "qualified floating rates" that does not operate in a manner that
accelerates or defers interest payments on such REMIC Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner in
which such rules will be applied with respect to those Certificates in preparing
information returns to the Certificateholders and the Internal Revenue Service
(the "IRS").
Certain classes of the REMIC Regular Certificates may provide for the first
interest payment with respect to such Certificates to be made more than one
month after the date of issuance, a period which is longer than the subsequent
monthly intervals between interest payments. Assuming the "accrual period" (as
defined below) for original issue discount is each monthly period that ends on a
Distribution Date, in some cases, as a consequence of this "long first accrual
period," some or all interest payments may be required to be included in the
stated redemption price of the REMIC Regular Certificate and accounted for as
original issue discount. Because interest on REMIC Regular Certificates must in
any event be accounted for under an accrual method, applying this analysis would
result in only a slight difference in the timing of the inclusion in income of
the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based
61
<PAGE>
on the position that the portion of the purchase price paid for the interest
accrued with respect to periods prior to the Closing Date is treated as part of
the overall cost of such REMIC Regular Certificate (and not as a separate asset
the cost of which is recovered entirely out of interest received on the next
Distribution Date) and that portion of the interest paid on the first
Distribution Date in excess of interest accrued for a number of days
corresponding to the number of days from the Closing Date to the first
Distribution Date should be included in the stated redemption price of such
REMIC Regular Certificate. However, the OID Regulations state that all or some
portion of such accrued interest may be treated as a separate asset the cost of
which is recovered entirely out of interest paid on the first Distribution Date.
It is unclear how an election to do so would be made under the OID Regulations
and whether such an election could be made unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying (i) the
number of complete years (rounding down for partial years) from the issue date
until such payment is expected to be made (presumably taking into account the
Prepayment Assumption) by (ii) a fraction, the numerator of which is the amount
of the payment, and the denominator of which is the stated redemption price at
maturity of such REMIC Regular Certificate. Under the OID Regulations, original
issue discount of only a de minimis amount (other than de minimis original
discount attributable to a so-called "teaser" interest rate or an initial
interest holiday) will be included in income as each payment of stated principal
is made, based on the product of the total amount of such de minimis original
issue discount and a fraction, the numerator of which is the amount of such
principal payment and the denominator of which is the outstanding stated
principal amount of the REMIC Regular Certificate. The OID Regulations also
would permit a Certificateholder to elect to accrue de minimis original issue
discount into income currently based on a constant yield method. See "--Taxation
of Owners of REMIC Regular Certificates--Market Discount" for a description of
such election under the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such Certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period," that is, unless otherwise stated in the
related Prospectus Supplement, each period that ends on a date that corresponds
to a Distribution Date and begins on the first day following the immediately
preceding accrual period (or in the case of the first such period, begins on the
Closing Date), a calculation will be made of the portion of the original issue
discount that accrued during such accrual period. The portion of original issue
discount that accrues in any accrual period will equal the excess, if any, of
(i) the sum of (a) the present value, as of the end of the accrual period, of
all of the distributions remaining to be made on the REMIC Regular Certificate,
if any, in future periods and (b) the distributions made on such REMIC Regular
Certificate during the accrual period of amounts included in the stated
redemption price, over (ii) the adjusted issue price of such REMIC Regular
Certificate at the beginning of the accrual period. The present value of the
remaining distributions referred to in the preceding sentence will be calculated
(i) assuming that distributions on the REMIC Regular Certificate will be
received in future periods based on the Mortgage Loans being prepaid at a rate
equal to the Prepayment Assumption and (ii) using a discount rate equal to the
original yield to maturity of the Certificate. For these purposes, the original
yield to maturity of the Certificate will be calculated based on its issue price
and assuming that distributions on the Certificate will be made in all accrual
periods based on the Mortgage Loans being prepaid at a rate equal to the
Prepayment Assumption. The adjusted issue price of a REMIC Regular Certificate
at the beginning of any accrual period will equal the issue price of such
Certificate, increased by the aggregate amount of original issue discount that
accrued with respect to such Certificate in prior accrual periods, and reduced
by the amount of any distributions made on such REMIC Regular Certificate in
prior accrual periods of amounts included in the stated redemption price. The
original issue discount accruing during any accrual period, computed as
described above, will be allocated ratably to each day during the accrual period
to determine the daily portion of original issue discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price
62
<PAGE>
will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price," in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (ii) the daily portions of original issue
discount for all days during such accrual period prior to such day.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under Section 1276 of the
Code such a Certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A Certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If made, such election will apply to all
market discount bonds acquired by such Certificateholder on or after the first
day of the first taxable year to which such election applies. In addition, the
OID Regulations permit a Certificateholder to elect to accrue all interest,
discount (including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election were
made with respect to a REMIC Regular Certificate with market discount, the
Certificateholder would be deemed to have made an election to include currently
market discount in income with respect to all other debt instruments having
market discount that such Certificateholder acquires during the taxable year of
the election or thereafter, and possibly previously acquired instruments.
Similarly, a Certificateholder that made this election for a Certificate that is
acquired at a premium would be deemed to have made an election to amortize bond
premium with respect to all debt instruments having amortizable bond premium
that such Certificateholder owns or acquires. See "--Taxation of Owners of REMIC
Regular Certificates--Premium." Each of these elections to accrue interest,
discount and premium with respect to a Certificate on a constant yield method or
as interest would be irrevocable.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." Such treatment would result in discount
being included in income at a slower rate than discount would be required to be
included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on REMIC Regular Certificates should
accrue, at the Certificateholder's option: (i) on the basis of a constant yield
method, (ii) in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to the
total amount of stated interest remaining to be paid on the REMIC Regular
Certificate as of the beginning of the accrual period, or (iii) in the case of a
REMIC Regular Certificate issued with original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the original
issue discount accrued in the accrual period bears to the total original issue
discount remaining on the REMIC Regular Certificate at the beginning of the
accrual period. Moreover, the Prepayment Assumption used in calculating the
accrual of original issue discount is also used in calculating the accrual of
market discount. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.
63
<PAGE>
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield method
over the life of the Certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID Regulations also permit Certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the Certificateholder as having made the election
to amortize premium generally. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount." The Committee Report states that the same rules
that apply to accrual of market discount (which rules will require use of a
Prepayment Assumption in accruing market discount with respect to REMIC Regular
Certificates without regard to whether such Certificates have original issue
discount) will also apply in amortizing bond premium under Section 171 of the
Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their Certificates become wholly or partially
worthless as the result of one or more realized losses on the Residential Loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until such holder's Certificate
becomes wholly worthless (i.e., until its outstanding principal balance has been
reduced to zero) and that the loss will be characterized as a short-term capital
loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Residential Loans or the underlying Certificates until it
can be established that any such reduction ultimately will not be recoverable.
As a result, the amount of taxable income reported in any period by the holder
of a REMIC Regular Certificate could exceed the amount of economic income
actually realized by the holder in such period. Although the holder of a REMIC
Regular Certificate eventually will recognize a loss or reduction in income
attributable to previously accrued and included income that as the result of a
realized loss ultimately will not be realized, the law is unclear with respect
to the timing and character of such loss or reduction in income.
Taxation of Owners of Remic Residual Certificates
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the Mortgage Loans or as debt instruments issued
by the REMIC.
An original holder of a REMIC Residual Certificate generally will be
required to report its daily portion of the taxable income or, subject to the
limitations noted in this discussion, the net loss of the REMIC for each day
during a
64
<PAGE>
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
Prospectus Supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on such day. Any amount included in the gross income or
allowed as a loss of any REMIC Residual Certificateholder by virtue of this
paragraph will be treated as ordinary income or loss. The taxable income of the
REMIC will be determined under the rules described below in "--Taxable Income of
the REMIC" and will be taxable to the REMIC Residual Certificateholders without
regard to the timing or amount of cash distributions by the REMIC. Ordinary
income derived from REMIC Residual Certificates will be "portfolio income" for
purposes of the taxation of taxpayers subject to limitations under Section 469
of the Code on the deductibility of "passive losses."
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise to reduce (or increase) the income of a REMIC Residual
Certificateholder that purchased such REMIC Residual Certificate from a prior
holder of such Certificate at a price greater than (or less than) the adjusted
basis (as defined below) such REMIC Residual Certificate would have had in the
hands of an original holder of such Certificate. The REMIC Regulations, however,
do not provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate in
connection with the acquisition of such REMIC Residual Certificate will be taken
into account in determining the income of such holder for federal income tax
purposes. Although it appears likely that any such payment would be includible
in income immediately upon its receipt, the IRS might assert that such payment
should be included in income over time according to an amortization schedule or
according to some other method. Because of the uncertainty concerning the
treatment of such payments, holders of REMIC Residual Certificates should
consult their tax advisors concerning the treatment of such payments for income
tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions,"
residual interests without "significant value" and "noneconomic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distributions received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders after-tax rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal the
income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
amortization of any premium on the Mortgage Loans, bad debt losses with respect
to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, their fair market values). Such aggregate basis will be allocated
among the Mortgage Loans and the other assets of the REMIC in proportion to
their respective fair market values. The issue price of any REMIC Certificates
offered hereby will be determined in the manner described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount."
The issue price of a REMIC Certificate received in exchange for an interest in
the Mortgage Loans or other property will equal the fair market value of such
interests in the Mortgage Loans or other property. Accordingly, if one or more
classes of REMIC Certificates are retained initially rather than sold, the
65
<PAGE>
Master Servicer or the Trustee may be required to estimate the fair market value
of such interests in order to determine the basis of the REMIC in the Mortgage
Loans and other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to Mortgage Loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates (that is, under the constant yield method taking into account the
Prepayment Assumption). However, a REMIC that acquires loans at a market
discount must include such market discount in income currently, as it accrues,
on a constant interest basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing such discount income
that is analogous to that required to be used by a REMIC as to Mortgage Loans
with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption. Further, such an election would not apply to any Mortgage
Loan originated on or before September 27, 1985. Instead, premium on such a
Mortgage Loan should be allocated among the principal payments thereon and be
deductible by the REMIC as those payments become due or upon the prepayment of
such Mortgage Loan.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount," except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates (including any
other class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess "Issue Premium"), the net
amount of interest deductions that are allowed the REMIC in each taxable year
with respect to the REMIC Regular Certificates of such class will be reduced by
an amount equal to the portion of the Issue Premium that is considered to be
amortized or repaid in that year. Although the matter is not entirely certain,
it is likely that Issue Premium would be amortized under a constant yield method
in a manner analogous to the method of accruing original issue discount
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount."
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other non-interest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "--Possible Pass-Through of Miscellaneous Itemized
Deductions." If the deductions allowed to the REMIC exceed its gross income for
a calendar quarter, such excess will be the net loss for the REMIC for that
calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual
66
<PAGE>
Certificate as of the close of such calendar quarter (determined without regard
to such net loss). Any loss that is not currently deductible by reason of this
limitation may be carried forward indefinitely to future calendar quarters and,
subject to the same limitation, may be used only to offset income from the REMIC
Residual Certificate. The ability of REMIC Residual Certificateholders to deduct
net losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
non-taxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the Trust Fund. However, such bases increases may not occur until the
end of the calendar quarter, or perhaps the end of the calendar year, with
respect to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders initial
bases are less than the distributions to such REMIC Residual Certificateholders,
and increases in such initial bases either occur after such distributions or
(together with their initial bases) are less than the amount of such
distributions, gain will be recognized to such REMIC Residual Certificateholders
on such distributions and will be treated as gain from the sale of their REMIC
Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates." For a discussion of possible modifications of these rules that
may require adjustments to income of a holder of a REMIC Residual Certificate
other than an original holder in order to reflect any difference between the
cost of such REMIC Residual Certificate to such REMIC Residual Certificateholder
and the adjusted basis such REMIC Residual Certificate would have in the hands
of an original holder, see "--Taxation of Owners of REMIC Residual
Certificates--General."
Excess Inclusions. Any "excess inclusions" with respect to a REMIC Residual
Certificate will, with an exception discussed below for certain REMIC Residual
Certificates held by thrift institutions, be subject to federal income tax in
all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the sum
of the daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such REMIC Residual Certificateholder. The daily accruals of a REMIC Residual
Certificateholder will be determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Certificate at the beginning of the calendar quarter and 120% of
the "long-term Federal rate" in effect on the Closing Date. For this purpose,
the adjusted issue price of a REMIC Residual Certificate as of the beginning of
any calendar quarter will be equal to the issue price of the REMIC Residual
Certificate, increased by the sum of the daily accruals for all prior quarters
and decreased (but not below zero) by any distributions made with respect to
such REMIC Residual Certificate before the beginning of such quarter. The issue
price of a REMIC Residual Certificate is the initial offering price to the
public (excluding bond houses and brokers) at which a substantial amount of the
REMIC Residual Certificates were sold. The "long-term Federal rate" is an
average of current yields on Treasury securities with a remaining term of
greater than nine years, computed and published monthly by the IRS.
For REMIC Residual Certificateholders, an excess inclusion (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however, "--Foreign
Investors in REMIC Certificates" below.
As an exception to the general rules described above, thrift institutions
are allowed to offset their excess inclusions with unrelated deductions, losses
or loss carryovers, but only if the REMIC Residual Certificates are
67
<PAGE>
considered to have "significant value." The REMIC Regulations provide that in
order to be treated as having significant value, the REMIC Residual Certificates
must have an aggregate issue price, at least equal to two percent of the
aggregate issue prices of all of the related REMIC's Regular and Residual
Certificates. In addition, based on the Prepayment Assumption, the anticipated
weighted average life of the REMIC Residual Certificates must equal or exceed 20
percent of the anticipated weighted average life of the REMIC, based on the
Prepayment Assumption and on any required or permitted clean up calls or
required liquidation provided for in the REMIC's organizational documents.
Although it has not done so, the Treasury also has authority to issue
regulations that would treat the entire amount of income accruing on a REMIC
Residual Certificate as an excess inclusion if the REMIC Residual Certificates
are considered not to have "significant value." The related Prospectus
Supplement will disclose whether offered REMIC Residual Certificates may be
considered to have "significant value" under the REMIC Regulations; provided,
however, that any disclosure that a REMIC Residual Certificate will have
"significant value" will be based upon certain assumptions, and the Depositor
will make no representation that a REMIC Residual Certificate will have
"significant value" for purposes of the above-described rules. The
above-described exception for thrift institutions applies only to those residual
interests held directly by, and deductions, losses and loss carryovers incurred
by, such institutions (and not by other members of an affiliated group of
corporations filing a consolidated income tax return) or by certain wholly-owned
direct subsidiaries of such institutions formed or operated exclusively in
connection with the organization and operation of one or more REMICs.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and certain cooperatives; the
REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax." If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted clean up calls, or required liquidation provided for in
the REMIC's organizational documents, (1) the present value of the expected
future distributions (discounted using the "applicable Federal rate" for
obligations whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS) on the
REMIC Residual Certificate equals at least the present value of the expected tax
on the anticipated excess inclusions, and (2) the transferor reasonably expects
that the transferee will receive distributions with respect to the REMIC
Residual Certificate at or after the time the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling Agreement that are intended to reduce the
possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain
representations as to the financial condition of the prospective transferee, as
to which the transferor is also required to make a reasonable investigation to
determine such transferee's historic payment of its debts and ability to
continue to pay its debts as they come due in the future. Prior to purchasing a
REMIC Residual Certificate, prospective purchasers should consider the
possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "--Foreign Investors in REMIC Certificates--
68
<PAGE>
REMIC Residual Certificates" below for additional restrictions applicable to
transfers of certain REMIC Residual Certificates to foreign persons.
Mark-to-Market Rules. Prospective purchasers of a REMIC Residual
Certificate should be aware that on December 28, 1993, the IRS released
temporary regulations under Code Section 475 (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 IRS with the authority to treat any REMIC
Residual Certificate having substantially the same economic effect as a
"negative value" residual interest. On January 3, 1995, the IRS released
proposed regulations under Section 475 of the Code (the "Proposed Mark-to-Market
Regulations"). The Proposed Mark-to-Market Regulations provide that any residual
interest (regardless of whether it has negative value) that is acquired on or
after January 4, 1995 is not a "security" for the purposes of Section 475 of the
Code, and thus is not subject to the mark-to-market rules. Prospective
purchasers of a REMIC Residual Certificate should consult their tax advisors
regarding the possible application of the Temporary Mark-to-Market Regulations
and the Proposed Mark-to-Market Regulations.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related Prospectus Supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees and expenses
will be treated as a miscellaneous itemized deduction allowable subject to the
limitation of Section 67 of the Code, which permits such deductions only to the
extent they exceed in the aggregate two percent of a taxpayer's adjusted gross
income. In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by REMIC Certificateholders that
are subject to the limitations of either Section 67 or Section 68 of the Code
may be substantial. Furthermore, in determining the alternative minimum taxable
income of such a holder of a REMIC Certificate that is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, no deduction will be allowed for such holder's allocable
portion of servicing fees and other miscellaneous itemized deductions of the
REMIC, even though an amount equal to the amount of such fees and other
deductions will be included in such holder's gross income. Accordingly, such
REMIC Certificates may not be appropriate investments for individuals, estates,
or trusts, or pass-through entities beneficially owned by one or more
individuals,
69
<PAGE>
estates or trusts. Such prospective investors should carefully consult with
their own tax advisors prior to making an investment in such Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such Certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described under
"--Taxation of Owners of REMIC Residual Certificates--Basis Rules, Net Losses
and Distributions." Except as provided in the following two paragraphs, any such
gain or loss will be capital gain or loss, provided such REMIC Certificate is
held as a capital asset (generally, property held for investment) within the
meaning of Section 1221 of the Code. The Code as of the date of this Prospectus
provides for a top marginal tax rate of 39.6% for individuals and a maximum
marginal rate for long-term capital gains of individuals of 28%. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the Certificate based on the
application of the Prepayment Assumption to such Certificate, which rate is
computed and published monthly by the IRS), determined as of the date of
purchase of such REMIC Regular Certificate, over (ii) the amount of ordinary
income actually includible in the seller's income prior to such sale. In
addition, gain recognized on the sale of a REMIC Regular Certificate by a seller
who purchased such REMIC Regular Certificate at a market discount will be
taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium."
REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires a REMIC Residual Certificate,
or acquires any other residual interest in a REMIC or any similar interest in a
"taxable mortgage pool" (as defined in Section 7701(i) of the Code) during the
period beginning six months before, and ending six months after, the date of
such sale, such sale will be subject to the "wash sale" rules of Section 1091 of
the Code. In that event, any loss realized by the REMIC Residual
Certificateholder on the sale will not be deductible, but instead will be added
to such REMIC Residual Certificateholder's adjusted basis in the newly-acquired
asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions" (a
"Prohibited Transactions Tax"). In general, subject to certain
70
<PAGE>
specified exceptions a prohibited transaction means the disposition of a
Mortgage Loan, the receipt of income from a source other than a Mortgage Loan or
certain other permitted investments, the receipt of compensation for services,
or gain from the disposition of an asset purchased with the payments on the
Mortgage Loans for temporary investment pending distribution on the REMIC
Certificates. It is not anticipated that the REMIC will engage in any prohibited
transactions in which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling Agreement will include provisions designed to
prevent the acceptance of any contributions that would be subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property," determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any REMIC will recognize "net income from foreclosure property"
subject to federal income tax.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related Master Servicer, Special Servicer or Trustee in any case out of its
own funds, provided that such person has sufficient assets to do so, and
provided further that such tax arises out of a breach of such person's
obligations under the related Pooling Agreement and in respect of compliance
with applicable laws and regulations. Any such tax not borne by a Master
Servicer, Special Servicer or Trustee will be charged against the related Trust
Fund resulting in a reduction in amounts payable to holders of the related REMIC
Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a "disqualified
organization" (as defined below), a tax would be imposed in an amount
(determined under the REMIC Regulations) equal to the product of (i) the present
value (discounted using the "applicable Federal rate" for obligations whose term
ends on the close of the last quarter in which excess inclusions are expected to
accrue with respect to the REMIC Residual Certificate, which rate is computed
and published monthly by the IRS) of the total anticipated excess inclusions
with respect to such REMIC Residual Certificate for periods after the transfer
and (ii) the highest marginal federal income tax rate applicable to
corporations. The anticipated excess inclusions must be determined as of the
date that the REMIC Residual Certificate is transferred and must be based on
events that have occurred up to the time of such transfer, the Prepayment
Assumption and any required or permitted clean up calls or required liquidation
provided for in the REMIC's organizational documents. Such a tax generally would
be imposed on the transferor of the REMIC Residual Certificate, except that
where such transfer is through an agent for a disqualified organization, the tax
would instead be imposed on such agent. However, a transferor of a REMIC
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 that the
transferee is not a disqualified organization and, as of the time of the
transfer, the transferor does not have actual knowledge that such affidavit is
false. Moreover, an entity will not qualify as a REMIC unless there are
reasonable arrangements designed to ensure that (i) residual interests in such
entity are not held by disqualified organizations and (ii) information necessary
for the application of the tax described herein will be made available.
Restrictions on the transfer of REMIC Residual Certificates and certain other
provisions that are intended to meet this requirement will be included in the
Pooling Agreement, and will be discussed more fully in any Prospectus Supplement
relating to the offering of any REMIC Residual Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
71
<PAGE>
pass-through entity (i) such holder's social security number and a statement
under penalty of perjury that such social security number is that of the record
holder or (ii) a statement under penalty of perjury that such record holder is
not a disqualified organization.
For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the Federal Home Loan Mortgage Corporation), (ii) any organization
(other than a cooperative described in Section 521 of the Code) that is exempt
from federal income tax, unless it is subject to the tax imposed by Section 511
of the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code. For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in Section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the Distribution Date
following receipt by the REMIC of the final payment in respect of the Mortgage
Loans or upon a sale of the REMIC's assets following the adoption by the REMIC
of a plan of complete liquidation. The last distribution on a REMIC Regular
Certificate will be treated as a payment in retirement of a debt instrument. In
the case of a REMIC Residual Certificate, if the last distribution on such REMIC
Residual Certificate is less than the REMIC Residual Certificateholder's
adjusted basis in such REMIC Residual Certificate, such REMIC Residual
Certificateholder should (but may not) be treated as realizing a loss equal to
the amount of such difference, and such loss may be treated as a capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, either the Trustee
or the Master Servicer, generally will hold at least a nominal amount of REMIC
Residual Certificates, will file REMIC federal income tax returns on behalf of
the related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the Trustee or the Master Servicer, as the case
may be, will, subject to certain notice requirements and various restrictions
and limitations, generally have the authority to act on behalf of the REMIC and
the REMIC Residual Certificateholders in connection with the administrative and
judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification. REMIC Residual Certificateholders will
generally be required to report such REMIC items consistently with their
treatment on the related REMIC's tax return and may in some circumstances be
bound by a settlement agreement between the Trustee or the Master Servicer, as
the case may be, as tax matters person, and the IRS concerning any such REMIC
item. Adjustments made to the REMIC tax return may require a REMIC Residual
Certificateholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from such an audit,
could result in an audit of a REMIC Residual Certificateholder's return. No
REMIC will be registered as a tax shelter pursuant to Section 6111 of the Code
because it is not anticipated that any REMIC will have a net loss for any of the
first five taxable years of its existence. Any person that holds a REMIC
Residual Certificate as a nominee for another person may be required to furnish
to the related REMIC, in a manner to be provided in Treasury regulations, the
name and address of such person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. The REMIC must also comply with rules
requiring a REMIC Regular Certificate issued with original issue discount to
disclose on its face the amount of original issue discount and the issue date,
and requiring such information to be reported to the IRS. Reporting with respect
to the REMIC Residual Certificates, including income, excess inclusions,
investment expenses and relevant information regarding qualification of the
REMIC's assets will be made as required under the Treasury regulations,
generally on a quarterly basis.
72
<PAGE>
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount."
The responsibility for complying with the foregoing reporting rules will be
borne by either the Trustee or the Master Servicer, unless otherwise stated in
the related Prospectus Supplement.
Backup Withholding with Respect to REMIC Certificates. Payments of interest
and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States person" (as defined below) and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate will
not, unless otherwise disclosed in the related Prospectus Supplement, be subject
to United States federal income or withholding tax in respect of a distribution
on a REMIC Regular Certificate, provided that the holder complies to the extent
necessary with certain identification requirements (including delivery of a
statement, signed by the Certificateholder under penalties of perjury,
certifying that such Certificateholder is not a United States person and
providing the name and address of such Certificateholder). For these purposes,
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States. It
is possible that the IRS may assert that the foregoing tax exemption should not
apply with respect to a REMIC Regular Certificate held by a REMIC Residual
Certificateholder that owns directly or indirectly a 10% or greater interest in
the REMIC Residual Certificates. If the holder does not qualify for exemption,
distributions of interest, including distributions in respect of accrued
original issue discount, to such holder may be subject to a tax rate of 30%,
subject to reduction under any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are non-resident
alien individuals should consult their tax advisors concerning this question.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States persons will
be prohibited under the related Pooling Agreement.
Grantor Trust Funds
Classification of Grantor Trust Funds. With respect to each series of
Grantor Trust Certificates, counsel to the Depositor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
Agreement, the related Grantor Trust Fund will be classified as a grantor trust
under subpart E, part I of subchapter J of the Code and not as a partnership or
an association taxable as a corporation. Accordingly, each holder of a Grantor
Trust Certificate generally will be treated as the owner of an interest in the
Mortgage Loans included in the Grantor Trust Fund.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
73
<PAGE>
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate." A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees and any spread) and interest paid to the holders of Grantor
Trust Fractional Interest Certificates issued with respect to such Grantor Trust
Fund will be referred to as a "Grantor Trust Strip Certificate." A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) assets described in Section 7701(a)(19)(C) of the Code; (ii)
"obligation[s] (including any participation or certificate of beneficial
ownership therein) which . . . [are] principally secured by an interest in real
property" within the meaning of Section 860G(a)(3)(A) of the Code; and (iii)
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code. In
addition, counsel to the Depositor will deliver an opinion that interest on
Grantor Trust Fractional Interest Certificates will to the same extent be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of Mortgage Loans that
are assets described in Section 7701(a)(19)(C) of the Code and "real estate
assets" within the meaning of Section 856(c)(5)(A) of the Code, and the interest
on which is "interest on obligations secured by mortgages on real property"
within the meaning of Section 856(c)(3)(B) of the Code, it is unclear whether
the Grantor Trust Strip Certificates, and the income therefrom, will be so
characterized. However, the policies underlying such sections (namely, to
encourage or require investments in mortgage loans by thrift institutions and
real estate investment trusts) may suggest that such characterization is
appropriate. Counsel to the Depositor will not deliver any opinion on these
questions. Prospective purchasers to which such characterization of an
investment in Grantor Trust Strip Certificates is material should consult their
tax advisors regarding whether the Grantor Trust Strip Certificates, and the
income therefrom, will be so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
Taxation of Owners of Grantor Trust Fractional Interest Certificates
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. Because of stripped interests, market or original issue
discount, or premium, the amount includible in income on account of a Grantor
Trust Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the Mortgage Loans. Under Section
67 of the Code, an individual, estate or trust holding a Grantor Trust
Fractional Interest Certificate directly or through certain pass-through
entities will be allowed a deduction for such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such holder's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by holders of Grantor Trust
Fractional Interest Certificates who are subject to the limitations of either
Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. Although it is not entirely clear,
it appears that in transactions in which multiple classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the classes of Grantor Trust Certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of statutory or administrative clarification as to the
74
<PAGE>
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a class of Grantor
Trust Strip Certificates is issued as part of the same series of Certificates or
(ii) the Depositor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. For
purposes of determining what constitutes reasonable servicing fees for various
types of mortgages the IRS has established certain "safe harbors." The servicing
fees paid with respect to the Mortgage Loans for certain series of Grantor Trust
Certificates may be higher than the "safe harbors" and, accordingly, may not
constitute reasonable servicing compensation. The related Prospectus Supplement
will include information regarding servicing fees paid to a Master Servicer, a
Special Servicer, any Sub-Servicer or their respective affiliates necessary to
determine whether the preceding "safe harbor" rules apply.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--Taxation of Grantor Trust Fractional Interest
Certificates--Market Discount." Under the stripped bond rules, the holder of a
Grantor Trust Fractional Interest Certificate (whether a cash or accrual method
taxpayer) will be required to report interest income from its Grantor Trust
Fractional Interest Certificate for each month in an amount equal to the income
that accrues on such Certificate in that month calculated under a constant yield
method, in accordance with the rules of the Code relating to original issue
discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser for the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest," if any, as well as such Certificate's share of reasonable servicing
fees and other expenses. See "--Taxation of Grantor Trust Fractional Interest
Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest." In general, the amount of such income that accrues
in any month would equal the product of such holder's adjusted basis in such
Grantor Trust Fractional Interest Certificate at the beginning of such month
(see "--Sales of Grantor Trust Certificates") and the yield of such Grantor
Trust Fractional Interest Certificate to such holder. Such yield would be
computed at the rate (compounded based on the regular interval between payment
dates) that, if used to discount the holder's share of future payments on the
Mortgage Loans, would cause the present value of those future payments to equal
the price at which the holder purchased such Certificate. In computing yield
under the stripped bond rules, a Certificateholder's share of future payments on
the Mortgage Loans will not include any payments made in respect of any spread
or any other ownership interest in the Mortgage Loans retained by the Depositor,
a Master Servicer, a Special Servicer, any Sub-Servicer or their respective
affiliates, but will include such Certificateholder's share of any reasonable
servicing fees and other expenses.
Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,
and regulations could be adopted applying those provisions to the Grantor Trust
Fractional Interest Certificates. It is unclear whether those provisions would
be applicable to the Grantor Trust Fractional Interest Certificates or whether
use of a reasonable prepayment assumption may be required or permitted without
reliance on these rules. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Fractional
Interest Certificate or, with respect to any holder, at the time of purchase of
the Grantor Trust Fractional Interest Certificate by that holder.
Certificateholders are advised to consult their own tax advisors concerning
reporting original issue discount in general and, in particular, whether a
prepayment assumption should be used in reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates.
75
<PAGE>
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the Grantor Trust Fractional Interest Certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--REMICs--Taxation
of Owners of REMIC Regular Certificates--Original Issue Discount." It is unclear
whether any other adjustments would be required to reflect differences between
an assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption (the "Prepayment Assumption") that will be disclosed in
the related Prospectus Supplement and on a constant yield computed using a
representative initial offering price for each class of Certificates. However,
neither the Depositor nor any other person will make any representation that the
Mortgage Loans will in fact prepay at a rate conforming to such Prepayment
Assumption or any other rate and Certificateholders should bear in mind that the
use of a representative initial offering price will mean that such information
returns or reports, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial Certificateholders of each series
who bought at that price.
Under Treasury regulation Section 1.1286-1T, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue and market discount described in "--Taxation of Owners of Grantor
Trust Fractional Interest Certificates--If Stripped Bond Rules Do Not Apply" and
"--Market Discount."
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. The original issue
discount rules will apply to a Grantor Trust Fractional Interest Certificate to
the extent it evidences an interest in Mortgage Loans issued with original issue
discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. Under the OID Regulations, the stated redemption price is equal to
the total of all payments to be made on such Mortgage Loan other than "qualified
stated interest." "Qualified stated interest" includes interest that is
unconditionally payable at least annually at a single fixed rate, at a
"qualified floating rate," or at an "objective rate," a combination of a single
fixed rate and one or more "qualified floating rates" or one "qualified inverse
floating rate," or a combination of "qualified floating rates" that does not
operate in a manner that accelerates or defers interest payments on such
Mortgage Loan. In general, the issue price of a
76
<PAGE>
Mortgage Loan will be the amount received by the borrower from the lender under
the terms of the Mortgage Loan, less any "points" paid by the borrower, and the
stated redemption price of a Mortgage Loan will equal its principal amount,
unless the Mortgage Loan provides for an initial below-market rate of interest
or the acceleration or the deferral of interest payments.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans in preparing
information returns to the Certificateholders and the IRS.
Notwithstanding the general definition of original issue discount, original
issue discount will be considered to be de minimis if such original issue
discount is less than 0.25% of the stated redemption price multiplied by the
weighted average maturity of the Mortgage Loan. For this purpose, the weighted
average maturity of the Mortgage Loan will be computed as the sum of the amounts
determined, as to each payment included in the stated redemption price of such
Mortgage Loan, by multiplying (i) the number of complete years (rounding down
for partial years) from the issue date until such payment is expected to be made
by (ii) a fraction, the numerator of which is the amount of the payment and the
denominator of which is the stated redemption price of the Mortgage Loan. Under
the OID Regulations, original issue discount of only a de minimis amount (other
than de minimis original issue discount attributable to a so-called "teaser"
rate or initial interest holiday) will be included in income as each payment of
stated principal price is made, based on the product of the total amount of such
de minimis original issue discount and a fraction, the numerator of which is the
amount of each such payment and the denominator of which is the outstanding
stated principal amount of the Mortgage Loan. The OID Regulations also permit a
Certificateholder to elect to accrue de minimis original issue discount into
income currently based on a constant yield method. See "--Taxation of Owners of
Grantor Trust Fractional Interest Certificates--Market Discount" below.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
Regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, Section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. Certificateholders should refer to the related Prospectus
Supplement with respect to each series to determine whether and in what manner
the original issue discount rules will apply to Mortgage Loans in such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (i) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (ii) the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
Mortgage Loan at the beginning of any accrual period will equal the issue price
of such Mortgage Loan, increased by the aggregate amount of original issue
discount with respect to such Mortgage Loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such Mortgage Loan in
prior accrual periods of amounts included in its stated redemption price.
Unless otherwise provided in the related Prospectus Supplement, the Trustee
or Master Servicer, as applicable, will provide to any holder of a Grantor Trust
Fractional Interest Certificate such information as such holder may reasonably
request from time to time with respect to original issue discount accruing on
Grantor Trust Fractional Interest Certificates. See "--Grantor Trust Reporting"
below.
77
<PAGE>
Market Discount. If the stripped bond rules do not apply to the Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount," that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing.
If made, such election will apply to all market discount bonds acquired by such
Certificateholder during or after the first taxable year to which such election
applies. In addition, the OID Regulations would permit a Certificateholder to
elect to accrue all interest, discount (including de minimis market or original
issue discount) and premium in income as interest, based on a constant yield
method. If such an election were made with respect to a Mortgage Loan with
market discount, the Certificateholder would be deemed to have made an election
to include currently market discount in income with respect to all other debt
instruments having market discount that such Certificateholder acquires during
the taxable year of the election and thereafter, and possibly previously
acquired instruments. Similarly, a Certificateholder that made this election for
a Certificate acquired at a premium would be deemed to have made an election to
amortize bond premium with respect to all debt instruments having amortizable
bond premium that such Certificateholder owns or acquires. See
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Premium." Each of
these elections to accrue interest, discount and premium with respect to a
Certificate on a constant yield method or as interest is irrevocable.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
Certificateholder's option: (i) on the basis of a constant yield method, (ii) in
the case of a Mortgage Loan issued without original issue discount, in an amount
that bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or
(iii) in the case of a Mortgage Loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
original issue discount accrued in the accrual period bears to the total
original issue discount remaining at the beginning of the accrual period. The
prepayment assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a prepayment assumption could be to accelerate the reporting of such
discount income. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Mortgage Loan purchased at a discount in the
secondary market.
Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans generally will be considered
to be de minimis if it is less than 0.25% of the stated redemption price of the
Mortgage Loans multiplied by the number of complete years to maturity remaining
after the date of its purchase. In interpreting a similar rule with respect to
original issue discount on obligations payable in installments, the OID
Regulations refer to the weighted average maturity of obligations, and it is
likely that the same rule will be applied with respect to market discount,
presumably taking into account the prepayment assumption used, if any. The
effect of using a prepayment assumption could be to accelerate the reporting of
such discount income. If market discount is treated as de minimis under the
foregoing rule, it appears that actual discount would be treated in a manner
similar to original issue discount of a de minimis amount. See "--Taxation of
Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond Rules
Do Not Apply."
78
<PAGE>
Further, under the rules described in "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount," any discount that is not original
issue discount and exceeds a de minimis amount may require the deferral of
interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss, equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption used, if any, and the actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "--Taxation of Owners of Grantor
Trust Fractional Interest Certificates--If Stripped Bond Rules Apply," no
regulations or published rulings under Section 1286 of the Code have been issued
and some uncertainty exists as to how it will be applied to securities such as
the Grantor Trust Strip Certificates. Accordingly, holders of Grantor Trust
Strip Certificates should consult their own tax advisors concerning the method
to be used in reporting income or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons," although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "--Possible Application of Proposed Contingent Payment Rules"
below and assumes that the holder of a Grantor Trust Strip Certificate will not
own any Grantor Trust Fractional Interest Certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the Mortgage Loans. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the Grantor Trust Strip Certificates. It is unclear whether
those provisions would be applicable to the Grantor Trust Strip Certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the
79
<PAGE>
first sale of the Grantor Trust Strip Certificate or, with respect to any
subsequent holder, at the time of purchase of the Grantor Trust Strip
Certificate by that holder.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Prepayment
Assumption disclosed in the related Prospectus Supplement and on a constant
yield computed using a representative initial offering price for each class of
Certificates. However, neither the Depositor nor any other person will make any
representation that the Mortgage Loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate and Certificateholders should
bear in mind that the use of a representative initial offering price will mean
that such information returns or reports, even if otherwise accepted as accurate
by the IRS, will in any event be accurate only as to the initial
Certificateholders of each series who bought at that price. Prospective
purchasers of the Grantor Trust Strip Certificates should consult their own tax
advisors regarding the use of the Prepayment Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Grantor Trust Strip Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Prepayment Assumption. However, if a Grantor Trust Strip Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a
Grantor Trust Strip Certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the Grantor Trust Strip Certificate that
is allocable to such Mortgage Loan.
Possible Application of Proposed Contingent Payment Rules. The coupon
stripping rules' general treatment of stripped coupons is to regard them as
newly issued debt instruments in the hands of each purchaser. To the extent that
payments on the Grantor Trust Strip Certificates would cease if the Mortgage
Loans were prepaid in full, the Grantor Trust Strip Certificates could be
considered to be debt instruments providing for contingent payments. Under the
OID Regulations, debt instruments providing for contingent payments are not
subject to the same rules as debt instruments providing for noncontingent
payments, but no final regulations have been promulgated with respect to
contingent payment debt instruments. Proposed regulations were promulgated in
1994 regarding contingent payment debt instruments, but have not been made final
and are likely to be substantially revised before being made final. Moreover,
like the OID Regulations, such proposed regulations do not specifically address
securities, such as the Grantor Trust Strip Certificates, that are subject to
the stripped bond rules of Section 1286 of the Code.
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Grantor Trust Strip
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus provides a top marginal
tax rate of 39.6% for individuals and a maximum marginal rate for long-term
capital gains of individuals of 28%. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust Certificate is held as part of a "conversion transaction"
within the meaning of Section 1258 of
80
<PAGE>
the Code. A conversion transaction generally is one in which the taxpayer has
taken two or more positions in the same or similar property that reduce or
eliminate market risk, if substantially all of the taxpayer's return is
attributable to the time value of the taxpayer's net investment in such
transaction. The amount of gain realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of the
appropriate "applicable Federal rate" (which rate is computed and published
monthly by the IRS) at the time the taxpayer enters into the conversion
transaction, subject to appropriate reduction for prior inclusion of interest
and other ordinary income items from the transaction. Finally, a taxpayer may
elect to have net capital gain taxed at ordinary income rates rather than
capital gains rates in order to include such net capital gain in total net
investment income for that taxable year, for purposes of the rule that limits
the deduction of interest on indebtedness incurred to purchase or carry property
held for investment to a taxpayer's net investment income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, within a reasonable time after the end of each
calendar year, the Trustee or Master Servicer, as applicable, will furnish to
each Certificateholder during such year such customary factual information as
the Depositor or the reporting party deems necessary or desirable to enable
holders of Grantor Trust Certificates to prepare their tax returns and will
furnish comparable information to the IRS as and when required by law to do so.
Because the rules for accruing discount and amortizing premium with respect to
the Grantor Trust Certificates are uncertain in various respects, there is no
assurance the IRS will agree with the Trustee's or Master Servicer's, as the
case may be, information reports of such items of income and expense. Moreover,
such information reports, even if otherwise accepted as accurate by the IRS,
will in any event be accurate only as to the initial Certificateholders that
bought their Certificates at the representative initial offering price used in
preparing such reports.
Backup Withholding. In general, the rules described in "--REMICs--Backup
Withholding with Respect to REMIC Certificates" will also apply to Grantor Trust
Certificates.
Foreign Investors. In general, the discussion with respect to REMIC Regular
Certificates in "--REMICs--Foreign Investors in REMIC Certificates" applies to
Grantor Trust Certificates except that Grantor Trust Certificates will, unless
otherwise disclosed in the related Prospectus Supplement, be eligible for
exemption from United States withholding tax, subject to the conditions
described in such discussion, only to the extent the related Mortgage Loans were
originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal tax law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the Offered
Certificates.
ERISA CONSIDERATIONS
General
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans, and on
certain other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts in which such plans, accounts or arrangements are invested that are
subject to the fiduciary responsibility provisions of
81
<PAGE>
ERISA and Section 4975 of the Code (all of which are hereinafter referred to as
"Plans"), and on persons who are fiduciaries with respect to Plans, in
connection with the investment of Plan assets. Certain employee benefit plans,
such as governmental plans (as defined in ERISA Section 3(32)), and, if no
election has been made under Section 410(d) of the Code, 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 Offered Certificates
without regard to the ERISA considerations described below, subject to the
provisions of other applicable federal and state law. Any such plan which is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code,
however, is subject to the prohibited transaction rules set forth in Section 503
of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, ERISA and the Code prohibit a broad range of
transactions involving assets of a Plan and persons ("Parties in Interest") who
have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. Certain Parties in Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code, unless a statutory or administrative
exemption is available. These prohibited transactions generally are set forth in
Section 406 of ERISA and Section 4975 of the Code.
Plan Asset Regulations
A Plan's investment in Certificates may cause the Trust Assets to be deemed
Plan assets. Section 2510.3-101 of the regulations of the United States
Department of Labor ("DOL") provides that when a Plan acquires an equity
interest in an entity, the Plan's assets include both such equity interest and
an undivided interest in each of the underlying assets of the entity, unless
certain exceptions not applicable to this discussion apply, or unless the equity
participation in the entity by "benefit plan investors" (that is, Plans and
certain employee benefit plans not subject to ERISA) is not "significant." For
this purpose, in general, equity participation in a Trust Fund will be
"significant" on any date if, immediately after the most recent acquisition of
any Certificate, 25% or more of any class of Certificates is held by benefit
plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Trust Assets constitute Plan assets, then any party exercising
management or discretionary control regarding those assets, such as a Master
Servicer, a Special Servicer or any Sub-Servicer, may be deemed to be a Plan
"fiduciary" with respect to the investing Plan, and thus subject to the
fiduciary responsibility provisions and prohibited transaction provisions of
ERISA and the Code. In addition, if the Trust Assets constitute Plan assets, the
purchase of Certificates by a Plan, as well as the operation of the Trust Fund,
may constitute or involve a prohibited transaction under ERISA and the Code.
Prohibited Transaction Exemptions
The DOL issued an individual administrative exemption, Prohibited
Transaction Exemption 90-29 (the "Exemption"), to Merrill Lynch, Pierce, Fenner
& Smith Incorporated, which generally exempts from the application of the
prohibited transaction provisions of Section 406 of ERISA, and the excise taxes
imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of
the Code and Section 502(i) of ERISA, certain transactions, among others,
relating to the servicing and operation of mortgage pools and the purchase, sale
and holding of mortgage pass-through certificates underwritten by an Underwriter
(as hereinafter defined), provided that certain conditions set forth in the
Exemption are satisfied. For purposes of this Section "ERISA Considerations,"
the term "Underwriter" includes (i) Merrill Lynch, Pierce, Fenner & Smith
Incorporated, (ii) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Merrill
Lynch, Pierce, Fenner & Smith Incorporated and (iii) any member of the
underwriting syndicate or selling group of which Merrill Lynch, Pierce, Fenner &
Smith Incorporated or a person described in (ii) is a manager or co-manager with
respect to a class of Certificates.
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of Certificates to be
eligible for exemptive relief thereunder. First, the acquisition of Certificates
by a Plan must be on terms that are at least as favorable to the Plan as they
would be in an arm's-length transaction with an unrelated party. Second, the
Exemption only applies to Certificates evidencing rights and interests not
subordinated
82
<PAGE>
to the rights and interests evidenced by the other Certificates of the same
series. Third, the Certificates at the time of acquisition by the Plan must be
rated in one of the three highest generic rating categories by Standard & Poor's
Corporation ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's"),
Duff & Phelps, Inc. ("Duff & Phelps") or Fitch Investors Service, Inc.
("Fitch"). Fourth, the Trustee cannot be an affiliate of any member of the
"Restricted Group," which consists of any Underwriter, the Depositor, the
Trustee, the Master Servicer, any Sub-Servicer, the provider of any Credit
Support and any obligor with respect to Mortgage Assets (including mortgage
loans underlying an MBS not issued by FNMA, FHLMC or GNMA) constituting more
than 5% of the aggregate unamortized principal balance of the Mortgage Assets in
the related Trust Fund as of the date of initial issuance of the Certificates.
Fifth, the sum of all payments made to and retained by the Underwriter(s) must
represent not more than reasonable compensation for underwriting the
Certificates; the sum of all payments made to and retained by the Depositor
pursuant to the assignment of the Mortgage Assets to the related Trust Fund must
represent not more than the fair market value of such obligations; and the sum
of all payments made to and retained by the Master Servicer and any Sub-Servicer
must represent not more than reasonable compensation for such person's services
under the related Agreement and reimbursement of such person's reasonable
expenses in connection therewith. Sixth, the investing Plan must be 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, as amended.
The Exemption also requires that each Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest categories of
Standard & Poor's, Moody's, Duff & Phelps or Fitch for at least one year prior
to the Plan's acquisition of Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1) (A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of Offered
Certificates acquired by a Plan upon issuance from the Depositor or Underwriter
when the Depositor, Master Servicer, Special Servicer, Sub-Servicer, Trustee,
provider of Credit Support, Underwriter or obligor with respect to Mortgage
Assets is a Party in Interest with respect to the investing Plan, (ii) the
direct or indirect acquisition or disposition in the secondary market of fuel
Certificates by a Plan and (iii) the holding of Offered Certificates by a Plan.
However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
Certificate on behalf of an "Excluded Plan" by any person who has discretionary
authority or renders investment advice with respect to the assets of such
Excluded Plan. For purposes hereof, an Excluded Plan is a Plan sponsored by any
member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (i) the direct or indirect sale, exchange or
transfer of Offered Certificates in the initial issuance of Offered Certificates
between the Depositor or an Underwriter and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in such Certificates is (a) an obligor with respect to
5% or less of the fair market value of the Mortgage Assets (including mortgage
loans underlying an MBS not issued by FNMA, FHLMC or GNMA) in the related Trust
Fund or (b) an affiliate of such a person, (ii) the direct or indirect
acquisition or disposition in the secondary market of Offered Certificates by a
Plan and (iii) the holding of Offered Certificates by a Plan.
Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code for transactions in
connection with the servicing, management and operation of the Trust Assets.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1) (a) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a Party in Interest with respect to an investing Plan by virtue of
providing services to the Plan (or by virtue of having certain specified
relationships to such a person) solely as a result of the Plan's ownership of
Offered Certificates.
83
<PAGE>
Before purchasing a Certificate, a fiduciary of a Plan should itself
confirm (i) that the Offered Certificates constitute "certificates" for purposes
of the Exemption and (ii) that the specific and general conditions set forth in
the Exemption and the other requirements set forth in the Exemption would be
satisfied. In addition to making its own determination as to the availability of
the exemptive relief provided in the Exemption, the Plan fiduciary should
consider its general fiduciary obligations under ERISA in determining whether to
purchase any Offered Certificates on behalf of a Plan.
Any fiduciary of a Plan that proposes to cause the Plan to purchase Offered
Certificates should consult with its counsel with respect to the potential
applicability of ERISA and the Code to such investment and the availability of
(and scope of relief provided by) the Exemption or any other prohibited
transaction exemption in connection therewith. The Prospectus Supplement with
respect to a series of Certificates may contain additional information regarding
the application of the Exemption or any other exemption, with respect to the
Certificates offered thereby. In addition, any Plan fiduciary that proposes to
cause a Plan to purchase Stripped Interest Certificates should consider the
federal income tax consequences of such investment.
LEGAL INVESTMENT
The Offered Certificates of any series will constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA") only if so specified in the related Prospectus Supplement.
Accordingly, investors whose investment authority is subject to legal
restrictions should consult their own legal advisors to determine whether and to
what extent the Offered Certificates constitute legal investments for them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies and (ii) are
part of a series evidencing interests in a Trust Fund consisting of loans
secured by a single parcel of real estate upon which is located a dwelling or
mixed residential and commercial structure, such as certain Multifamily Loans,
and originated by types of Originators specified in SMMEA, will be "mortgage
related securities" for purposes of SMMEA. "Mortgage related securities" are
legal investments to the same extent that, under applicable law, obligations
issued by or guaranteed as to principal and interest by the United States or any
agency or instrumentality thereof constitute legal investments for persons,
trusts, corporations, partnerships, associations, business trusts and business
entities (including depository institutions, insurance companies and pension
funds created pursuant to or existing under the laws of the United States or of
any state, the authorized investments of which are subject to state regulation).
Under SMMEA, if a state enacted legislation prior to October 3, 1991 that
specifically limits the legal investment authority of any such entities with
respect to "mortgage related securities," Offered Certificates would constitute
legal investments for entities subject to such legislation only to the extent
provided in 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 with "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities 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.
Upon the issuance of final implementing regulations under the Riegle
Community Development and Regulatory Improvement Act of 1994 and subject to any
limitations those regulations may impose, a modification of the definition of
"mortgage related securities" will become effective to include among the types
of loans to which such securities may relate loans secured by "one or more
parcels of real estate upon which is located one or more commercial structures."
In addition, the related legislative history states that this expanded
definition includes multifamily loans secured by more than one parcel of real
estate upon which is located more than one structure. Until September 23, 2001
any state may enact legislation limiting the extent to which "mortgage related
securities" under this expanded definition would constitute legal investments
under that state's laws.
All depository institutions considering an investment in the Offered
Certificates of any series should review the Federal Financial Institutions
Examination Council's Supervisory Policy Statement on the Selection of
Securities Dealers and Unsuitable Investment Practices (to the extent adopted by
their respective regulatory authorities), setting forth, in relevant part,
certain investment practices deemed to be unsuitable for an institution's
investment portfolio, as well as guidelines for investing in certain types of
mortgage related securities.
84
<PAGE>
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying."
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or to
purchase Offered 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 Offered Certificates constitute legal
investments for such investors.
METHOD OF DISTRIBUTION
The Offered Certificates offered hereby and by the Prospectus Supplements
hereto will be offered in series. The distribution of the Offered Certificates
may be effected from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
to be determined at the time of sale or at the time of commitment therefor. The
Prospectus Supplement for the Offered Certificates of each series will, as to
each class of such Certificates, set forth the method of the offering, either
the initial public offering price or the method by which the price at which the
Certificates of such class will be sold to the public can be determined, the
amount of any underwriting discounts, concessions and commissions to
underwriters, any discounts or commissions to be allowed to dealers and the
proceeds of the offering to the Depositor.
If so specified in the related Prospectus Supplement, the Offered
Certificates of a series will be distributed in a firm commitment underwriting,
subject to the terms and conditions of the underwriting agreement, by Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") acting as
underwriter with other underwriters, if any, named therein. Alternatively, the
Prospectus Supplement may specify that Offered Certificates will be distributed
by Merrill Lynch acting as agent. If Merrill Lynch acts as agent in the sale of
Offered Certificates, Merrill Lynch will receive a selling commission with
respect to such Offered Certificates, depending on market conditions, expressed
as a percentage of the aggregate Certificate Balance or Notional Amount of such
Offered Certificates as of the date of issuance. The exact percentage for each
series of Certificates will be disclosed in the related Prospectus Supplement.
To the extent that Merrill Lynch elects to purchase Offered Certificates as
principal, Merrill Lynch may realize losses or profits based upon the difference
between its purchase price and the sales price. The Prospectus Supplement with
respect to any series offered other than through underwriters will contain
information regarding the nature of such offering and any agreements to be
entered into between the Depositor and purchasers of Offered Certificates of
such series.
The Depositor will agree to indemnify Merrill Lynch and any underwriters
and their respective controlling persons against certain civil liabilities,
including liabilities under the Securities Act of 1933, or will contribute to
payments that any such person may be required to make in respect thereof.
In the ordinary course of business, Merrill Lynch and the Depositor may
engage in various securities and financing transactions, including repurchase
agreements to provide interim financing of the Depositor's mortgage loans
pending the sale of such mortgage loans or interests therein, including the
Certificates.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act of 1933 in connection with reoffers and sales by them of Offered
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer or sale.
As to each series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any class of Certificates not offered hereby may be initially retained by the
Depositor, and may be sold by the Depositor at any time to one or more
institutional investors.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each series, including
certain federal income tax consequences, will be passed upon for the Depositor
and for Merrill Lynch, Pierce, Fenner & Smith Incorporated by Thacher Proffitt &
Wood, New York, New York.
85
<PAGE>
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of stripped interest certificates in extreme cases
might fail to recoup their initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
86
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
Page
----
Accrual Certificates ......................................... 11
Accrued Certificate Interest ................................. 31
ADA .......................................................... 58
ARM Loans .................................................... 23
Available Distribution Amount ................................ 30
Bankruptcy Code .............................................. 53
Book-Entry Certificates ...................................... 13
Cash Flow Agreement .......................................... 1
CERCLA ....................................................... 20
Certificate .................................................. 1
Certificate Account .......................................... 9
Certificate Balance .......................................... 2
Certificate Owner ............................................ 13
Certificateholder ............................................ 1
Closing Date ................................................. 61
Code ......................................................... 13
Commercial Properties ........................................ 8
Commission ................................................... 2
Committee Report ............................................. 61
Companion Class .............................................. 12
Contributions Tax ............................................ 71
Controlled Amortization Class ................................ 12
Cooperatives ................................................. 21
CPR .......................................................... 27
Credit Support ............................................... 1
Cut-off Date ................................................. 12
Debt Service Coverage Ratio .................................. 22
Definitive Certificate ....................................... 13
Depositor .................................................... 8
Determination Date ........................................... 31
Direct Participants .......................................... 36
Distribution Date ............................................ 11
Distribution Date Statement .................................. 33
DOL .......................................................... 82
DTC .......................................................... 2
Due Dates .................................................... 23
Due Period ................................................... 33
Duff & Phelps ................................................ 83
Equity Participation ......................................... 23
EPA .......................................................... 56
ERISA ........................................................ 15
Excess Funds ................................................. 29
Exchange Act ................................................. 2
Exemption .................................................... 82
FAMC ......................................................... 9
FHLMC ........................................................ 9
Fitch ........................................................ 83
FNMA ......................................................... 9
Gann Act ..................................................... 57
GNMA ......................................................... 9
Grantor Trust Certificates ................................... 13
Grantor Trust Fractional Interest Certificates ............... 14
Grantor Trust Fund ........................................... 59
Grantor Trust Strip Certificate .............................. 74
Indirect Participants ........................................ 36
87
<PAGE>
Page
----
Insurance Proceeds ........................................... 39
IRS .......................................................... 61
Issue Premium ................................................ 66
L/C Bank ..................................................... 49
Liquidation Proceeds ......................................... 39
Loan-to-Value Ratio .......................................... 22
Lock-out Expiration Date ..................................... 23
Lock-out Period .............................................. 23
Master Servicer .............................................. 2
MBS .......................................................... 1
MBS Agreement ................................................ 24
MBS Issuer ................................................... 24
MBS Servicer ................................................. 24
MBS Trustee .................................................. 24
Merrill Lynch ................................................ 85
Moody's ...................................................... 83
Mortgage Asset Seller ........................................ 9
Mortgage Assets .............................................. 1
Mortgage Loan ................................................ 1
Mortgage Notes ............................................... 21
Mortgage Rate ................................................ 8
Mortgaged Properties ......................................... 21
Mortgages .................................................... 21
Multifamily Properties ....................................... 8
Net Leases ................................................... 22
Net Operating Income ......................................... 22
Nonrecoverable Advance ....................................... 33
Notional Amount .............................................. 11
Offered Certificates ......................................... 1
OID Regulations .............................................. 59
Originator ................................................... 21
PAC .......................................................... 28
Participants ................................................. 20
Parties in Interest .......................................... 82
Pass-Through Rate ............................................ 2
Permitted Investments ........................................ 39
Plans ........................................................ 82
Pooling Agreement ............................................ 10
Prepayment Assumption ........................................ 61
Prepayment Interest Shortfall ................................ 26
Prepayment Premium ........................................... 23
Prohibited Transactions Tax .................................. 70
Proposed Mark-to-Market Regulations .......................... 69
Prospectus Supplement ........................................ 1
Rating Agency ................................................ 15
RCRA ......................................................... 50
Record Date .................................................. 31
Related Proceeds ............................................. 33
Relief Act ................................................... 58
REMIC ........................................................ 1
REMIC Certificates ........................................... 59
REMIC Provisions ............................................. 59
REMIC Regular Certificates ................................... 13
REMIC Regulations ............................................ 59
REMIC Residual Certificates .................................. 13
REO Property ................................................. 33
88
<PAGE>
Page
----
Senior Certificates .......................................... 10
Servicing Standard ........................................... 41
SMMEA ........................................................ 84
SPA .......................................................... 27
Special Servicer ............................................. 2
Standard & Poor's ............................................ 83
Stripped Interest Certificates ............................... 10
Stripped Principal Certificates .............................. 10
Sub-Servicer ................................................. 41
Sub-Servicing Agreement ...................................... 42
Subordinate Certificates ..................................... 10
TAC .......................................................... 28
Temporary Mark-to-Market Regulations ......................... 69
Tiered REMICs ................................................ 60
Title V ...................................................... 58
Trust Assets ................................................. 2
Trust Fund ................................................... 1
Trustee ...................................................... 2
UCC .......................................................... 51
Value ........................................................ 22
Voting Rights ................................................ 35
Warranting Party ............................................. 38
89
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
83 Park Towne Place 2201 Park Towne Place
345 Estes - Best Western - Orlando 8738 International Drive
73 Olde Mill Landing 11800 Beltsville Drive
153 Best Buy Distribution Center 14401 Township Road 212
241 Renaissance III Shopping Center NWC of Pecos & Flamingo
- -----------------------------------------------------------------------------------------------------
152 The Port Authority of NY/NJ Technical Center 241 Erie Street
56 254 Park Avenue South 254 Park Avenue South
307 Shilo Inn-Portland Airport/I-205 11707 N.E. Airport Way
278 KFS-Sunset Apartments 910-975 Del Dios Highway
110 Central Shopping Center 3701 N.W. 7 Street
- -----------------------------------------------------------------------------------------------------
204 Canyon Center 19307 Soledad Canyon Rd.
271 Gateway Retail Center 2500 Gateway Boulevard South
277 KFS-Sycamore Ridge Apartments 820 Sycamore Avenue
145 Intelligent Electronics 5025 Tuggle Road
267 Oxford-Oaks at Woodbridge I Apts 3800 Woodbridge Blvd
- -----------------------------------------------------------------------------------------------------
147 Flagler 251 255 East Flagler Street
159 Reston International Center 11800, 11840 & 11816-11832 Sunrise Valley Drive
82 Islander Marina 14015 West Tahiti Way
266 Oxford - Island Club Apartments 2225 Montego Blvd
304 The Olympic Marketplace NWC Olympic and Cloverfield
- -----------------------------------------------------------------------------------------------------
215 INT-6200 Gessner Apartments 8721 Town Park Drive
302 SNE Enterprises 1000 Southview Drive
*108 1111 Beacon Street*** 1111 Beacon Street
*108 1101 Beacon Street*** 1101 Beacon Street
- -----------------------------------------------------------------------------------------------------
303 Shilo Inn-Seaside Oceanfront Resort 30 North Promenade
207 26 Court Street 26 Court Street
344 Town Center Plaza SEC Fred Waring Dr. & Town Ctr
265 Oxford-Runaway Bay Apartments 8242 Runaway Bay Drive
165 Las Villas del Norte 1325 Las Villas Way
- -----------------------------------------------------------------------------------------------------
264 Oxford - Hunters Chase Apartments 2550 Steeple Chase Drive
285 Copper Tree Shopping Plaza 350 Ramapo Valley Road
13 Kimberly Club 3000 East Kimberly Road
118 415 Hamburg Turnpike 415 Hamburg Turnpike
57 298 Mulberry 298 Mulberry
- -----------------------------------------------------------------------------------------------------
243 K&S - North County Village 9700 North Riverdale
173 Riverside Square 8190 Wiles Road
60 Greenhills Bicycle Club 7909 North Grandby Avenue
42 Woods on LaMonte 4800 LaMonte Lane
25 Sunwood Village 4020 Arville Street
- -----------------------------------------------------------------------------------------------------
353 Ramada Inn - Seattle 2200 Fifth Avenue
352 Horwitz-Ramada Inn - Portland 6221 NE 82nd Street
332 Summer Street Office Building 1111 & 1177 Summer Street
306 Collegetown Plaza 111-121 Dryden Road
284 Rodeo Square Apartments 6700 Dairy Ashford
- -----------------------------------------------------------------------------------------------------
174 Countryside Lakes 941 Village Trail
300 Shilo Inn-Tacoma 7414 South Hosmer Street
172 Tamarac Town Square 8177 North Pine Island Road
164 501 Route 17 South 501 Route 17 South
116 61-65 Brookline Avenue 61 - 65 Brookline Avenue
- -----------------------------------------------------------------------------------------------------
101 Market Place Shopping Center N.C. Highway 180
228 Shafer Plaza Shopping Center 8383 Westheimer
155 Willow Wood Shoppes 1141-1187 Wantagh Ave.
94 Biggs Park Mall 2800 N. Elm Street
351 Horwitz-Ramada Inn - Corvallis 1550 NW 9th Street
- -----------------------------------------------------------------------------------------------------
58 304 Mulberry 304 Mulberry
276 KFS-Sunset Village Apartments 3634 College Boulevard
169 Beverly Hills Carmel Retirement Hotel I 8757 Burton Way
299 Shilo Inn-Salem Suites 3304 Market Street NE
268 Paseo Plaza 2600 West Sahara Avenue
- -----------------------------------------------------------------------------------------------------
359 Metro Office Building 202 West Berry Street
342 Estes - HoJo Main Gate - Kissimmee 6051 Irlo Bronson Memorial Highway
350 Horwitz-Ramada Inn - Beaverton 13455 SW Canyon Road
245 SHL - Village Green Apartments 2305 Bay Area Bldv.
2 Woodcrest 3903 Camelot Circle
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
83 Philadelphia PA 19130 $38,500,000 $38,500,000 3.38% 3.38
345 Orlando FL 32819 21,000,000 21,000,000 1.84 5.23
73 Beltsville MD 20705 18,500,000 18,478,635 1.62 6.85
153 Findlay OH 45840 18,375,000 18,365,222 1.61 8.46
241 Las Vegas NV 89104 17,280,000 17,246,478 1.52 9.98
- -----------------------------------------------------------------------------------------------------
152 Jersey City NJ 07310 17,000,000 16,975,344 1.49 11.47
56 New York NY 10010 15,715,000 15,688,374 1.38 12.85
307 Portland OR 97220-1075 14,750,000 14,729,335 1.29 14.14
278 Escondido CA 92083 14,039,000 14,022,035 1.23 15.37
110 Miami FL 33126 13,650,000 13,603,721 1.20 16.57
- -----------------------------------------------------------------------------------------------------
204 Santa Clarita CA 91351 13,300,000 13,246,071 1.16 17.73
271 Federal Way WA 98003 12,750,000 12,725,849 1.12 18.85
277 Vista CA 92083 11,468,600 11,454,741 1.01 19.86
145 Memphis TN 38118 11,250,000 11,244,168 0.99 20.84
267 Fairfield OH 45014 11,070,000 11,056,261 0.97 21.82
- -----------------------------------------------------------------------------------------------------
147 Miami FL 33131 10,800,000 10,800,000 0.95 22.76
159 Reston VA 22090 10,650,000 10,631,616 0.93 23.70
82 Marina Del Rey CA 90292 10,125,000 10,110,315 0.89 24.59
266 Columbus OH 43235 10,120,000 10,107,440 0.89 25.48
304 Santa Monica CA 90404 10,000,000 9,991,838 0.88 26.35
- -----------------------------------------------------------------------------------------------------
215 Houston TX 77036 10,000,000 9,969,340 0.88 27.23
302 Mosinee WI 54455 9,975,000 9,966,776 0.88 28.10
*108 Brookline MA 02146 5,700,000 5,693,750 0.50
*108 Brookline MA 02146 4,000,000 3,995,614 0.35
--------------------------------------
9,700,000 9,689,363 0.85 28.96
- -----------------------------------------------------------------------------------------------------
303 Seaside OR 97138 9,510,000 9,496,676 0.83 29.79
207 Brooklyn NY 11242 9,500,000 9,409,635 0.83 30.62
344 Palm Desert CA 92260 9,350,000 9,350,000 0.82 31.44
265 Charlotte NC 28212 9,259,000 9,247,509 0.81 32.25
165 Escondido CA 92026 9,233,000 9,226,041 0.81 33.06
- -----------------------------------------------------------------------------------------------------
264 Miamisburg OH 45342 9,081,000 9,069,730 0.80 33.86
285 Oakland NJ 07436 9,000,000 8,990,152 0.79 34.65
13 Davenport IA 52807 9,000,000 8,962,951 0.79 35.43
118 Wayne NJ 07470 8,684,000 8,668,450 0.76 36.20
57 New York NY 10012 8,606,000 8,591,419 0.75 36.95
- -----------------------------------------------------------------------------------------------------
243 Thornton CO 80229 8,430,000 8,415,069 0.74 37.69
173 Coral Springs FL 33067 8,225,000 8,216,327 0.72 38.41
60 Kansas City MO 64151 8,100,000 8,086,627 0.71 39.12
42 Houston TX 77401 8,100,000 8,082,651 0.71 39.83
25 Las Vegas NV 89103 8,100,000 8,075,743 0.71 40.54
- -----------------------------------------------------------------------------------------------------
353 Seattle WA 98121 7,850,000 7,850,000 0.69 41.23
352 Portland OR 97220 7,800,000 7,800,000 0.69 41.92
332 Stamford CT 06905 7,620,000 7,613,823 0.67 42.59
306 Ithaca NY 14850 7,000,000 6,996,152 0.61 43.20
284 Houston TX 77072 6,960,000 6,951,380 0.61 43.81
- -----------------------------------------------------------------------------------------------------
174 Port Orange FL 32119 6,800,000 6,788,562 0.60 44.41
300 Tacoma WA 98408 6,770,000 6,760,515 0.59 45.00
172 Tamarac FL 33321 6,635,000 6,628,003 0.58 45.58
164 Paramus NJ 07652 6,591,000 6,586,839 0.58 46.16
116 Boston MA 02215 6,600,000 6,583,466 0.58 46.74
- -----------------------------------------------------------------------------------------------------
101 Shelby NC 28150 6,600,000 6,577,790 0.58 47.32
228 Houston TX 77063 6,500,000 6,482,639 0.57 47.89
155 Wantagh NY 11793 6,098,000 6,098,000 0.54 48.42
94 Lumberton NC 28359 5,800,000 5,775,323 0.51 48.93
351 Corvallis OR 97330 5,750,000 5,750,000 0.51 49.44
- -----------------------------------------------------------------------------------------------------
58 New York NY 10012 5,683,000 5,673,371 0.50 49.93
276 Oceanside CA 92056 5,650,000 5,643,172 0.50 50.43
169 Beverly Hills CA 90048 5,500,000 5,486,358 0.48 50.91
299 Salem OR 97301 5,470,000 5,462,336 0.48 51.39
268 Las Vegas NV 89102 5,333,400 5,311,065 0.47 51.86
- -----------------------------------------------------------------------------------------------------
359 Fort Wayne IN 46802 5,300,000 5,300,000 0.47 52.32
342 Kissimmee FL 34747 5,110,000 5,110,000 0.45 52.77
350 Beaverton OR 97005 4,900,000 4,900,000 0.43 53.20
245 Houston TX 77058 4,900,000 4,891,321 0.43 53.63
2 Decatur IL 62526 4,728,000 4,694,438 0.41 54.05
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
83 9.1250 120 120 360 360 10/2/96 11/1/06 34,557,552
345 9.8900 264 264 264 264 10/9/96 11/1/18 NAP
73 8.7500 120 118 360 358 8/12/96 9/1/06 16,494,410
153 9.1250 120 119 360 359 9/24/96 10/1/06 16,493,377
241 9.1700 120 117 336 333 7/23/96 8/1/06 15,140,789
- -----------------------------------------------------------------------------------------------------------------
152 9.2500 240 239 240 239 9/30/96 10/1/16 NAP
56 8.8750 84 81 360 357 7/3/96 8/1/03 14,710,360
307 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
278 8.5300 84 82 360 358 8/26/96 9/1/03 13,087,470
110 9.3750 120 116 300 296 6/28/96 7/1/06 11,418,492
- -----------------------------------------------------------------------------------------------------------------
204 9.0600 180 175 312 307 5/21/96 6/1/11 9,298,753
271 8.6600 36 34 300 298 8/22/96 9/1/99 12,272,854
277 8.5300 84 82 360 358 8/26/96 9/1/03 10,691,285
145 9.2500 120 119 360 359 9/12/96 10/1/06 10,119,832
267 8.4000 120 118 360 358 8/20/96 9/1/06 9,805,020
- -----------------------------------------------------------------------------------------------------------------
147 8.8750 84 84 300 300 10/4/96 11/1/03 9,678,422
159 9.2200 84 82 300 298 8/30/96 9/1/03 9,592,241
82 9.2500 240 239 240 239 10/1/96 10/1/16 NAP
266 8.4000 120 118 360 358 8/20/96 9/1/06 8,963,577
304 9.5300 240 239 300 299 9/12/96 10/1/16 4,221,171
- -----------------------------------------------------------------------------------------------------------------
215 8.5100 60 55 360 355 5/8/96 6/1/01 9,559,009
302 9.4700 120 119 300 299 9/20/96 10/1/06 8,361,522
*108 9.0000 120 118 360 358 8/16/96 9/1/06 5,105,071
*108 9.0000 120 118 360 358 8/16/96 9/1/06 3,582,506
----------
8,687,577
- -----------------------------------------------------------------------------------------------------------------
303 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
207 9.9500 240 233 240 233 3/26/96 4/1/16 NAP
344 8.7800 120 120 360 360 10/9/96 11/1/06 8,340,954
265 8.4000 120 118 360 358 8/20/96 9/1/06 8,200,965
165 10.0000 120 119 300 299 9/6/96 10/1/06 7,826,232
- -----------------------------------------------------------------------------------------------------------------
264 8.4000 120 118 360 358 8/20/96 9/1/06 8,043,305
285 9.0100 120 118 360 358 8/30/96 9/1/06 8,062,068
13 8.7500 120 113 360 353 3/29/96 4/1/06 8,024,308
118 9.0000 120 118 300 298 8/16/96 9/1/06 7,203,921
57 8.8750 84 81 360 357 7/3/96 8/1/03 8,055,829
- -----------------------------------------------------------------------------------------------------------------
243 8.6600 60 57 360 357 7/10/96 8/1/01 8,068,173
173 9.1875 186 184 360 358 8/22/96 3/1/12 6,475,703
60 9.0000 60 57 360 357 7/8/96 8/1/01 7,773,167
42 9.1500 84 80 360 356 6/24/96 7/1/03 7,605,959
25 8.6250 60 55 360 355 5/17/96 6/1/01 7,750,130
- -----------------------------------------------------------------------------------------------------------------
353 9.4300 264 264 264 264 10/3/96 11/1/18 NAP
352 9.6500 240 240 240 240 10/3/96 11/1/16 NAP
332 9.5700 120 119 300 299 9/12/96 10/1/06 6,401,197
306 8.9700 120 119 360 359 9/25/96 10/1/06 6,266,040
284 8.4100 36 34 360 358 8/26/96 9/1/99 6,790,300
- -----------------------------------------------------------------------------------------------------------------
174 9.3750 120 118 300 298 8/30/96 9/1/06 5,688,333
300 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
172 9.1875 157 155 360 358 8/22/96 10/1/09 5,594,204
164 9.5200 120 119 330 329 9/17/96 10/1/06 5,772,406
116 9.6250 120 116 330 326 6/7/96 7/1/06 5,791,683
- -----------------------------------------------------------------------------------------------------------------
101 9.0000 120 115 336 331 5/10/96 6/1/06 5,763,872
228 9.1800 120 115 360 355 5/31/96 6/1/06 5,839,970
155 9.1250 84 84 360 360 10/4/96 11/1/03 5,724,468
94 9.3750 120 115 300 295 5/8/96 6/1/06 4,851,813
351 9.6500 252 252 252 252 10/3/96 11/1/17 NAP
- -----------------------------------------------------------------------------------------------------------------
58 8.8750 84 81 360 357 7/3/96 8/1/03 5,319,693
276 8.5300 84 82 360 358 8/26/96 9/1/03 5,267,056
169 9.5000 120 117 300 297 7/3/96 8/1/06 4,613,349
299 9.5200 240 239 240 239 9/25/96 10/1/16 NAP
268 9.4700 120 115 300 295 5/17/96 6/1/06 4,470,711
- -----------------------------------------------------------------------------------------------------------------
359 9.0900 120 120 300 300 10/8/96 11/1/06 4,405,635
342 9.8900 264 264 264 264 10/9/96 11/1/18 NAP
350 9.6500 240 240 240 240 10/3/96 11/1/16 NAP
245 8.6600 48 45 360 357 7/1/96 8/1/00 4,739,974
2 8.3500 84 77 300 293 3/12/96 4/1/03 4,202,951
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- ---------------------------
83 Multifamily
345 Hospitality
73 Multifamily
153 Industrial
241 Anchored Retail
- ---------------------------
152 Office
56 Multifamily
307 Hospitality
278 Multifamily
110 Anchored Retail
- ---------------------------
204 Anchored Retail
271 Anchored Retail
277 Multifamily
145 Industrial
267 Multifamily
- ---------------------------
147 Anchored Retail
159 Office
82 Multifamily
266 Multifamily
304 Anchored Retail
- ---------------------------
215 Multifamily
302 Industrial
*108 Multifamily
*108 Office
- ---------------------------
303 Hospitality
207 Office
344 Anchored Retail
265 Multifamily
165 Assisted Living
- ---------------------------
264 Multifamily
285 Anchored Retail
13 Multifamily
118 Industrial
57 Multifamily
- ---------------------------
243 Mobile Home Park
173 Anchored Retail
60 Multifamily
42 Multifamily
25 Multifamily
- ---------------------------
353 Hospitality
352 Hospitality
332 Office
306 Multifamily/Retail
284 Multifamily
- ---------------------------
174 Congregate Care
300 Hospitality
172 Anchored Retail
164 Unanchored Retail
116 Multifamily/Retail
- ---------------------------
101 Anchored Retail
228 Anchored Retail
155 Anchored Retail
94 Anchored Retail
351 Hospitality
- ---------------------------
58 Multifamily
276 Multifamily
169 Congregate Care
299 Hospitality
268 Unanchored Retail
- ---------------------------
359 Office
342 Hospitality
350 Hospitality
245 Multifamily
2 Multifamily
- ---------------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- -------------------------------------------------------------------------------------
<S> <C>
83 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
345 11 yr lock, >1% or YM through yr 21 3/4, open last 3 months
73 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
153 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
241 5.25 yr lock, >1% or YM through yr 9 1/2, open last 6 months
- -------------------------------------------------------------------------------------
152 5 yr lock, >1% or YM through yr 19 1/2, open last 6 mos
56 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
307 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
278 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
110 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
204 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
271 2 yr lock, >1% or YM through yr 2 3/4, open last 3 months
277 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
145 5 1/2 yr lock, >1% or YM through yr 9, open last 12 mos
267 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
- -------------------------------------------------------------------------------------
147 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
159 4 yr lock, 3% Yr 5, 2% Yr 6, 1% Yr 6 1/2, open last 6 mos
82 2 yr lock, >1% or YM through yr 4, 5%-1%, 1% yr 10, open last 10 years
266 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
304 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
- -------------------------------------------------------------------------------------
215 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
302 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
*108 4 yr lock, >1% or YM through yr 9, open last 12 mos
*108 4 yr lock, >1% or YM through yr 9, open last 12 mos
- -------------------------------------------------------------------------------------
303 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
207 10 yr lock, yearly @ 8%, 7, 6, 5, 4, 3, 2, 33 mos @ 1%, open last 3 months
344 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
265 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
165 3 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
264 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
285 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
13 5 yr lock, >1% or YM through yr 9, open last 12 mos
118 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
57 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
243 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
173 5 yr lock,>1% or YM through yr 10,4%,3%,2%,1%-yr 14 1/2, open last 12 mos
60 1 yr lock, >1% or YM through yr 4 1/2, open last 6 mos
42 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
25 1 yr lock, >1% or YM through yr 4 1/2, open last 6 mos
- -------------------------------------------------------------------------------------
353 11 yr lock, >1% or YM through yr 21 3/4, open last 3 months
352 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
332 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
306 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
284 2.25 yr lock, >1% or YM through yr 2 1/2, open last 6 months
- -------------------------------------------------------------------------------------
174 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
300 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
172 5 yr lock, >1% or YM through yr 10, 2%, 1%-yr 12 and 1 mos,open last 12 mos
164 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
116 6 yr lock, >1% or YM through yr 9, open last 12 mos
- -------------------------------------------------------------------------------------
101 4 yr lock, >1% or YM through yr 9, 5% through yr 9 1/2, open last 6 mos
228 5.25 yr lock, >1% or YM through yr 9 1/2, open last 6 months
155 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
94 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
351 10 yr lock, >1% or YM through yr 20 3/4, open last 3 months
- -------------------------------------------------------------------------------------
58 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
276 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
169 4 yr lock, >1% or YM through yr 9, open last 12 mos
299 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
268 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------
359 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
342 11 yr lock, >1% or YM through yr 21 3/4, open last 3 months
350 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
245 2.5 yr lock, >1% or YM through yr 3 3/4, open last 3 months
2 1 yr lock, >1% or YM through yr 6, open last 12 mos
- -------------------------------------------------------------------------------------
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
83 313,249 10,207,812 5,184,327 4,780,235 1.27 51,000,000 1996 75.49
345 195,462 8,871,101 5,560,462 3,310,639 1.41 30,000,000 1996 70.00
73 145,540 5,145,396 2,643,868 2,323,283 1.33 25,500,000 1996 72.47
153 149,505 2,390,557 59,764 2,290,384 1.28 24,500,000 1996 74.96
241 143,137 2,802,128 576,444 2,172,055 1.26 24,000,000 1996 71.86
- ------------------------------------------------------------------------------------------------------------------------------------
152 155,697 2,885,816 493,966 2,241,659 1.20 24,000,000 1996 70.73
56 125,036 3,477,590 1,472,220 1,955,196 1.30 20,300,000 1996 77.28
307 137,682 5,494,759 3,048,388 2,446,371 1.48 22,500,000 1996 65.46
278 108,246 2,581,971 958,241 1,623,730 1.25 19,000,000 1996 73.80
110 118,076 3,153,291 1,179,265 1,868,647 1.32 24,800,000 1996 54.85
- ------------------------------------------------------------------------------------------------------------------------------------
204 111,039 2,281,860 522,007 1,672,210 1.25 18,800,000 1996 70.46
271 104,045 2,188,311 524,521 1,626,759 1.30 17,000,000 1996 74.86
277 88,428 2,023,384 749,995 1,273,389 1.20 14,700,000 1996 77.92
145 92,551 1,487,852 29,757 1,405,157 1.27 16,700,000 1996 67.33
267 84,335 2,216,880 966,118 1,250,763 1.24 13,890,000 1996 79.60
- ------------------------------------------------------------------------------------------------------------------------------------
147 89,711 3,370,587 1,702,529 1,523,269 1.41 18,000,000 1996 60.00
159 90,984 3,049,871 1,268,890 1,478,138 1.35 17,000,000 1996 62.54
82 92,732 3,167,475 1,704,657 1,401,523 1.26 17,500,000 1996 57.77
266 77,098 2,018,588 860,242 1,158,347 1.25 13,035,000 1996 77.54
304 87,578 1,660,211 274,413 1,385,798 1.32 14,500,000 1996 68.91
- ------------------------------------------------------------------------------------------------------------------------------------
215 76,962 3,010,563 1,822,218 1,188,345 1.29 12,500,000 1996 79.75
302 86,943 1,975,614 671,542 1,304,072 1.25 13,300,000 1996 74.94
*108 78,048 1,314,424 584,760 711,964 1.33 7,800,000 1996 65.03
*108 1,073,073 468,889 533,881 7,100,000 1996
------------------------------------------ ----------
2,387,497 1,053,649 1,245,845 14,900,000
- ------------------------------------------------------------------------------------------------------------------------------------
303 88,770 3,167,906 1,588,284 1,579,621 1.48 14,000,000 1996 67.83
207 91,363 5,481,680 3,534,565 1,548,252 1.41 13,000,000 1996 72.38
344 73,757 1,521,024 350,708 1,129,823 1.28 12,880,000 1996 72.59
265 70,539 1,898,626 838,668 1,059,958 1.25 13,200,000 1996 70.06
165 83,900 7,500,000 6,030,000 1,409,500 1.40 14,700,000 1996 62.76
- ------------------------------------------------------------------------------------------------------------------------------------
264 69,182 1,912,748 877,115 1,035,633 1.25 11,860,000 1996 76.47
285 72,481 1,591,045 481,030 1,066,048 1.23 12,900,000 1996 69.69
13 70,803 2,228,712 1,094,851 1,062,261 1.25 12,300,000 1996 72.87
118 72,876 2,148,309 845,283 1,170,834 1.34 13,000,000 1996 66.68
57 68,473 1,917,902 813,526 1,085,176 1.32 11,300,000 1996 76.03
- ------------------------------------------------------------------------------------------------------------------------------------
243 65,778 1,565,107 520,560 1,044,547 1.32 11,000,000 1996 76.50
173 67,293 1,495,705 437,735 1,007,468 1.25 10,900,000 1996 75.38
60 65,174 1,838,608 809,528 971,360 1.24 10,800,000 1996 74.88
42 66,051 2,660,657 1,499,539 1,038,988 1.31 11,650,000 1996 69.38
25 63,001 1,722,217 707,476 958,041 1.27 11,400,000 1996 70.84
- ------------------------------------------------------------------------------------------------------------------------------------
353 70,632 2,848,054 1,699,734 1,148,320 1.35 11,400,000 1996 68.86
352 73,472 3,034,080 1,827,901 1,206,179 1.37 12,200,000 1996 63.93
332 66,947 1,987,774 871,410 1,004,121 1.25 10,300,000 1996 73.92
306 56,173 1,450,566 484,940 952,544 1.41 10,350,000 1996 67.60
284 53,073 2,723,344 1,887,412 835,932 1.31 10,000,000 1996 69.51
- ------------------------------------------------------------------------------------------------------------------------------------
174 58,822 2,969,701 1,995,485 931,593 1.32 9,500,000 1996 71.46
300 63,194 2,464,677 1,251,271 1,213,406 1.60 9,950,000 1996 67.94
172 54,284 1,301,117 429,011 807,086 1.24 9,500,000 1996 69.77
164 56,449 1,150,659 245,339 871,073 1.29 9,350,000 1996 70.45
116 57,022 1,224,353 291,417 904,096 1.32 8,800,000 1996 74.81
- ------------------------------------------------------------------------------------------------------------------------------------
101 53,876 1,052,688 167,734 820,288 1.27 9,000,000 1996 73.09
228 53,145 1,117,043 273,895 809,742 1.27 9,000,000 1996 72.03
155 49,615 1,412,732 628,794 743,712 1.25 8,400,000 1996 72.60
94 50,171 1,349,505 456,725 785,369 1.30 9,500,000 1996 60.79
351 53,325 1,837,040 958,834 878,206 1.37 8,500,000 1996 67.65
- ------------------------------------------------------------------------------------------------------------------------------------
58 45,217 1,402,525 667,872 715,483 1.32 7,200,000 1996 78.80
276 43,564 995,937 368,608 627,329 1.20 7,400,000 1996 76.26
169 48,053 1,974,000 1,130,200 824,144 1.43 7,600,000 1996 72.19
299 51,059 1,766,189 850,597 915,593 1.49 8,400,000 1996 65.03
268 46,487 906,963 160,429 722,557 1.30 8,000,000 1996 66.39
- ------------------------------------------------------------------------------------------------------------------------------------
359 44,805 1,568,907 797,993 680,146 1.27 7,500,000 1996 70.67
342 47,562 4,139,121 3,329,629 809,496 1.42 7,300,000 1996 70.00
350 46,155 1,653,338 902,485 750,853 1.36 8,300,000 1996 59.04
245 38,234 1,209,636 629,315 580,321 1.26 6,200,000 1996 78.89
2 37,594 1,257,903 580,489 625,014 1.39 6,100,000 1996 76.96
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
83 67.76 1959 973/units 39,568.35/ unit 90.70 222,500.00 250 per unit
345 NAP 1985 672/rooms 31,250.00/room NAP 875.00 4% of gross rev.
73 64.68 1971 699/units 26,435.82/ unit 93.20 70,000.00 255 per unit
153 67.32 1995 808,178/sqft 22.72/ /sqft 100.00 0.00 0.05 per sq. ft.
241 63.09 1987 213,552/sqft 80.76//sqft 99.38 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
152 NAP 1972 296,393/sqft 57.27/ /sqft 100.00 3,500.00 0.14 per sq. ft.
56 72.46 1979 223/units 70,351.45/ unit 98.20 7,750.00 225 per unit
307 NAP 1989 200/rooms 73,646.67/room NAP 0.00 4% of gross rev.
278 68.88 1984 334/units 41,982.14//units 99.70 0.00 200 per unit
110 46.04 1959 309,474/sqft 43.96/ /sqft 100.00 39,062.50 0.12 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
204 49.46 1963 229,115/sqft 57.81//sqft 100.00 0.00 0.15 per sq. ft.
271 72.19 1988 100,183/sqft 127.03//sqft 98.51 0.00 0.15 per sq. ft.
277 72.73 1986 282/units 40,619.65//units 99.65 0.00 200 per unit
145 60.60 1995 487,372/sqft 23.07/ /sqft 100.00 0.00 0.05 per sq. ft.
267 70.59 1986 332/units 33,301.99//units 91.87 0.00 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
147 53.77 1990 110,291/sqft 97.92/ /sqft 96.00 6,187.50 0.15 per sq. ft.
159 56.42 1974 200,572/sqft 53.01/ /sqft 95.30 0.00 0.10 per sq. ft.
82 NAP 1972 205/units 49,318.61/ unit 98.05 22,356.25 299 per unit
266 68.77 1986 308/units 32,816.36//units 97.40 0.00 250 per unit
304 29.11 1996 50,000/sqft 199.84//sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
215 76.47 1979 659/units 15,127.98//units 96.16 0.00 225 per unit
302 62.87 1990 660,000/sqft 15.10//sqft 100.00 93,937.50 0.15 per sq. ft.
*108 58.31 1984 60/units 94,895.83/ unit 100.00 16,462.50 295 per unit
*108 1929 57,268/sqft 69.77/ /sqft 98.61 11,125.00 0.29 per sq. ft.
NAP 1984 113/rooms 84,041.38/room NAP 35,875.00 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
303 NAP 1915 256,997/sqft 36.61//sqft 92.93 78,937.50 0.21 per sq. ft.
207
344 64.76 1993 81,168/sqft 115.19//sqft 97.04 0.00 0.15 per sq. ft.
265 62.13 1985 280/units 33,026.82//units 98.57 31,250.00 254 per unit
165 53.24 1986 242/beds 38,124.14/ /bed 90.91 1,935.00 250 per /bed
- ------------------------------------------------------------------------------------------------------------------------------------
264 67.82 1985 292/units 31,060.72//units 94.86 0.00 250 per unit
285 62.50 1972 120,053/sqft 74.88//sqft 93.66 0.00 0.15 per sq. ft.
13 65.24 1974 358/units 25,036.18/ unit 90.70 71,250.00 200 per unit
118 55.41 1968 358,012/sqft 24.21/ /sqft 95.00 188,025.00 0.23 per sq. ft.
57 71.29 1986 96/units 89,493.95/ unit 98.70 6,625.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
243 73.35 1986 425/pad 19,800.16/pad 99.06 12,500.00 50 per pad
173 59.41 1986 103,246/sqft 79.58/ /sqft 93.00 16,250.00 0.10 per sq. ft.
60 71.97 1987 312/units 25,918.68/ unit 91.30 15,225.00 185 per unit
42 65.29 1978 531/units 15,221.56/ unit 93.00 172,187.50 230 per unit
25 67.98 1985 252/units 32,046.60/ unit 96.10 28,750.00 225 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
353 NAP 1978 120/rooms 65,416.67/room NAP 0.00 4% of gross rev.
352 NAP 1969 202/rooms 38,613.86/room NAP 37,187.50 4% of gross rev.
332 62.15 1978 123,473/sqft 61.66//sqft 97.09 359,202.50 0.15 per sq. ft.
306 60.54 1980 72,083/sqft 97.06//sqft 98.50 95,765.00 350 per unit
284 67.90 1980 592/units 11,742.20//units 88.00 48,012.50 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
174 59.88 1984 149/beds 45,560.82/ room 100.00 33,390.00 292 per /bed
300 NAP 1985 132/rooms 51,216.02/room NAP 8,076.25 4% of gross rev.
172 58.89 1980 120,316/sqft 55.09/ /sqft 94.30 18,000.00 0.22 per sq. ft.
164 61.74 1981 39,803/sqft 165.49/ /sqft 100.00 39,042.50 0.29 per sq. ft.
116 65.81 1913 58,557/sqft 112.43/ /sqft 100.00 5,075.00 0.28 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
101 64.04 1987 197,787/sqft 33.26/ /sqft 100.00 0.00 0.10 per sq. ft.
228 64.89 1995 43,000/sqft 150.76//sqft 100.00 0.00 0.15 per sq. ft.
155 68.15 1985 56,540/sqft 107.85/ /sqft 88.00 9,750.00 0.26 per sq. ft.
94 51.07 1964 249,053/sqft 23.19/ /sqft 98.54 143,750.00 0.16 per sq. ft.
351 NAP 1972 120/rooms 47,916.67/room NAP 15,156.25 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
58 73.88 1984 90/units 63,037.46/ unit 98.60 7,618.75 213 per unit
276 71.18 1987 114/units 49,501.51//units 100.00 27,937.50 220 per unit
169 60.70 1986 78/units 70,337.92/ unit 97.43 1,562.50 252 per /bed
299 NAP 1989 89/rooms 61,374.57/room NAP 0.00 4% of gross rev.
268 55.88 1995 45,940/sqft 115.61//sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
359 58.74 1975 120,650/sqft 43.93//sqft 86.74 28,273.75 0.15 per sq. ft.
342 NAP 1984 367/rooms 13,923.71/room NAP 93,862.50 4% of gross rev.
350 NAP 1980 143/rooms 34,265.73/room NAP 0.00 4% of gross rev.
245 76.45 1979 232/units 21,083.28//units 90.52 12,112.50 225 per unit
2 68.90 1972 262/units 17,917.70/ unit 95.21 1,500.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
----------------------------------------------------------------------------------------------------------
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
83 0.1500
345 0.1150
73 0.1500
153 0.1150 Best Buy 808,178
241 0.1350 Price Rite (Anchored by Payless Drug) 60,560
- ------------------------------------------------------------------------------------------------------------------------------------
152 0.1150 Port Authority of New York 296,393
56 0.1150
307 0.1350
278 0.1350
110 0.1650 KMART 100,000
- ------------------------------------------------------------------------------------------------------------------------------------
204 0.1350 Howard & Phil's (Anchored by TJ Maxx; Ralphs Supermarket) 48,000
271 0.1150 General Cinema (Next to Sea-Tac Mall) 32,000
277 0.1350
145 0.1150 Intelligent Electronics, Inc. 487,372
267 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
147 0.1150 Marshalls 35,447
159 0.1150 Decision Support Systems 25,528
82 0.1150
266 0.1150
304 0.1350 Ralphs 50,000
- ------------------------------------------------------------------------------------------------------------------------------------
215 0.1150
302 0.1150 SNE Enterprises 660,000
*108 0.1150
*108 0.1150 BIH Radiologic Foundation 3,620
- ------------------------------------------------------------------------------------------------------------------------------------
0.1350
303 0.1350 Gail Shields 9,748
207 0.1150 Michaels (Anchored by Trader Joe's; Pier 1 Imports; House of Fabrics) 18,000
344 0.1150
265 0.1150
165 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
264 0.1150 Grand Union 33,660
285 0.1500
13 0.1150 Swan Pkg. 107,510
118 0.1150
57 0.1350
- ------------------------------------------------------------------------------------------------------------------------------------
243 0.1150 Publix 39,795
173 0.1150
60 0.1500
42 0.1150
25 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
353 0.1150
352 0.1150 ITT Rayon 43,462
332 0.1150
306 0.1150
284 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
174 0.1350
300 0.1150 Publix 36,464
172 0.1150 The Gap 20,000
164 0.1150 Mercantile Bank & Trust 9,696
116 0.1150 Wal-Mart 101,517
- ------------------------------------------------------------------------------------------------------------------------------------
101 0.1350 DSW Shoe Warehouse ("Shadow"-Walmart; JAM'S) 24,500
228 0.1150 Genovese Drug 11,500
155 0.1150 Belks (Anchored by Winn Dixie) 66,635
94 0.1150
351 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
58 0.1350
276 0.1150
169 0.1350
299 0.1350 David's Bridal 12,600
268 0.1350 Baden, Gage, & Schroeder 14,204
- ------------------------------------------------------------------------------------------------------------------------------------
359 0.1150
342 0.1150
350 0.1150
245 0.1150
2
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- --------------------------------------------------------------------------------
83
345
73
6/25/2016 153
12/31/2008 241
- --------------------------------------------------------------------------------
2/28/2010 152
56
307
278
1/31/2007 110
- --------------------------------------------------------------------------------
1/01/2001 204
11/19/2008 271
277
11/30/2005 145
267
- --------------------------------------------------------------------------------
12/31/2006 147
2/28/1999 159
82
266
9/08/2021 304
- --------------------------------------------------------------------------------
215
6/30/2016 302
*108
3/31/1999 *108
- --------------------------------------------------------------------------------
303
11/30/1998 207
11/02/2005 344
265
165
- --------------------------------------------------------------------------------
264
11/30/2008 285
13
8/31/1997 118
57
- --------------------------------------------------------------------------------
243
2/18/2007 173
60
42
25
- --------------------------------------------------------------------------------
353
352
12/31/2003 332
306
284
- --------------------------------------------------------------------------------
174
300
9/30/2004 172
12/31/2002 164
3/31/2008 116
- --------------------------------------------------------------------------------
6/26/2007 101
7/31/2005 228
1/31/2006 155
7/31/2005 94
351
- --------------------------------------------------------------------------------
58
276
169
299
12/26/2000 268
- --------------------------------------------------------------------------------
2/14/2000 359
342
350
245
2
- --------------------------------------------------------------------------------
Page 1
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
333 Melbourne Village Plaza 1270 North Wickham Road
218 INT-The Lodge Apartments 7600 Kirby
263 Oxford-Runaway Bay II Apartments 1480 Runaway Bay Drive
170 Beverly Hills Carmel Retirement Hotel II 8750 Burton Way
98 Herndon Centre II 460-490 Elden Street
- -----------------------------------------------------------------------------------------------------
176 Woodland Park West Retirement Hotel 21711 Ventura Boulevard
224 INT-Regency Walk Apartments 10301 Sandpiper
252 Belfonti-Greenbriar Hills Apartments 110 Falls Terrace
360 Park Place Shopping Center 3761 Nova Road
49 Orchard Place 1901 Dawson
- -----------------------------------------------------------------------------------------------------
35 Twin Creek 401 South Twin Creek Drive
18 University Place 1205 University Avenue
356 Prospect Plaza 401 Jefferson Street
236 AB - Westgate @ Fairfield 9 Law Drive
61 Nob Hill 600 North Semoran Boulevard
- -----------------------------------------------------------------------------------------------------
89 Skyview 1590 Sky Valley Drive
309 Riverside Shopping Center 2410 Riverside Drive
171 Charlotte Square 2150 US 41
88 Skyline 1570 Sky Valley Drive
324 CAP-Knollwood Apartments Knollwood Acres Road
- -----------------------------------------------------------------------------------------------------
*29 Laurel Woods 1096 Green Holly Road
*30 Morgan Manor 124 Mountain View Way
- -----------------------------------------------------------------------------------------------------
297 Rancho Niguel Medical Building 25500 Rancho Niguel Road
27 Cedar Village 217 Cedar Village Drive
240 West Palm Industrial Park 501-635 West Palm Avenue
163 7 Star Mobile Home Park 170 Koontz Lane
4 Charter Oaks 8196 Lincoln Avenue
- -----------------------------------------------------------------------------------------------------
200 AB - Sixty-Five Madison Avenue 65 Madison Avenue
275 KFS-Citrus Sunset Apartments 1280 North Citrus Avenue
67 Stratford Village 14222 Kimberly Lane
65 Colonial Arms 19 East Colonial Drive
313 Parker Plaza West 2109 West Parker Road
- -----------------------------------------------------------------------------------------------------
80 Gregory Apartments 3300 16th Street
140 SMC 360 9860 West Broad St.
201 JMA - Ashford On The Green Apts. 2700 S. Dairy Ashford
210 INT-Deer Creek Apartments 16303 Imperial Valley Drive
202 Belmont Square Apts. 2020 Jerry Murphy Road
- -----------------------------------------------------------------------------------------------------
229 Shiloh Road Apartments 1717 Shiloh Road
326 The Branson Mall 2206 West State Hwy. 76
225 Southgate Apartments & Townhouses 801A Southgate Drive
141 SMC 348 1300 Huguenot Road
336 Naugatuck Industrial 50 Rado Drive
- -----------------------------------------------------------------------------------------------------
70 Desert Palms 210 West Brown Road
334 Comfort Inn - Panama City 1023 East 23rd Street
135 SMC 353 17727 Tomball Parkway
9 Rolling Hills 280 John Knox Road
137 SMC 276 600 E. Expressway 83
- -----------------------------------------------------------------------------------------------------
244 SHL - San Antonio Station Apts. 7458 Louis Pasteur
8 Northside Villas 2711 Allen Road
148 Rivers Park Business Center - Phase II 8085 Rivers Avenue
274 KFS-Sunset Pointe Apartments 465 West Clemmens Lane
227 Seneca Village Apartments 3201 East Seneca St.
- -----------------------------------------------------------------------------------------------------
234 1212 Westheimer Apartments 1212 Westheimer
144 Tarzana Town Plaza 18607 Ventura Boulevard
68 Royal Sheridan 4200 Sheridan Street
335 Cooper Park Apartments 812 Cooper Square Circle
283 Pioneer Way Industrial Park 1035 Pioneer Way
- -----------------------------------------------------------------------------------------------------
134 SMC 359 11250 N. Central Expressway
362 Promenade Center 4440 South Maryland Parkway
121 SMC 202 1380 N. Dupont Hway
131 SMC 389 4701 Capitol Blvd
120 SMC 316 3563 Berlin Turnpike
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
333 Melbourne FL 32935 4,600,000 4,600,000 0.40 54.45
218 Houston TX 77030 4,553,500 4,539,539 0.40 54.85
263 Columbus OH 43204 4,522,000 4,516,388 0.40 55.25
170 Beverly Hills CA 90048 4,500,000 4,488,838 0.39 55.64
98 Herndon VA 22070 4,433,000 4,404,270 0.39 56.03
- -----------------------------------------------------------------------------------------------------
176 Woodland Hills CA 91364 4,375,000 4,371,560 0.38 56.41
224 Houston TX 77096 4,360,000 4,346,632 0.38 56.79
252 Watertown CT 06779 4,350,000 4,334,408 0.38 57.17
360 Port Orange FL 32119 4,300,000 4,300,000 0.38 57.55
49 Grand Rapids MI 48116 4,300,000 4,291,528 0.38 57.93
- -----------------------------------------------------------------------------------------------------
35 Kileen TX 76543 4,300,000 4,288,323 0.38 58.30
18 Columbia MO 65201 4,200,000 4,182,329 0.37 58.67
356 Frederick MD 21701 4,155,000 4,151,722 0.36 59.04
236 Fairfield NJ 07004 4,163,000 4,142,239 0.36 59.40
61 Winter Park FL 32792 4,043,000 4,036,557 0.35 59.76
- -----------------------------------------------------------------------------------------------------
89 Reno NV 89503 4,027,000 4,024,768 0.35 60.11
309 Austin TX 78741 4,000,000 4,000,000 0.35 60.46
171 Port Charlotte FL 33948 3,940,000 3,934,683 0.35 60.81
88 Reno NV 89503 3,893,000 3,890,842 0.34 61.15
324 Storrs CT 06268 3,828,000 3,824,423 0.34 61.48
- -----------------------------------------------------------------------------------------------------
*29 Clark Summit PA 18411 1,488,000 1,481,536 0.13
*30 Scranton PA 18508 2,325,000 2,314,900 0.20
--------------------------------------
3,813,000 3,796,437 0.33 61.82
- -----------------------------------------------------------------------------------------------------
297 Laguna Niguel CA 92677 3,739,000 3,739,000 0.33 62.15
27 York PA 17402 3,750,000 3,737,351 0.33 62.47
240 Orange CA 92666 3,735,000 3,721,788 0.33 62.80
163 Carson City NV 89701 3,700,000 3,693,906 0.32 63.13
4 Evansville IN 47715 3,700,000 3,685,530 0.32 63.45
- -----------------------------------------------------------------------------------------------------
200 Morristown NJ 07960 3,691,000 3,672,470 0.32 63.77
275 Vista CA 92083 3,660,000 3,655,577 0.32 64.09
67 Houston TX 77079 3,654,000 3,654,000 0.32 64.41
65 New Paltz NY 12561 3,525,000 3,518,085 0.31 64.72
313 Plano TX 75080 3,500,000 3,500,000 0.31 65.03
- -----------------------------------------------------------------------------------------------------
80 Washington DC 20010 3,500,000 3,497,649 0.31 65.34
140 Glen Allen VA 23060 3,447,000 3,447,000 0.30 65.64
201 Houston TX 77082 3,450,000 3,444,410 0.30 65.94
210 Houston TX 77060 3,326,100 3,315,902 0.29 66.23
202 Pueblo CO 81001 3,320,300 3,313,276 0.29 66.53
- -----------------------------------------------------------------------------------------------------
229 Tyler TX 75703 3,320,000 3,310,526 0.29 66.82
326 Branson MO 65616 3,300,000 3,300,000 0.29 67.11
225 State College PA 16801 3,300,000 3,294,597 0.29 67.40
141 Midlothian VA 23113 3,220,000 3,220,000 0.28 67.68
336 Naugatuck CT 06770 3,211,000 3,211,000 0.28 67.96
- -----------------------------------------------------------------------------------------------------
70 Mesa AZ 85201 3,175,000 3,169,758 0.28 68.24
334 Panama City FL 32405 3,161,000 3,161,000 0.28 68.52
135 Houston TX 77064 3,110,000 3,110,000 0.27 68.79
9 Tallahassee FL 32303 3,108,000 3,086,899 0.27 69.06
137 McAllen TX 78503 3,073,000 3,073,000 0.27 69.33
- -----------------------------------------------------------------------------------------------------
244 San Antonio TX 78229 3,030,000 3,024,633 0.27 69.60
8 Tallahassee FL 32312 3,036,000 3,019,787 0.27 69.86
148 North Charleston SC 29406 3,000,000 3,000,000 0.26 70.13
274 Fallbrook CA 92028 3,000,000 2,996,375 0.26 70.39
227 Tucson AZ 85716 3,000,000 2,995,139 0.26 70.65
- -----------------------------------------------------------------------------------------------------
234 Austin TX 78752 2,990,000 2,982,058 0.26 70.91
144 Tarzana CA 91356 2,973,000 2,973,000 0.26 71.18
68 Hollywood FL 33021 2,950,000 2,944,042 0.26 71.43
335 Arlington TX 76013 2,920,000 2,918,470 0.26 71.69
283 El Cajon CA 92020 2,900,000 2,894,790 0.25 71.94
- -----------------------------------------------------------------------------------------------------
134 Dallas TX 75243 2,885,000 2,885,000 0.25 72.20
362 Las Vegas NV 89119 2,870,000 2,870,000 0.25 72.45
121 Dover DE 19901 2,848,000 2,848,000 0.25 72.70
131 Raleigh NC 27604 2,848,000 2,848,000 0.25 72.95
120 Newington CT 06111 2,810,000 2,810,000 0.25 73.20
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
333 8.7700 120 120 324 324 10/9/96 11/1/06 3,938,259
218 8.5100 60 55 360 355 5/8/96 6/1/01 4,352,695
263 8.4000 120 118 360 358 8/20/96 9/1/06 4,005,266
170 9.5000 120 117 300 297 7/3/96 8/1/06 3,774,558
98 8.9100 120 113 300 293 3/29/96 4/1/06 3,669,907
- ----------------------------------------------------------------------------------------------------------------------
176 9.7500 120 119 300 299 9/19/96 10/1/06 3,689,268
224 8.5100 60 55 360 355 5/8/96 6/1/01 4,167,728
252 9.0400 120 116 300 296 6/28/96 7/1/06 3,611,870
360 8.6700 120 120 324 324 10/9/96 11/1/06 3,673,575
49 9.5500 300 296 360 356 6/28/96 7/1/21 1,749,452
- ----------------------------------------------------------------------------------------------------------------------
35 9.1000 120 115 360 355 5/24/96 6/1/06 3,857,989
18 9.0625 120 114 330 324 4/26/96 5/1/06 3,645,823
356 9.7300 84 83 300 299 9/20/96 10/1/03 3,768,950
236 9.5400 120 114 300 294 4/30/96 5/1/06 3,494,890
61 9.1700 84 81 360 357 7/9/96 8/1/03 3,797,252
- ----------------------------------------------------------------------------------------------------------------------
89 8.9300 360 359 360 359 9/25/96 10/1/26 NAP
309 9.1700 180 180 180 180 10/9/96 11/1/11 NAP
171 9.1875 173 171 330 328 8/22/96 2/1/11 3,001,552
88 8.9300 360 359 360 359 9/25/96 10/1/26 NAP
324 8.7200 84 83 300 299 9/30/96 10/1/03 3,422,474
- ----------------------------------------------------------------------------------------------------------------------
*29 9.2500 120 115 300 295 5/20/96 6/1/06 1,241,326
*30 9.2500 120 115 300 295 5/20/96 6/1/06 1,939,572
---------
3,180,898
- ----------------------------------------------------------------------------------------------------------------------
297 9.1100 120 120 330 330 10/8/96 11/1/06 3,248,722
27 9.2500 120 115 330 325 5/20/96 6/1/06 3,267,274
240 9.1200 120 116 300 296 6/4/96 7/1/06 3,106,819
163 9.5000 120 118 300 298 8/28/96 9/1/06 3,103,525
4 9.0000 120 113 360 353 3/15/96 4/1/06 3,313,818
- ----------------------------------------------------------------------------------------------------------------------
200 9.5000 120 114 300 294 4/30/96 5/1/06 3,095,976
275 8.5300 84 82 360 358 8/26/96 9/1/03 3,411,934
67 9.0500 84 84 360 360 10/24/96 11/1/03 3,427,280
65 9.3750 120 117 330 327 7/15/96 8/1/06 3,078,683
313 8.9900 120 120 300 300 10/2/96 11/1/06 2,902,809
- ----------------------------------------------------------------------------------------------------------------------
80 9.1900 120 119 330 329 9/3/96 10/1/06 3,045,873
140 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
201 9.0900 120 117 360 357 7/1/96 8/1/06 3,094,821
210 8.5100 60 55 360 355 5/8/96 6/1/01 3,179,422
202 9.2100 120 116 360 356 6/11/96 7/1/06 2,984,693
- ----------------------------------------------------------------------------------------------------------------------
229 8.8600 60 55 360 355 5/9/96 6/1/01 3,182,577
326 9.1400 120 120 300 300 10/2/96 11/1/06 2,746,211
225 9.0400 120 117 360 357 7/3/96 8/1/06 2,957,661
141 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
336 9.2200 120 120 300 300 10/9/96 11/1/06 2,676,915
- ----------------------------------------------------------------------------------------------------------------------
70 9.0000 300 297 360 357 7/31/96 8/1/21 1,246,869
334 10.3400 240 240 240 240 10/4/96 11/1/16 NAP
135 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
9 8.6250 84 77 300 293 3/29/96 4/1/03 2,774,722
137 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
244 8.6600 48 45 360 357 7/1/96 8/1/00 2,931,045
8 8.6250 84 77 330 323 3/29/96 4/1/03 2,779,925
148 9.0625 120 120 180 180 10/4/96 11/1/06 1,488,349
274 8.5300 84 82 360 358 8/26/96 9/1/03 2,796,667
227 9.0900 120 117 360 357 7/15/96 8/1/06 2,691,149
- ----------------------------------------------------------------------------------------------------------------------
234 9.0900 120 117 300 297 7/16/96 8/1/06 2,485,443
144 9.8125 120 120 330 330 10/8/96 11/1/06 2,617,914
68 9.2200 120 117 330 327 7/29/96 8/1/06 2,568,748
335 9.2000 240 239 360 359 9/18/96 10/1/16 1,881,460
283 8.9800 120 118 300 298 8/30/96 9/1/06 2,404,638
- ----------------------------------------------------------------------------------------------------------------------
134 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
362 9.0000 84 84 330 330 10/9/96 11/1/03 2,641,077
121 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
131 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
120 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- -----------------------
333 Anchored Retail
218 Multifamily
263 Multifamily
170 Congregate Care
98 Unanchored Retail
- -----------------------
176 Congregate Care
224 Multifamily
252 Multifamily
360 Anchored Retail
49 Sec. 42
- -----------------------
35 Multifamily
18 Multifamily
356 Unanchored Retail
236 Office
61 Multifamily
- -----------------------
89 Sec. 42
309 Anchored Retail
171 Anchored Retail
88 Sec. 42
324 Multifamily
- -----------------------
*29 Multifamily
*30 Multifamily
- -----------------------
297 Office
27 Multifamily
240 Industrial
163 Mobile Home Park
4 Multifamily
- -----------------------
200 Office
275 Multifamily
67 Multifamily
65 Multifamily
313 Anchored Retail
- -----------------------
80 Multifamily
140 Anchored Retail
201 Multifamily
210 Multifamily
202 Multifamily
- -----------------------
229 Multifamily
326 Anchored Retail
225 Multifamily
141 Unanchored Retail
336 Industrial
- -----------------------
70 Sec. 42
334 Hospitality
135 Anchored Retail
9 Multifamily
137 Anchored Retail
- -----------------------
244 Multifamily
8 Multifamily
148 Office
274 Multifamily
227 Multifamily
- -----------------------
234 Multifamily
144 Unanchored Retail
68 Multifamily
335 Multifamily
283 Industrial
- -----------------------
134 Anchored Retail
362 Unanchored Retail
121 Unanchored Retail
131 Anchored Retail
120 Anchored Retail
- -----------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
333 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
218 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
263 5.167 yrs lock, >1% or YM through yr 9 7/12, open last 5 months
170 4 yr lock, >1% or YM through yr 9, open last 12 mos
98 5 yr lock, >1% or YM through yr 8, open last 2 yrs.
- ----------------------------------------------------------------------------------------------------------------------------
176 4 yr lock, >1% or YM through yr 9, open last 12 mos
224 3 yr lock >1% or YM through yr 4 3/4, open last 3 months
252 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
360 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
49 15 yr lock, open last 10 years
- ----------------------------------------------------------------------------------------------------------------------------
35 2 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
18 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
356 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
236 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
61 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
89 5 yr lock, >1% or YM through yr 15, open last 15 years
309 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
171 5 yr lock, >1% or YM through yr 10, 4%, 3%, 2%-yr 13 and 5 mos,open last 12 mos
88 5 yr lock, >1% or YM through yr 15, open last 15 years
324 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
*29 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
*30 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
297 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
27 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
240 5 yr lock, yearly @ 5%, 4, 3, 2, 9mos @ 1%, open last 3 months
163 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
4 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
200 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
275 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
67 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
65 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
313 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
80 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
140 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
201 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
210 3 yr lock, > 1% or YM through yr 4 3/4, open last 3 months
202 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
229 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @1%, open last 3 months
326 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
225 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
141 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
336 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
70 15 yr lock, open last 10 years
334 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
135 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
9 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
137 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
244 2.5 yr lock, >1% or YM through yr 3 3/4, open last 3 months
8 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
148 4 yr lock, >1% or YM through yr 9, open last 12 mos
274 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
227 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
234 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
144 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
68 3 yr lock, >1% or YM through yr 9, open last 12 mos
335 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
283 4 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
134 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
362 4.25 yr lock, >1% or Ym through yr 6 1/2, open last 6 months
121 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
131 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
120 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
333 37,126 904,140 268,554 608,109 1.36 6,150,000 1996 74.80
218 35,045 1,196,385 691,738 532,177 1.27 6,200,000 1996 73.22
263 34,450 887,254 363,082 524,172 1.27 5,880,000 1996 76.81
170 39,316 1,915,200 1,220,260 667,190 1.41 6,390,000 1996 70.25
98 36,929 882,790 259,259 583,048 1.32 6,500,000 1996 67.76
- ---------------------------------------------------------------------------------------------------------------------------------
176 38,987 1,697,400 1,007,870 652,630 1.39 10,000,000 1996 43.72
224 33,556 1,472,099 942,083 530,016 1.32 5,450,000 1996 79.75
252 36,624 1,220,311 628,120 592,190 1.35 5,750,000 1996 75.38
360 34,407 811,680 264,869 516,319 1.25 5,845,000 1996 73.57
49 36,314 841,782 299,165 518,467 1.19 5,280,000 1996 81.28
- ---------------------------------------------------------------------------------------------------------------------------------
35 34,909 1,056,613 467,854 553,879 1.32 6,000,000 1995 71.47
18 34,609 1,148,712 526,678 571,634 1.38 5,900,000 1995 70.89
356 36,969 981,301 300,374 621,925 1.40 7,850,000 1996 52.89
236 36,488 1,044,079 428,589 547,534 1.25 5,900,000 1996 70.21
61 33,027 1,104,479 541,814 520,233 1.31 6,007,000 1996 67.20
- ---------------------------------------------------------------------------------------------------------------------------------
89 32,200 729,926 251,490 463,436 1.20 4,950,000 1996 81.31
309 40,976 1,181,445 407,945 735,575 1.50 7,400,000 1996 54.05
171 32,814 746,318 203,887 502,607 1.28 5,400,000 1996 72.86
88 31,128 707,541 251,495 441,046 1.18 4,700,000 1996 82.78
324 31,394 759,017 288,069 470,948 1.25 5,600,000 1996 68.29
- ---------------------------------------------------------------------------------------------------------------------------------
*29 32,654 528,756 290,744 216,761 1.43 2,000,000 1996 74.44
*30 748,396 369,741 342,047 3,100,000 1996
1,277,152 660,485 558,808 5,100,000
- ---------------------------------------------------------------------------------------------------------------------------------
297 30,935 730,011 186,525 464,026 1.25 5,975,000 1996 62.58
27 31,397 1,134,278 594,352 484,176 1.29 5,000,000 1996 74.75
240 31,651 719,196 173,063 503,528 1.33 4,980,000 1995 74.73
163 32,327 662,436 156,874 499,982 1.29 5,230,000 1996 70.63
4 29,771 973,975 458,815 476,760 1.33 5,800,000 1995 63.54
- ---------------------------------------------------------------------------------------------------------------------------------
200 32,248 1,192,332 630,622 483,723 1.25 5,950,000 1996 61.72
275 28,220 728,969 291,114 437,855 1.29 4,800,000 1996 76.16
67 29,532 1,053,550 578,355 443,469 1.25 5,175,000 1996 70.61
65 29,826 1,497,663 952,683 489,610 1.37 5,700,000 1996 61.72
313 29,348 714,879 219,291 441,828 1.25 5,450,000 1996 64.22
- ---------------------------------------------------------------------------------------------------------------------------------
80 29,156 1,032,453 521,391 474,162 1.36 4,800,000 1996 72.87
140 35,528 569,412 8,991 534,387 1.25 6,200,000 1996 55.60
201 27,983 1,041,110 618,304 422,806 1.26 5,000,000 1996 68.89
210 25,598 1,118,707 750,084 368,622 1.20 4,200,000 1996 78.95
202 27,219 778,789 386,827 391,962 1.20 4,500,000 1996 73.63
- ---------------------------------------------------------------------------------------------------------------------------------
229 26,380 768,188 381,102 387,086 1.22 4,150,000 1996 79.77
326 28,011 795,788 237,894 527,275 1.57 4,650,000 1996 70.97
225 26,648 1,005,788 613,285 392,503 1.23 4,300,000 1996 76.62
141 33,188 532,226 8,404 498,806 1.25 5,950,000 1996 54.12
336 27,432 629,985 218,489 411,496 1.25 4,300,000 1996 74.67
- ---------------------------------------------------------------------------------------------------------------------------------
70 25,547 626,291 242,585 366,906 1.20 4,700,000 1996 67.44
334 31,220 1,464,934 954,068 510,867 1.36 4,550,000 1996 69.47
135 32,054 514,351 8,121 481,384 1.25 5,750,000 1996 54.09
9 25,289 760,093 346,117 387,176 1.28 4,000,000 1996 77.17
137 31,673 508,669 8,032 475,112 1.25 5,750,000 1996 53.44
- ---------------------------------------------------------------------------------------------------------------------------------
244 23,643 824,116 477,117 346,999 1.22 4,050,000 1996 74.68
8 24,088 795,144 389,588 360,597 1.25 4,350,000 1996 69.42
148 30,540 598,844 98,125 494,875 1.35 4,300,000 1996 69.77
274 23,131 567,545 227,162 340,383 1.23 3,800,000 1996 78.85
227 24,333 1,039,663 574,514 465,149 1.59 5,200,000 1996 57.60
- ---------------------------------------------------------------------------------------------------------------------------------
234 25,277 1,079,655 715,956 363,699 1.20 4,200,000 1996 71.00
144 26,086 696,185 249,309 406,936 1.30 4,140,000 1996 71.81
68 24,637 768,725 356,302 392,423 1.33 4,050,000 1996 72.69
335 23,916 986,676 622,885 363,791 1.27 4,200,000 1996 69.49
283 24,297 523,677 113,696 387,048 1.33 4,300,000 1996 67.32
- ---------------------------------------------------------------------------------------------------------------------------------
134 29,735 476,885 7,530 446,875 1.25 5,100,000 1996 56.57
362 23,523 631,935 222,400 387,258 1.37 4,100,000 1996 70.00
121 29,354 470,491 7,429 441,490 1.25 5,150,000 1996 55.30
131 29,354 470,623 7,431 441,326 1.25 5,000,000 1996 56.96
120 28,962 464,389 7,332 435,380 1.25 5,650,000 1996 49.73
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
333 64.04 1988 128,318/sqft 35.85/sqft 85.82 13,000.00 0.15 per sq. ft.
218 70.20 1977 240/units 18,914.75/units 90.83 0.00 225 per unit
263 68.12 1986 132/units 34,215.06/units 92.42 0.00 284 per unit
170 59.07 1975 111/units 40,439.98/ unit 92.79 3,843.75 250 per bed
98 56.46 1978 50,708/sqft 86.86/sqft 98.52 2,875.00 0.16 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
176 36.89 1978 164/beds 26,655.85/ bed 100.00 39,525.00 225 per bed
224 76.47 1979 320/units 13,583.23/units 96.30 0.00 225 per unit
252 62.82 1973 182/units 23,815.43/units 96.70 41,000.00 250 per unit
360 62.85 1984 87,386/sqft 49.21/sqft 97.17 13,414.00 0.20 per sq. ft.
49 33.13 1995 138/units 31,098.03/ unit 97.83 61,302.00 175 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
35 64.30 1984 160/units 26,802.02/ unit 90.63 18,250.00 218 per unit
18 61.79 1966 168/units 24,894.81/ unit 96.00 19,375.00 300 per unit
356 48.01 1962 109,651/sqft 37.86/sqft 93.82 27,156.25 0.15 per sq. ft.
236 59.24 1989 65,949/sqft 62.81/sqft 100.00 17,500.00 0.15 per sq. ft.
61 63.21 1969 192/units 21,023.73/ unit 97.26 318,750.00 221 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
89 NAP 1994 100/units 40,247.68/ unit 99.00 0.00 150 per unit
309 NAP 1986 101,408/sqft 39.44/sqft 89.49 33,465.00 0.20 per sq. ft.
171 55.58 1980 96,188/sqft 40.91/sqft 98.30 174,125.00 0.22 per sq. ft.
88 NAP 1994 100/units 38,908.42/ unit 94.50 0.00 150 per unit
324 61.12 1964 136/units 28,120.76/units 97.79 0.00 280 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
*29 62.37 1972 85/units 17,429.84/ unit 97.61 161,397.50 250 per unit
*30 1972 128/units 18,085.16/ unit 94.87 108,000.00 286 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
297 54.37 1990 29,270/sqft 127.74/sqft 83.38 0.00 0.15 per sq. ft.
27 65.35 1970 223/units 16,759.42/ unit 87.87 62,531.25 250 per unit
240 62.39 1923 194,274/sqft 19.16/sqft 100.00 15,375.00 0.15 per sq. ft.
163 59.34 1973 180/pads 20,555.56/ pad 100.00 2,812.50 31 per pad
4 57.13 1984 192/units 19,195.47/ unit 95.00 1,620.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
200 52.03 1975 80,194/sqft 45.79/sqft 82.50 11,587.50 0.26 per sq. ft.
275 71.08 1985 97/units 37,686.36/units 100.00 50,000.00 225 per unit
67 66.23 1974 135/units 27,066.67/ unit 97.04 230,477.50 235 per unit
65 54.01 1970 226/units 15,566.75/ unit 92.04 215,000.00 245 per unit
313 53.26 1979 99,588/sqft 35.14/sqft 97.28 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
80 63.46 1965 164/units 21,327.13/ unit 89.50 21,531.25 225 per unit
140 NAP 1993 60,200/sqft 57.26/sqft 100.00 2,000.00 0.10 per sq. ft.
201 61.90 1982 180/units 19,135.61/units 93.89 22,643.75 250 per unit
210 75.70 1978 304/units 10,907.57/units 90.79 0.00 225 per unit
202 66.33 1973 138/units 24,009.25/units 97.62 23,343.75 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
229 76.69 1979 160/units 20,690.79/units 96.25 0.00 225 per unit
326 59.06 1989 46,524/sqft 70.93/sqft 100.00 0.00 0.15 per sq. ft.
225 68.78 1968 151/units 21,818.52/units 99.34 58,500.00 275 per unit
141 NAP 1993 59,195/sqft 54.40/sqft 100.00 1,625.00 0.10 per sq. ft.
336 62.25 1988 104,613/sqft 30.69/sqft 100.00 23,875.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
70 26.53 1995 96/units 33,018.31/ unit 97.60 0.00 175 per unit
334 NAP 1987 105/rooms 30,104.76/room NAP 30,031.25 4% of gross rev.
135 NAP 1993 60,075/sqft 51.77/sqft 100.00 0.00 0.10 per sq. ft.
9 69.37 1972 134/units 23,036.56/ unit 93.90 56,250.00 200 per unit
137 NAP 1993 63,500/sqft 48.39/sqft 100.00 0.00 0.10 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
244 72.37 1978 172/units 17,585.08/units 91.28 36,437.50 250 per unit
8 63.91 1974 160/units 18,873.67/ unit 93.00 10,000.00 281 per unit
148 34.61 1984 58,444/sqft 51.33/sqft 100.00 26,823.00 0.10 per sq. ft.
274 73.60 1988 76/units 39,425.98/units 100.00 0.00 200 per unit
227 51.75 1973 176/units 17,017.83/units 89.77 262,071.25 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
234 59.18 1968 199/units 14,985.22/units 98.99 66,762.50 309 per unit
144 63.23 1986 37,208/sqft 79.90/sqft 100.00 24,750.00 0.11 per sq. ft.
68 63.43 1974 100/units 29,440.42/ unit 100.00 0.00 200 per unit
335 44.80 1979 180/units 16,213.72/units 95.55 31,528.75 269 per unit
283 55.92 1980 95,427/sqft 30.34/sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
134 NAP 1994 53,316/sqft 54.11/sqft 100.00 1,625.00 0.10 per sq. ft.
362 64.42 1978 39,166/sqft 73.28/sqft 97.06 0.00 0.15 per sq. ft.
121 NAP 1992 50,000/sqft 56.96/sqft 100.00 1,875.00 0.10 per sq. ft.
131 NAP 1994 51,250/sqft 55.57/sqft 100.00 2,750.00 0.10 per sq. ft.
120 NAP 1994 51,000/sqft 55.10/sqft 100.00 3,875.00 0.10 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Largest Retail Tenant
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
333 0.1350 Gooding's supermkt (Guaranteed by A&P) 57,500
218 0.1150
263 0.1150
170 0.1150
98 0.1150 Total Crafts 24,989
- ------------------------------------------------------------------------------------------------------------------------------------
176 0.1150
224 0.1150
252 0.1150
360 0.1350 Beall's Dept Store 41,077
49 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
35 0.1500
18 0.1500
356 0.1150 Hub Furniture 27,392
236 0.1350 Duro-Test Corporation 34,639
61 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
89 0.1150
309 0.1350 Presidio Theater ("Shadow"-HEB Supermarket) 30,277
171 0.1150 Publix 44,024
88 0.1150
324 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
*29 0.1150
*30 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
297 0.1350 South Coast Medical 8,784
27 0.1150
240 0.1350 St. Joseph Hospital 37,156
163 0.1150
4 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
200 0.1350 United Jersey Bank 8,944
275 0.1350
67 0.2000
65 0.1500
313 0.1150 Burrurk/Ross 35,320
- ------------------------------------------------------------------------------------------------------------------------------------
80 0.1150
140 0.1150 Service Merchandise Inc. 60,200
201 0.1350
210 0.1150
202 0.1150
- ------------------------------------------------------------------------------------------------------------------------------------
229 0.1150
326 0.1150 Craft Country ("Shadow"-Walmart; Consumers Food/Drug) 8,563
225 0.1150
141 0.1150 Service Merchandise Inc. 59,195
336 0.1150 Fabricated Metal Prod. 62,963
- ------------------------------------------------------------------------------------------------------------------------------------
70 0.1150
334 0.1150
135 0.1150 Service Merchandise Inc. 60,075
9 0.1150
137 0.1150 Service Merchandise Inc. ("Shadow"-Office Max; Petsmart) 63,500
- ------------------------------------------------------------------------------------------------------------------------------------
244 0.1150
8 0.1150
148 0.1150 Medaphis, Inc. 58,444
274 0.1350
227 0.1350
- ------------------------------------------------------------------------------------------------------------------------------------
234 0.1150
144 0.1150 Hypnosis Motivation 7,216
68 0.1150
335 0.1150
283 0.1350 Auto Parts Club 42,736
- ------------------------------------------------------------------------------------------------------------------------------------
134 0.1150 Service Merchandise Inc. ("Shadow"-Albertson's) 53,316
362 0.1350 Kinko-s Graphics 4,782
121 0.1150 Service Merchandise Inc. 50,000
131 0.1150 Service Merchandise Inc. ("Shadow"-Target; Lowes) 51,250
120 0.1150 Service Merchandise Inc. 51,000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- ----------------------------------------------------------------------------
12/18/2008 333
218
263
170
12/31/2005 98
- ----------------------------------------------------------------------------
176
224
252
12/31/2004 360
49
- ----------------------------------------------------------------------------
35
18
1/31/1998 356
6/30/1999 236
61
- ----------------------------------------------------------------------------
89
12/31/2001 309
1/31/2011 171
88
324
- ----------------------------------------------------------------------------
*29
*30
- ----------------------------------------------------------------------------
10/31/2000 297
27
4/30/2002 240
163
4
- ----------------------------------------------------------------------------
11/01/2005 200
275
67
65
9/27/2004 313
- ----------------------------------------------------------------------------
80
11/30/2011 140
201
210
202
- ----------------------------------------------------------------------------
229
10/31/2000 326
225
11/30/2011 141
8/30/2014 336
- ----------------------------------------------------------------------------
70
334
11/30/2011 135
9
11/30/2011 137
- ----------------------------------------------------------------------------
244
8
6/30/2011 148
274
227
- ----------------------------------------------------------------------------
234
2/17/1999 144
68
335
4/30/2001 283
- ----------------------------------------------------------------------------
11/30/2011 134
12/31/1999 362
11/30/2011 121
11/30/2011 131
11/30/2011 120
- ----------------------------------------------------------------------------
Page 2
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
122 SMC 452 260 Jimmy Ann Drive
81 Sutton Place 6838 Everhart Road
125 SMC 343 123 South Kingston Drive
24 Courtyard at Glenview (Manchester Arms) 2035 Memorial Drive
127 SMC 441 6502 Grape Road
- -----------------------------------------------------------------------------------------------------
133 SMC 259 9333 Kingston Pike
126 SMC 309 5501 Coldwater Road
130 SMC 532 7368 Nankin Road
312 Parkridge Village Apartments 5252 Orange Avenue
21 Hillcrest 105 West Avenue & Hillcrest Drive
- -----------------------------------------------------------------------------------------------------
158 Palmdale Marketplace 4500 Avenue S
139 SMC 277 6161 Northwest Loop 410
331 Holiday Inn Express 4100 Salida Blvd
156 Comfort Inn - Mt. Airy 2136 Rockford Street
1 Park Victoria 2312 Victoria Drive
- -----------------------------------------------------------------------------------------------------
106 Rhodes Furniture Store 4363 Northeast Expressway
136 SMC 042 2665 HWY 6 South
330 911 North Buffalo Drive 911 North Buffalo Drive
226 Scripps Mesa Apartments 9961 Erma Road
149 Normandy Village 7764 Normandy Boulevard
- -----------------------------------------------------------------------------------------------------
17 Park View 3101 East Artesia Boulevard
168 Comfort Inn - Simpsonville 600 Fairview Rd. / I-385, Exit 27
316 Howard Johnson - Delk Road 2375 Delk Road
295 Westside Apartments 2647 Broadway
45 Palm Cove 950 W. Main St.
- -----------------------------------------------------------------------------------------------------
251 Glenbrook Townhomes 600 West Pioneer Parkway
258 Berkeley Heights Grand Union 396 Springfield Avenue
358 Casa Claire Apartments 1125 Hillcrest Street
223 Ralston Plaza Ward Rd. & 64th Ave.
232 EW - Sorrento Creek Industrial Park 10350-60 Sorrento Valley Road
- -----------------------------------------------------------------------------------------------------
16 Turtle Place 455 Eastdale Road South
262 22601 Pacific Coast Highway Ctr 22601 Pacific Coast Highway
273 KFS-Sunset Terrace Apartments 1456 Alturas Street
12 Wellington Place 10803 Green Creek Drive
43 Jennifer Green 741 Park Avenue
- -----------------------------------------------------------------------------------------------------
281 Cedar Grove Mobile Home Park 1A Whippoorwill Way
132 SMC 190 5537 N.W. Expressway
253 Wilshire Villa Apartments 4245 5th Avenue South
209 Crosby Creek 1300 E. Crosby Road
66 Lakeview Commons 15205-15235 18th Avenue North
- -----------------------------------------------------------------------------------------------------
339 Twin Parks Estates 800 West Harris Road
51 Candleridge Park 1601 Wooded Pine
296 Days Inn South 2850 South Circle Drive
128 SMC 214 1636 Martin Luther King Blvd.
138 SMC 440 1300 E. Beltline Road
- -----------------------------------------------------------------------------------------------------
113 Park Forest Office Building 3530 Forest Lane
50 Country Wood 791 Bateswood Drive
292 Multiflex VI 2540 Alamo, S.E. & 2500 Yale Blvd. S.E
23 Parkwood Lofts II 4231 Travis Street
349 Comfort Inn Sugar Creek 5111 North Service Road
- -----------------------------------------------------------------------------------------------------
293 JF Commons West 107 The Commons
269 Cordele Corners Shopping Center 1411 East 16th Avenue
75 Clearlake Village 1239 Bay Area Boulevard
270 Vista Gardens Apartments 555 East Fruitvale
53 Art Museum 1705 Art Museum Drive
- -----------------------------------------------------------------------------------------------------
47 Merrifield 1027-A Adams Avenue
142 Sigo Shopping Center 205 East Oneida Street
259 College Park Apartments S.R. 696 (North Earl Street)
260 Homestead Lodge 13300 York Center Drive
249 Marigold I Apartments 2303 Goliad Road
- -----------------------------------------------------------------------------------------------------
59 Ridgeview 350 Six Flags Drive
22 Fountain Place 920 S. Washington Ave
346 Chapel Creek Apartments 3410 Hilalgo
357 Glenwood Village S.C. 12611 Montgomery Boulevard
175 Village Shopping Center 19609 NW 57th Ave.
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
122 Daytona Beach FL 32114 2,810,000 2,810,000 0.25 73.44
81 Corpus Christi TX 78413 2,800,000 2,798,096 0.25 73.69
125 Bloomington IN 47408 2,773,000 2,773,000 0.24 73.93
24 Atlanta GA 30317 2,750,000 2,738,054 0.24 74.17
127 Mishawaka IN 46545 2,735,000 2,735,000 0.24 74.41
- --------------------------------------------------------------------------------------------------
133 Knoxville TN 37922 2,735,000 2,735,000 0.24 74.65
126 Fort Wayne IN 46825 2,698,000 2,698,000 0.24 74.89
130 Westland MI 48185 2,660,000 2,660,000 0.23 75.13
312 San Diego CA 92115 2,650,000 2,648,510 0.23 75.36
21 Woodstown NJ 08098 2,650,000 2,640,636 0.23 75.59
- --------------------------------------------------------------------------------------------------
158 Palmdale CA 93552 2,642,000 2,639,643 0.23 75.82
139 San Antonio TX 78238 2,623,000 2,623,000 0.23 76.05
331 Modesto CA 95358 2,600,000 2,600,000 0.23 76.28
156 Mount Airy NC 27030 2,600,000 2,596,631 0.23 76.51
1 Kansas City KS 66106 2,607,000 2,588,494 0.23 76.74
- --------------------------------------------------------------------------------------------------
106 Doraville GA 30340 2,600,000 2,586,395 0.23 76.96
136 Houston TX 77082 2,585,000 2,585,000 0.23 77.19
330 Las Vegas NV 89128 2,575,000 2,575,000 0.23 77.42
226 San Diego CA 92131 2,573,700 2,565,937 0.23 77.64
149 Jacksonville FL 32221 2,550,000 2,550,000 0.22 77.87
- --------------------------------------------------------------------------------------------------
17 Long Beach CA 90805 2,531,000 2,517,084 0.22 78.09
168 Simpsonville SC 29680 2,500,000 2,500,000 0.22 78.31
316 Marietta GA 30067 2,500,000 2,500,000 0.22 78.53
295 New York NY 10025 2,500,000 2,500,000 0.22 78.75
45 Mesa AZ 85201 2,500,000 2,494,476 0.22 78.97
- --------------------------------------------------------------------------------------------------
251 Arlington TX 76010 2,500,000 2,493,360 0.22 79.18
258 Berkeley Heights NJ 07922 2,500,000 2,492,720 0.22 79.40
358 Mesquite TX 75149 2,450,000 2,450,000 0.22 79.62
223 Arvada CO 80002 2,461,100 2,449,309 0.22 79.83
232 San Diego CA 92121 2,450,000 2,445,213 0.21 80.05
- --------------------------------------------------------------------------------------------------
16 Montgomery AL 36117 2,450,000 2,440,917 0.21 80.26
262 Malibu CA 90265 2,450,000 2,439,960 0.21 80.48
273 Fallbrook CA 92028 2,442,400 2,439,449 0.21 80.69
12 Houston TX 77070 2,451,000 2,433,672 0.21 80.91
43 Orange Park FL 32073 2,434,000 2,426,780 0.21 81.12
- --------------------------------------------------------------------------------------------------
281 Mantua NJ 08051 2,430,000 2,425,620 0.21 81.33
132 Warr Acres OK 73132 2,398,000 2,398,000 0.21 81.54
253 Lake Charles LA 70605 2,400,000 2,397,569 0.21 81.75
209 Carrollton TX 75006 2,400,000 2,388,936 0.21 81.96
66 Plymouth MN 55447 2,379,000 2,375,564 0.21 82.17
- --------------------------------------------------------------------------------------------------
339 Arlington TX 76017 2,320,000 2,318,071 0.20 82.38
51 Houston TX 77073 2,309,000 2,303,910 0.20 82.58
296 Colorado Springs CO 80906 2,300,000 2,300,000 0.20 82.78
128 Houma LA 70360 2,286,000 2,286,000 0.20 82.98
138 Richardson TX 75081 2,286,000 2,286,000 0.20 83.18
- --------------------------------------------------------------------------------------------------
113 Dallas TX 75234 2,255,000 2,249,637 0.20 83.38
50 Houston TX 77079 2,242,000 2,235,701 0.20 83.58
292 Albuquerque NM 87106 2,215,000 2,215,000 0.19 83.77
23 Dallas TX 75205 2,221,000 2,214,931 0.19 83.96
349 Charlotte NC 28269 2,200,000 2,200,000 0.19 84.16
- --------------------------------------------------------------------------------------------------
293 Ithaca NY 14850 2,200,000 2,198,140 0.19 84.35
269 Cordele GA 31015 2,175,000 2,171,066 0.19 84.54
75 Houston TX 77062 2,167,000 2,163,900 0.19 84.73
270 Hemet CA 92543 2,150,000 2,147,677 0.19 84.92
53 Jacksonville FL 32207 2,140,000 2,135,239 0.19 85.11
- --------------------------------------------------------------------------------------------------
47 Salisbury MD 21801 2,137,000 2,129,289 0.19 85.30
142 Oswego NY 13126 2,100,000 2,098,632 0.18 85.48
259 Shippensburg PA 17257 2,100,000 2,096,271 0.18 85.66
260 Charlotte NC 28273 2,100,000 2,094,257 0.18 85.85
249 San Antonio TX 78223 2,095,200 2,087,752 0.18 86.03
- --------------------------------------------------------------------------------------------------
59 Austell GA 30001 2,050,000 2,044,510 0.18 86.21
22 Lansing MI 48910 2,054,000 2,041,958 0.18 86.39
346 Dallas TX 75220 2,000,000 2,000,000 0.18 86.57
357 Albuquerque NM 87111 2,000,000 2,000,000 0.18 86.74
175 Miami FL 33055 2,000,000 1,996,565 0.18 86.92
- --------------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
122 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
81 9.1250 84 83 330 329 9/6/96 10/1/03 2,580,809
125 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
24 9.2500 300 295 300 295 5/15/96 6/1/21 NAP
127 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
133 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
126 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
130 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
312 8.8600 60 59 360 359 9/30/96 10/1/01 2,540,310
21 9.0000 120 115 330 325 5/3/96 6/1/06 2,297,459
- ----------------------------------------------------------------------------------------------------------------------
158 9.0000 84 83 300 299 9/4/96 10/1/03 2,372,014
139 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
331 10.1200 240 240 240 240 10/3/96 11/1/16 NAP
156 10.1250 120 119 240 239 9/24/96 10/1/06 1,914,119
1 8.3500 84 77 300 293 3/12/96 4/1/03 2,317,490
- ----------------------------------------------------------------------------------------------------------------------
106 9.2500 84 78 300 294 4/29/96 5/1/03 2,342,773
136 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
330 9.2900 120 120 330 330 10/9/96 11/1/06 2,245,277
226 8.5900 60 55 360 355 5/14/96 6/1/01 2,461,827
149 9.0000 120 120 300 300 10/4/96 11/1/06 2,115,384
- ----------------------------------------------------------------------------------------------------------------------
17 8.9500 120 114 300 294 4/24/96 5/1/06 2,097,234
168 9.5000 180 180 180 180 10/3/96 11/1/11 NAP
316 9.8400 180 180 240 240 10/2/96 11/1/11 1,141,704
295 8.8400 120 120 300 300 10/8/96 11/1/06 2,066,321
45 9.0000 300 296 360 356 6/27/96 7/1/21 981,787
- ----------------------------------------------------------------------------------------------------------------------
251 9.0900 120 117 300 297 7/26/96 8/1/06 2,078,130
258 9.2500 120 118 240 238 8/2/96 9/1/06 1,797,387
358 9.0900 120 120 360 360 10/3/96 11/1/06 2,197,772
223 9.7800 120 114 300 294 4/30/96 5/1/06 2,076,655
232 9.5900 120 116 360 356 6/13/96 7/1/06 2,216,443
- ----------------------------------------------------------------------------------------------------------------------
16 8.4900 120 114 360 354 4/8/96 5/1/06 2,173,786
262 9.6000 84 79 300 295 5/28/96 6/1/03 2,218,443
273 8.5300 84 82 360 358 8/26/96 9/1/03 2,276,860
12 8.3750 84 77 300 293 3/29/96 4/1/03 2,179,676
43 8.7200 84 80 330 326 6/27/96 7/1/03 2,231,574
- ----------------------------------------------------------------------------------------------------------------------
281 8.9600 180 178 300 298 8/23/96 9/1/11 1,615,574
132 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
253 9.3800 120 118 360 358 8/2/96 9/1/06 2,163,668
209 8.8900 120 115 300 295 5/21/96 6/1/06 1,985,954
66 9.6400 300 297 360 357 7/25/96 8/1/21 973,370
- ----------------------------------------------------------------------------------------------------------------------
339 9.4200 120 119 300 299 9/16/96 10/1/06 1,942,629
51 8.7500 84 81 330 327 7/3/96 8/1/03 2,117,824
296 10.3000 240 240 240 240 10/9/96 11/1/16 NAP
128 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
138 9.2750 180 180 180 180 10/4/96 11/1/11 NAP
- ----------------------------------------------------------------------------------------------------------------------
113 9.7500 84 81 300 297 7/9/96 8/1/03 2,046,034
50 8.7500 84 81 300 297 7/3/96 8/1/03 2,005,401
292 9.6200 240 240 240 240 10/9/96 11/1/16 NAP
23 9.0700 84 79 360 355 5/9/96 6/1/03 2,083,665
349 9.5300 240 240 240 240 10/9/96 11/1/16 NAP
- ----------------------------------------------------------------------------------------------------------------------
293 9.3200 120 119 300 299 9/25/96 10/1/06 1,838,128
269 8.9400 180 178 300 298 8/13/96 9/1/11 1,444,918
75 8.8750 120 118 330 328 8/12/96 9/1/06 1,873,957
270 9.0700 84 82 360 358 8/13/96 9/1/03 2,017,055
53 8.7000 84 81 330 327 7/3/96 8/1/03 1,961,496
- ----------------------------------------------------------------------------------------------------------------------
47 9.0000 120 116 300 296 6/27/96 7/1/06 1,772,775
142 9.6250 120 119 324 323 9/5/96 10/1/06 1,829,154
259 9.0500 120 118 300 298 8/19/96 9/1/06 1,744,056
260 9.7400 240 238 240 238 8/12/96 9/1/16 NAP
249 9.0900 84 80 300 296 6/24/96 7/1/03 1,883,568
- ----------------------------------------------------------------------------------------------------------------------
59 9.0400 300 297 300 297 7/8/96 8/1/21 NAP
22 8.6250 84 79 276 271 5/6/96 6/1/03 1,785,796
346 8.8400 120 120 336 336 10/4/96 11/1/06 1,741,093
357 8.9300 120 120 300 300 10/4/96 11/1/06 1,656,480
175 9.2500 120 118 300 298 8/19/96 9/1/06 1,668,449
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- ------------------------
122 Anchored Retail
81 Multifamily
125 Unanchored Retail
24 Sec. 42
127 Anchored Retail
- ------------------------
133 Anchored Retail
126 Anchored Retail
130 Unanchored Retail
312 Multifamily
21 Multifamily
- ------------------------
158 Anchored Retail
139 Anchored Retail
331 Hospitality
156 Hospitality
1 Multifamily
- ------------------------
106 Unanchored Retail
136 Anchored Retail
330 Office
226 Multifamily
149 Anchored Retail
- ------------------------
17 Multifamily
168 Hospitality
316 Hospitality
295 Multifamily/Retail
45 Sec. 42
- ------------------------
251 Multifamily
258 Anchored Retail
358 Multifamily
223 Unanchored Retail
232 Industrial
- ------------------------
16 Multifamily
262 Unanchored Retail
273 Multifamily
12 Multifamily
43 Multifamily
- ------------------------
281 Mobile Home Park
132 Anchored Retail
253 Multifamily
209 Multifamily
66 Sec. 42
- ------------------------
339 Mobile Home Park
51 Multifamily
296 Hospitality
128 Unanchored Retail
138 Anchored Retail
- ------------------------
113 Office
50 Multifamily
292 Industrial
23 Multifamily
349 Hospitality
- ------------------------
293 Multifamily/Retail
269 Anchored Retail
75 Multifamily
270 Multifamily
53 Multifamily
- ------------------------
47 Multifamily
142 Anchored Retail
259 Multifamily
260 Hospitality
249 Multifamily
- ------------------------
59 Multifamily
22 Multifamily
346 Multifamily
357 Anchored Retail
175 Unanchored Retail
- ------------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
122 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
81 2 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
125 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
24 15 yr lock, open last 10 years
127 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
133 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
126 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
130 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
312 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
21 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
158 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
139 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
331 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
156 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
1 1 yr lock, >1% or YM through yr 6, open last 12 mos
- ----------------------------------------------------------------------------------------------------------------------------
106 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
136 1 yr lock,>1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
330 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
226 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @ 1%, open last 3 months
149 4 yr lock, >1% or YM through yr 9, open last 12 mos
- ----------------------------------------------------------------------------------------------------------------------------
17 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
168 3 yr lock,>1% or YM through yr 10,4%,3%,2%,1% open last 12 mos
316 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
295 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
45 15 yr lock, open last 10 years
- ----------------------------------------------------------------------------------------------------------------------------
251 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
258 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
358 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
223 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
232 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
16 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
262 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
273 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
12 1 yr lock, >1% or YM through yr 6, open last 12 mos
43 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
281 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
132 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
253 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
209 5 yr lock, > 1% or YM through yr 9 3/4, open last 3 months
66 15 yr lock, open last 10 years
- ----------------------------------------------------------------------------------------------------------------------------
339 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
51 1 yr lock, >1% or YM through yr 6, open last 12 mos
296 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
128 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
138 1 yr lock, >1% or YM through yr 9 1/2,5%-yr 10 1/2,4%-yr 11 1/2,3%-yr 12 1/2,2%-yr 13 1/2,1%-yr 14 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
113 5 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
50 1 yr lock, >1% or YM through yr 6, open last 12 mos
292 10 yr lock, yearly @ 8%,7, 6, 5, 4, 3, 2, 33 mos @ 1%, open last 3 mos
23 1 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
349 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
293 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
269 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
75 3 yr lock, >1% or YM through yr 9, open last 12 mos
270 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
53 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
47 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
142 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
259 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
260 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
249 3 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- ----------------------------------------------------------------------------------------------------------------------------
59 5 yr lock, >1% or YM through yr 20, open last 5 years
22 1 yr lock, >1% or YM through yr 6, open last 12 mos
346 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
357 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
175 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
122 28,962 465,612 7,352 433,854 1.25 5,500,000 1996 51.09
81 23,196 1,062,980 657,495 351,819 1.26 4,800,000 1996 58.29
125 28,581 458,240 7,235 429,690 1.25 5,150,000 1996 53.84
24 23,551 839,037 427,126 374,951 1.33 3,400,000 1996 80.53
127 28,189 452,032 7,137 423,712 1.25 5,050,000 1996 54.16
- ---------------------------------------------------------------------------------------------------------------------------------
133 28,189 452,032 7,137 423,712 1.25 4,750,000 1996 57.58
126 27,808 445,989 7,042 417,891 1.25 4,900,000 1996 55.06
130 27,416 439,876 6,945 411,794 1.25 5,100,000 1996 52.16
312 21,056 588,125 252,602 335,523 1.33 3,400,000 1996 77.90
21 21,720 750,256 402,061 325,155 1.25 3,600,000 1996 73.35
- ---------------------------------------------------------------------------------------------------------------------------------
158 22,172 515,864 151,832 347,633 1.31 3,600,000 1996 73.32
139 27,035 434,714 6,864 404,873 1.25 4,950,000 1996 52.99
331 25,298 1,097,770 603,903 493,867 1.63 3,800,000 1996 68.42
156 25,306 858,122 379,901 431,696 1.42 3,910,000 1996 66.41
1 20,729 767,235 361,616 368,899 1.48 3,300,000 1995 78.44
- ---------------------------------------------------------------------------------------------------------------------------------
106 22,266 388,967 45,669 336,172 1.26 3,640,000 1996 71.05
136 26,643 427,530 6,750 400,113 1.25 4,750,000 1996 54.42
330 21,633 486,593 124,002 330,484 1.27 3,850,000 1996 66.88
226 19,954 503,550 148,813 309,018 1.29 3,600,000 1996 71.28
149 21,400 531,278 176,564 329,553 1.28 3,550,000 1996 71.83
- ---------------------------------------------------------------------------------------------------------------------------------
17 21,153 906,378 491,818 376,197 1.48 3,375,000 1996 74.58
168 26,106 1,158,840 663,852 448,634 1.43 3,700,000 1996 67.57
316 23,861 1,182,904 732,637 450,267 1.57 3,730,000 1996 67.02
295 20,707 499,639 160,167 335,593 1.35 3,480,000 1996 71.84
45 20,116 493,799 202,993 277,506 1.15 3,200,000 1996 77.95
- ---------------------------------------------------------------------------------------------------------------------------------
251 21,134 831,627 515,127 316,500 1.25 3,180,000 1996 78.41
258 22,897 568,697 214,830 353,868 1.29 3,800,000 1996 65.60
358 19,872 740,860 451,803 289,057 1.21 3,650,000 1996 67.12
223 21,983 548,865 167,115 356,172 1.35 3,600,000 1996 68.04
232 20,762 452,511 125,476 313,228 1.26 3,350,000 1996 72.99
- ---------------------------------------------------------------------------------------------------------------------------------
16 18,821 500,741 189,681 293,460 1.30 3,300,000 1995 73.97
262 21,576 504,520 119,267 373,325 1.44 3,600,000 1996 67.78
273 18,832 465,916 186,207 279,709 1.24 3,200,000 1996 76.23
12 19,530 797,367 456,676 312,091 1.33 3,350,000 1995 72.65
43 19,473 723,400 382,688 309,032 1.32 3,500,000 1996 69.34
- ---------------------------------------------------------------------------------------------------------------------------------
281 20,326 464,922 135,146 329,776 1.35 3,650,000 1996 66.46
132 24,716 396,979 6,268 370,699 1.25 4,500,000 1996 53.29
253 19,971 660,839 349,438 311,401 1.30 3,500,000 1996 68.50
209 19,960 963,088 666,249 296,839 1.24 3,250,000 1996 73.51
66 20,247 542,995 240,379 289,816 1.19 3,200,000 1996 74.24
- ---------------------------------------------------------------------------------------------------------------------------------
339 20,141 513,667 192,967 320,701 1.33 2,900,000 1996 79.93
51 18,521 661,533 358,103 277,830 1.25 3,220,000 1996 71.55
296 22,655 1,777,794 1,346,914 430,880 1.59 3,500,000 1996 65.71
128 23,562 378,690 5,979 353,071 1.25 4,500,000 1996 50.80
138 23,562 380,070 6,001 351,349 1.24 4,450,000 1996 51.37
- ---------------------------------------------------------------------------------------------------------------------------------
113 20,095 801,306 434,846 327,149 1.36 3,275,000 1996 68.69
50 18,432 608,916 313,226 276,490 1.25 3,080,000 1996 72.59
292 20,821 457,810 144,355 309,351 1.24 3,200,000 1996 69.22
23 17,983 408,552 117,844 282,208 1.31 3,160,000 1996 70.09
349 20,550 1,185,919 808,074 377,844 1.53 3,300,000 1996 66.67
- ---------------------------------------------------------------------------------------------------------------------------------
293 18,947 612,265 276,480 318,975 1.40 3,200,000 1996 68.69
269 18,163 397,929 85,223 293,613 1.35 2,900,000 1996 74.86
75 17,571 839,870 505,783 293,197 1.39 3,825,000 1996 56.57
270 17,408 707,448 355,719 351,729 1.68 2,700,000 1996 79.54
53 17,091 752,875 427,850 283,137 1.38 3,350,000 1996 63.74
- ---------------------------------------------------------------------------------------------------------------------------------
47 17,934 518,229 197,537 293,047 1.36 3,000,000 1996 70.98
142 18,212 413,353 112,668 274,854 1.26 3,200,000 1996 65.58
259 17,695 500,723 233,511 267,212 1.26 2,900,000 1996 72.29
260 19,905 771,443 366,173 405,270 1.70 3,485,000 1996 60.09
249 17,712 531,153 276,094 255,059 1.20 2,650,000 1996 78.78
- ---------------------------------------------------------------------------------------------------------------------------------
59 17,260 624,049 309,356 289,253 1.40 2,850,000 1986 71.74
22 17,137 594,563 306,563 266,400 1.30 2,600,000 1995 78.54
346 16,100 803,088 557,729 245,359 1.27 2,725,000 1996 73.39
357 16,688 359,954 75,490 267,370 1.34 2,700,000 1996 74.07
175 17,128 435,152 131,443 280,934 1.37 2,800,000 1996 71.31
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
122 NAP 1980 62,590 sqft 44.90/ sqft 100.00 14,050.00 0.10 per sq. ft.
81 53.77 1980 201 units 13,920.87/ unit 95.00 164,405.00 267 per unit
125 NAP 1994 50,000 sqft 55.46/ sqft 100.00 937.50 0.10 per sq. ft.
24 NAP 1965 176 units 15,557.13/ unit 99.00 0.00 210 per unit
127 NAP 1979 50,000 sqft 54.70/ sqft 100.00 99,053.75 0.10 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
133 NAP 1986 50,000 sqft 54.70/ sqft 100.00 3,750.00 0.10 per sq. ft.
126 NAP 1989 50,000 sqft 53.96/ sqft 100.00 20,016.25 0.10 per sq. ft.
130 NAP 1980 50,900 sqft 52.26/ sqft 100.00 12,603.75 0.10 per sq. ft.
312 74.72 1987 104 units 25,466.44/units 92.31 12,187.50 250 per unit
21 63.82 1975 96 units 27,506.62/ unit 95.00 74,875.00 240 per unit
- -----------------------------------------------------------------------------------------------------------------------
158 65.89 1991 39,671 sqft 66.54/ sqft 99.93 7,593.75 0.14 per sq. ft.
139 NAP 1981 59,250 sqft 44.27/ sqft 100.00 3,125.00 0.10 per sq. ft.
331 NAP 1993 65 rooms 40,000.00/room NAP 0.00 4% of gross rev.
156 48.95 1984 99 rooms 26,228.60/ room 69.50 2,812.50 4% of gross rev.
1 70.23 1970 144 units 17,975.65/ unit 97.89 12,468.75 255 per unit
- -----------------------------------------------------------------------------------------------------------------------
106 64.36 1972 70,515 sqft 36.68/ sqft 100.00 5,625.00 0.05 per sq. ft.
136 NAP 1993 50,000 sqft 51.70/ sqft 100.00 0.00 0.10 per sq. ft.
330 58.32 1995 25,516 sqft 100.92/sqft 100.00 0.00 0.15 per sq. ft.
226 68.38 1984 62 units 41,386.08/units 95.31 0.00 276 per unit
149 59.59 1988 76,635 sqft 33.27/ sqft 98.10 5,125.00 0.10 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
17 62.14 1966 169 units 14,893.99/ unit 85.00 0.00 227 per unit
168 NAP 1990 82 rooms 30,487.80/ room 80.00 22,125.00 4% of gross rev.
316 30.61 1972 103 rooms 24,271.84/room NAP 0.00 4% of gross rev.
295 59.38 1901 32,655 sqft 76.56/sqft 100.00 0.00 250 per unit
45 30.68 1995 76 units 32,822.05/ unit 95.00 0.00 175 per unit
- -----------------------------------------------------------------------------------------------------------------------
251 65.35 1969 214 units 11,651.21/units 93.46 52,250.00 280 per unit
258 47.30 1991 38,427 sqft 64.87/sqft 100.00 0.00 0.22 per sq. ft.
358 60.21 1972 160 units 15,312.50/units 99.38 0.00 250 per unit
223 57.68 1978 49,699 sqft 49.28/sqft 94.97 36,105.00 0.16 per sq. ft.
232 66.16 1990 54,193 sqft 45.12/sqft 91.05 0.00 0.15 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
16 65.87 1986 88 units 27,737.69/ unit 97.20 0.00 200 per unit
262 61.62 1991 20,343 sqft 119.94/sqft 96.61 0.00 0.15 per sq. ft.
273 71.15 1988 66 units 36,961.34/units 100.00 0.00 200 per unit
12 65.06 1980 143 units 17,018.68/ unit 95.00 2,856.25 200 per unit
43 63.76 1968 120 units 20,223.17/ unit 95.00 35,312.50 264 per unit
- -----------------------------------------------------------------------------------------------------------------------
281 44.26 1967 178 pads 13,627.08/pad 92.70 0.00 50 per pad
132 NAP 1985 49,950 sqft 48.01/ sqft 100.00 1,000.00 0.10per sq. ft.
253 61.82 1976 124 units 19,335.23/units 95.16 35,256.25 250 per unit
209 61.11 1973 200 units 11,944.68/units 93.00 58,473.00 250 per unit
66 30.42 1995 64 units 37,118.19/ unit 100.00 0.00 200 per unit
- -----------------------------------------------------------------------------------------------------------------------
339 66.99 1984 250 pad 9,272.28/pad 96.40 54,500.00 50 per pad
51 65.77 1985 128 units 17,999.30/ unit 98.20 1,250.00 200 per unit
296 NAP 1965 176 rooms 13,068.18/room NAP 41,500.00 4% of gross rev.
128 NAP 1992 50,000 sqft 45.72/ sqft 100.00 13,150.00 0.10 per sq. ft.
138 NAP 1979 63,083 sqft 36.24/ sqft 100.00 15,625.00 0.10 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
113 62.47 1969 91,366 sqft 24.62/ sqft 97.33 173,000.00 0.20 per sq. ft.
50 65.11 1971 96 units 23,288.55/ unit 98.78 44,000.00 200 per unit
292 NAP 1980 52,860 sqft 41.90/sqft 100.00 8,313.00 0.15 per sq. ft.
23 65.94 1963 34 units 65,145.03/ unit 100.00 0.00 250 per unit
349 NAP 1990 87 rooms 25,287.36/room NAP 19,600.00 4% of gross rev.
- -----------------------------------------------------------------------------------------------------------------------
293 57.44 Circa 1921 53,408 sqft 41.16/sqft 89.80 9,068.75 300 per unit
269 49.82 1987 51,678 sqft 42.01/sqft 97.52 34,300.00 0.24 per sq. ft.
75 48.99 1975 174 units 12,436.21/ unit 93.48 97,312.50 235 per unit
270 74.71 1987 140 units 15,340.55/units 90.00 51,447.50 175 per unit
53 58.55 1974 176 units 12,132.04/ unit 95.00 12,062.50 238 per unit
- -----------------------------------------------------------------------------------------------------------------------
47 59.09 1987 96 units 22,180.10/ unit 94.79 9,691.25 291 per unit
142 57.16 1969 96,790 sqft 21.68/ sqft 100.00 17,625.00 0.12 per sq. ft.
259 60.14 1968 74 units 28,327.98/units 100.00 18,437.50 325 per unit
260 NAP 1990 122 rooms 17,166.04/room NAP 0.00 4% of gross rev.
249 71.08 1975 116 units 17,997.86/units 97.41 0.00 250 per unit
- -----------------------------------------------------------------------------------------------------------------------
59 NAP 1975 120 units 17,037.58/ unit 92.50 46,250.00 212 per unit
22 68.68 1964 108 units 18,907.02/ unit 97.00 102,433.75 200 per unit
346 63.89 1963 185 units 10,810.81/units 95.14 37,480.00 250 per unit
357 61.35 Circa 1989 28,081 sqft 71.22/sqft 94.87 16,565.00 0.15 per sq. ft.
175 59.59 1985 34,152 sqft 58.46/ sqft 100.00 750.00 0.26 per sq. ft.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Largest Retail Tenant
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
122 0.1150 Service Merchandise Inc. 62,590
81 0.1150
125 0.1150 Service Merchandise Inc. 50,000
24 0.1150
127 0.1150 Service Merchandise Inc. ("Shadow"-Best Buy; Michael; Hannaford) 50,000
- -------------------------------------------------------------------------------------------------------------------
133 0.1150 Service Merchandise Inc. ("Shadow"-Kroger; Marshall; Home Depot) 50,000
126 0.1150 Service Merchandise Inc. ("Shadow"-Walmart) 50,000
130 0.1150 Service Merchandise Inc. 50,900
312 0.1350
21 0.1500
- -------------------------------------------------------------------------------------------------------------------
158 0.1150 Thrifty Drug Store ("Shadow"-Ralph's) 19,300
139 0.1150 Service Merchandise Inc. (Shadow"-Mervyn's) 59,250
331 0.1150
156 0.1150
1 0.1150
- -------------------------------------------------------------------------------------------------------------------
106 0.1150 Rhodes Furniture 70,515
136 0.1150 Service Merchandise Inc. ("Shadow"-Builders square) 50,000
330 0.1150 Diversified 3,584
226 0.1350
149 0.1150 Publix 39,795
17 0.1150
- -------------------------------------------------------------------------------------------------------------------
168 0.1150
316 0.1150
295 0.1350 Aerosole/JCPenney 1,300
45 0.1150
251 0.1150
- -------------------------------------------------------------------------------------------------------------------
258 0.1150 The Grand Union Company 38,427
358 0.1350
223 0.1150 Piccolo's 5,100
232 0.1350 Teal Electronics Corp 31,211
16 0.1150
- -------------------------------------------------------------------------------------------------------------------
262 0.1150 Malibu Greens 8,587
273 0.1350
12 0.1150
43 0.1150
281 0.1150
- -------------------------------------------------------------------------------------------------------------------
132 0.1150 Service Merchandise Inc. 49,950
253 0.1150
209 0.1150
66 0.1150
339 0.1150
- -------------------------------------------------------------------------------------------------------------------
51 0.1150
296 0.1150
128 0.1150 Service Merchandise Inc. 50,000
138 0.1150 Service Merchandise Inc. 63,083
113 0.1500 Oncor 44,505
- -------------------------------------------------------------------------------------------------------------------
50 0.1150
292 0.1150 Allied Signal Aerospace 34,860
23 0.2000
349 0.1150
293 0.1150
- -------------------------------------------------------------------------------------------------------------------
269 0.1150 Harvey's Supermarkets 27,878
75 0.1150
270 0.1350
53 0.1150
- -------------------------------------------------------------------------------------------------------------------
47 0.1150
142 0.1150 Penn Traffic Company 65,690
259 0.1150
260 0.1150
249 0.1150
- -------------------------------------------------------------------------------------------------------------------
59 0.1150
22 0.1150
346 0.1150
357 0.1150 Day Spa ("Shadow"-Smith's Grocery) 5,102
175 0.1150 National 5 Supermarket 10,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- -------------------------------------------------------
11/30/2011 122
81
11/30/2011 125
24
11/30/2011 127
- -------------------------------------------------------
11/30/2011 133
11/30/2011 126
11/30/2011 130
312
21
- -------------------------------------------------------
5/31/2015 158
11/30/2011 139
331
156
1
- -------------------------------------------------------
10/31/2004 106
11/30/2011 136
12/14/1998 330
226
3/02/2008 149
- -------------------------------------------------------
17
168
316
10/30/2005 295
45
- -------------------------------------------------------
251
12/14/2018 258
358
1/10/2006 223
3/22/2000 232
- -------------------------------------------------------
16
1/31/2006 262
273
12
43
- -------------------------------------------------------
281
11/30/2011 132
253
209
66
- -------------------------------------------------------
339
51
296
11/30/2011 128
11/30/2011 138
- -------------------------------------------------------
2/28/1998 113
50
12/31/1997 292
23
349
- -------------------------------------------------------
293
6/30/2007 269
75
270
53
- -------------------------------------------------------
47
12/31/2014 142
259
260
249
- -------------------------------------------------------
59
22
346
7/20/1999 357
10/31/1998 175
- -------------------------------------------------------
Page 3
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
<TABLE>
<CAPTION>
Control
No. Property Name Address
- -----------------------------------------------------------------------------------------------------
<S> <C>
6 Casa Del Lago 3140 Kearsage Drive
212 Fountainview Lodge I & II Apts. 6015 Winsome & 6100 Fairdale
151 Kings Court Shopping Center 901 S. Kings Drive
261 Coca-Cola Building-Industrial 2540 W. Pennway
15 Lakewood 1542 Arcadia Drive
- -----------------------------------------------------------------------------------------------------
111 Cor-West Plaza Shopping Center 703 West Main Street
52 Millcreek 1823 Stadium Road
161 Valli Hi Shopping Center SE Corner of South Circle Dr. & Airport Rd.
246 K&S - Pioneer Village MHP 2901 West 63rd Avenue
348 Comfort Inn Columbia 7700 Two Notch Road
- -----------------------------------------------------------------------------------------------------
220 P & K-Olive Gardens Apartments 6500 - 6502 W. Olive Avenue
76 Kingswood Estates 1910 South Chipman Street
203 JMA - Brookmore Hollow Apartments 810 Brooks Avenue
20 Regency on Kennedy 4350 West Kennedy Blvd
320 Clackamas Corner 11750 SE 82nd Ave.
- -----------------------------------------------------------------------------------------------------
291 Days Inn Six Flags 95 South Service Road
280 Tiger Industrial Plaza 4901 & 4929 West Van Buren Street
216 P&K-Glendale Shadows 5902 W. Royal Palm Rd
214 Fountain Square Apartments 544 Camp Avenue
219 Mount View Business Park 20-90 Mount View Lane
- -----------------------------------------------------------------------------------------------------
119 Lynnfield Shopping Centre 584-592 Main Street
206 Clinton Industrial Park 7100-7251 Clinton Drive
150 Pelham 6 6 Logue Court
289 Days Inn North 4610 Rusina Rd.
272 KFS-Sunset Trails Apartments 959 Postal Way
- -----------------------------------------------------------------------------------------------------
99 Kensington Cottages 415 8th Street NW
46 Sunset Way I 15385 SW 73rd Terrace Circle
254 Colinas Business Park 4320 North Belt Line Road
3 Morningside 2401 Jammes Rd
112 Days Inn - Flagstaff 2735 South Woodlands Village Boulevard
- -----------------------------------------------------------------------------------------------------
282 Super 8 Motel 3617 N. Pan Am Expressway (aka I-35)
40 Colony Woods II 3030 Continental Colony Parkway #1608
233 EW - Sorrento Roselle Industrial Park 10635-37-39 Roselle Street
107 Tower Glen Shopping Center 2216 West County Road D
39 Valleybrook 169 Roscoe Road
- -----------------------------------------------------------------------------------------------------
325 CAP-Clubhouse Apartments 3 Clubhouse Circle
256 Bay Towers 1203 Market Street
338 Southgate/Meadowlark Mobile Home Park 6405 - 6601 Arden Road
115 163 / 174 Newbury Street 163 & 174 Newbury Street
109 Arcadia Lakes Shopping Center 6432 Two Notch Road
- -----------------------------------------------------------------------------------------------------
230 Silvercreek II Apartments 4619 W. 34th Street
231 Solarium Apartments 9275 LBJ Freeway
48 Marabou Mills I 3420 Marabou Mills Drive
221 Pecos Trail Office Compound 1660 Old Pecos Trail
247 Buckingham Manor 1110 & 1160 S. Joliet
- -----------------------------------------------------------------------------------------------------
250 Belfonti-Stonebridge Apartments 157-161 Pinney Street
74 Lindendale 3580 Lindendale Drive
114 Sims Creek Plaza 1695-1697 Indiantown Road
311 PETsMART 3195 Hempstead Turnpike
238 Woodwillow Townhomes 3601 Willow Springs Road
- -----------------------------------------------------------------------------------------------------
347 Park Springs Apartments 2002 West Irving Blvd.
279 American Trade Institute 6627 Maple Avenue
63 Dogwood Glenn II 2390 Woodglen Drive
7 Park Colony 11200 Huffmeister
160 Shaw Butte Center Corner of N. 7th Street & Thunderbird Road
- -----------------------------------------------------------------------------------------------------
239 Timbergrove Manor Apts. 1600 West T. C. Jester Blvd
286 Las Colinas Tech Center 2039 Walnut Hill Lane
79 Country View - Texas 6324 Baker Boulevard
5 Seville 1420 North Meridian Road
361 Magnolia Gardens 15, 17 & 19 Fordyce Court
- -----------------------------------------------------------------------------------------------------
319 Enfield Court Apartments 16541 Loch Katrine Road
211 First Line Apartments 1120 Red Bluff Road
28 Elsmere 1410 Cypress Avenue
323 CAP-Maplewood Apartments 1 Carlton Road
105 Plaza 59 10508 Bennett Road
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 Lake Havasu City AZ 86406 2,000,000 1,991,554 0.17 87.09
212 Houston TX 77057 1,971,700 1,963,142 0.17 87.26
151 Charlotte NC 28204 1,950,000 1,948,735 0.17 87.44
261 Kansas City MO 64108 1,950,000 1,946,543 0.17 87.61
15 Jacksonville FL 32207 1,950,000 1,938,105 0.17 87.78
- -----------------------------------------------------------------------------------------------
111 New Britain CT 06053 1,935,000 1,930,099 0.17 87.95
52 Wharton TX 77488 1,935,000 1,929,563 0.17 88.12
161 Colorado Springs CO 80909 1,870,000 1,868,400 0.16 88.28
246 Denver CO 80221 1,870,000 1,866,925 0.16 88.44
348 Columbia SC 29223 1,850,000 1,850,000 0.16 88.61
- -----------------------------------------------------------------------------------------------
220 Glendale AZ 85302 1,850,000 1,843,706 0.16 88.77
76 Owosso MI 48867 1,842,000 1,838,633 0.16 88.93
203 Rosenburg TX 77471 1,811,661 1,808,762 0.16 89.09
20 Tampa FL 33609 1,809,000 1,802,731 0.16 89.25
320 Portland OR 97266 1,800,000 1,800,000 0.16 89.41
- -----------------------------------------------------------------------------------------------
291 Austell GA 30001 1,800,000 1,797,705 0.16 89.56
280 Phoenix AZ 85043 1,800,000 1,796,755 0.16 89.72
216 Glendale AZ 85302 1,800,000 1,793,877 0.16 89.88
214 Gulfport MS 39501 1,800,000 1,791,971 0.16 90.04
219 Colorado Springs CO 80907 1,771,400 1,761,867 0.15 90.19
- -----------------------------------------------------------------------------------------------
119 Lynnfield MA 01940 1,761,000 1,756,483 0.15 90.35
206 Houston TX 77020 1,762,500 1,753,030 0.15 90.50
150 Greenville SC 29615 1,750,000 1,750,000 0.15 90.65
289 Colorado Springs CO 80907 1,720,000 1,720,000 0.15 90.80
272 Vista CA 92083 1,700,000 1,698,147 0.15 90.95
- -----------------------------------------------------------------------------------------------
99 Buffalo MN 55313 1,700,000 1,690,004 0.15 91.10
46 Miami FL 33193 1,693,000 1,686,728 0.15 91.25
254 Irving TX 75038 1,670,000 1,667,263 0.15 91.40
3 Jacksonville FL 32210 1,658,000 1,646,231 0.14 91.54
112 Flagstaff AZ 86001 1,650,000 1,645,843 0.14 91.69
- -----------------------------------------------------------------------------------------------
282 San Antonio TX 78219 1,650,000 1,645,659 0.14 91.83
40 Atlanta GA 30331 1,607,000 1,601,182 0.14 91.97
233 San Diego CA 92121 1,600,000 1,596,808 0.14 92.11
107 Roseville MN 55112 1,598,000 1,593,952 0.14 92.25
39 Newnan GA 30263 1,594,000 1,588,230 0.14 92.39
- -----------------------------------------------------------------------------------------------
325 Storrs CT 06268 1,571,500 1,570,032 0.14 92.53
256 Pascagoula MS 39567 1,550,000 1,543,761 0.14 92.66
338 Amarillo TX 79109 1,520,000 1,518,664 0.13 92.80
115 Boston MA 2116 1,515,000 1,510,074 0.13 92.93
109 Columbia SC 29206 1,500,000 1,496,039 0.13 93.06
- -----------------------------------------------------------------------------------------------
230 Houston TX 77092 1,500,000 1,488,771 0.13 93.19
231 Dallas TX 75243 1,500,000 1,480,739 0.13 93.32
48 Indianapolis IN 46214 1,475,000 1,469,678 0.13 93.45
221 Santa Fe NM 87501 1,468,300 1,463,765 0.13 93.58
247 Aurora CO 80012 1,454,300 1,449,070 0.13 93.71
- -----------------------------------------------------------------------------------------------
250 Ellington CT 06029 1,450,000 1,444,803 0.13 93.83
74 Columbus OH 43204 1,444,000 1,441,228 0.13 93.96
114 Jupiter FL 33458 1,450,000 1,440,338 0.13 94.09
311 Levittown NY 11546 1,440,000 1,440,000 0.13 94.21
238 Austin TX 78704 1,431,000 1,427,922 0.13 94.34
- -----------------------------------------------------------------------------------------------
347 Irving TX 75061 1,425,000 1,425,000 0.13 94.46
279 Dallas TX 75226 1,425,000 1,421,440 0.12 94.59
63 Indianapolis IN 46260 1,425,000 1,421,055 0.12 94.71
7 Houston TX 77065 1,425,000 1,414,925 0.12 94.84
160 Phoenix AZ 85022 1,410,000 1,408,843 0.12 94.96
- -----------------------------------------------------------------------------------------------
239 Houston TX 77008 1,405,000 1,402,714 0.12 95.09
286 Irving TX 75038 1,400,000 1,397,778 0.12 95.21
79 Haltom City TX 76118 1,400,000 1,397,545 0.12 95.33
5 Tallahassee FL 32303 1,380,000 1,371,005 0.12 95.45
361 New MIlford CT 06776 1,370,000 1,370,000 0.12 95.57
- -----------------------------------------------------------------------------------------------
319 Houston TX 77084 1,350,000 1,349,215 0.12 95.69
211 Pasadena TX 77506 1,350,000 1,343,858 0.12 95.81
28 Elsmere DE 19805 1,288,000 1,282,405 0.11 95.92
323 Storrs CT 06268 1,272,200 1,271,011 0.11 96.03
105 Dunkirk NY 14048 1,264,000 1,259,803 0.11 96.14
- -----------------------------------------------------------------------------------------------
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 8.6250 300 293 360 353 3/26/96 4/1/21 766,036
212 8.4900 120 113 360 353 3/29/96 4/1/06 1,749,410
151 9.3750 120 119 330 329 9/24/96 10/1/06 1,703,101
261 9.0600 120 118 300 298 8/14/96 9/1/06 1,619,846
15 8.3125 84 78 300 294 4/5/96 5/1/03 1,732,420
- ----------------------------------------------------------------------------------------------------------------
111 9.3750 120 117 300 297 7/2/96 8/1/06 1,618,665
52 8.7500 84 81 300 297 7/3/96 8/1/03 1,730,799
161 9.2500 120 119 300 299 9/25/96 10/1/06 1,560,000
246 9.0200 84 81 360 357 7/10/96 8/1/03 1,753,375
348 9.7300 240 240 240 240 10/9/96 11/1/16 NAP
- ----------------------------------------------------------------------------------------------------------------
220 8.9100 120 114 360 354 4/30/96 5/1/06 1,654,247
76 8.8750 84 82 300 298 8/15/96 9/1/03 1,650,709
203 9.1500 120 117 360 357 7/1/96 8/1/06 1,626,853
20 8.8200 120 114 360 354 4/30/96 5/1/06 1,614,953
320 9.4600 120 120 300 300 10/2/96 11/1/06 1,508,520
- ----------------------------------------------------------------------------------------------------------------
291 10.2500 240 239 240 239 9/12/96 10/1/16 NAP
280 8.9600 120 118 300 298 8/30/96 9/1/06 1,491,854
216 8.9100 120 114 360 354 4/30/96 5/1/06 1,609,537
214 9.0900 180 175 300 295 5/16/96 6/1/11 1,202,726
219 9.0800 84 78 300 294 4/23/96 5/1/03 1,592,242
- ----------------------------------------------------------------------------------------------------------------
119 9.5000 120 116 330 326 6/6/96 7/1/06 1,541,703
206 9.0900 120 114 300 294 4/24/96 5/1/06 1,465,082
150 9.1875 120 120 300 300 10/4/96 11/1/06 1,457,869
289 10.3000 240 240 240 240 10/9/96 11/1/16 NAP
272 9.0300 120 118 360 358 8/26/96 9/1/06 1,523,374
- ----------------------------------------------------------------------------------------------------------------
99 9.5000 120 113 300 293 3/21/96 4/1/06 1,425,944
46 8.8400 84 80 300 296 6/27/96 7/1/03 1,516,389
254 9.5300 60 58 300 298 8/5/96 9/1/01 1,567,928
3 8.3500 84 77 300 293 3/12/96 4/1/03 1,473,878
112 10.3750 120 118 240 238 8/6/96 9/1/06 1,222,647
- ----------------------------------------------------------------------------------------------------------------
282 10.0400 240 238 240 238 8/23/96 9/1/16 NAP
40 8.9800 120 116 300 296 6/21/96 7/1/06 1,332,501
233 9.4900 120 116 360 356 6/13/96 7/1/06 1,445,096
107 9.3750 120 117 300 297 7/5/96 8/1/06 1,336,758
39 8.9800 120 116 300 296 6/21/96 7/1/06 1,321,722
- ----------------------------------------------------------------------------------------------------------------
325 8.7200 84 83 300 299 9/30/96 10/1/03 1,405,020
256 9.9200 240 237 240 237 7/31/96 8/1/16 NAP
338 9.0900 60 59 300 299 9/30/96 10/1/01 1,421,110
115 9.6250 120 116 300 296 6/7/96 7/1/06 1,274,172
109 9.1250 84 81 300 297 7/17/96 8/1/03 1,349,173
- ----------------------------------------------------------------------------------------------------------------
230 9.1200 240 235 240 235 5/14/96 6/1/16 NAP
231 9.4900 180 175 180 175 5/13/96 6/1/11 NAP
48 9.0000 120 116 300 296 6/27/96 7/1/06 1,223,605
221 9.9300 120 116 300 296 6/26/96 7/1/06 1,242,800
247 9.0200 60 56 300 296 6/12/96 7/1/01 1,358,746
- ----------------------------------------------------------------------------------------------------------------
250 9.0400 120 116 300 296 6/28/96 7/1/06 1,203,957
74 8.5800 120 118 300 298 8/12/96 9/1/06 1,186,266
114 8.7400 120 113 300 293 3/29/96 4/1/06 1,195,688
311 9.5200 120 120 300 300 10/3/96 11/1/06 1,208,379
238 9.1300 84 80 360 356 6/21/96 7/1/03 1,343,419
- ----------------------------------------------------------------------------------------------------------------
347 8.6800 120 120 300 300 10/7/96 11/1/06 1,173,423
279 9.6200 180 179 180 179 9/3/96 10/1/11 NAP
63 8.8400 120 117 300 297 7/23/96 8/1/06 1,177,803
7 8.3750 84 77 300 293 3/28/96 4/1/03 1,267,253
160 9.5000 84 83 300 299 9/4/96 10/1/03 1,274,979
- ----------------------------------------------------------------------------------------------------------------
239 9.0700 120 117 360 357 7/24/96 8/1/06 1,259,912
286 9.7200 240 238 300 298 8/29/96 9/1/16 597,226
79 9.1250 120 118 300 298 8/27/96 9/1/06 1,164,668
5 8.8750 84 77 300 293 3/20/96 4/1/03 1,236,687
361 8.7200 120 120 360 360 10/9/96 11/1/06 1,220,803
- ----------------------------------------------------------------------------------------------------------------
319 8.7000 84 83 360 359 9/20/96 10/1/03 1,261,092
211 8.9700 120 115 300 295 5/20/96 6/1/06 1,119,145
28 9.2500 120 115 300 295 5/20/96 6/1/06 1,074,481
323 8.7200 84 83 300 299 9/30/96 10/1/03 1,137,427
105 9.5000 120 116 300 296 6/28/96 7/1/06 1,060,231
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Control
No. Property Type
- --------------------------
6 Sec. 42
212 Multifamily
151 Unanchored Retail
261 Industrial
15 Multifamily
- --------------------------
111 Unanchored Retail
52 Multifamily
161 Unanchored Retail
246 Mobile Home Park
348 Hospitality
- --------------------------
220 Multifamily
76 Multifamily
203 Multifamily
20 Multifamily
320 Unanchored Retail
- --------------------------
291 Hospitality
280 Industrial
216 Multifamily
214 Multifamily
219 Industrial
- --------------------------
119 Unanchored Retail
206 Industrial
150 Office
289 Hospitality
272 Multifamily
- --------------------------
99 Assisted Living
46 Multifamily
254 Office
3 Multifamily
112 Hospitality
- --------------------------
282 Hospitality
40 Multifamily
233 Industrial
107 Unanchored Retail
39 Multifamily
- --------------------------
325 Multifamily
256 Assisted Living
338 Mobile Home Park
115 Multifamily/Retail
109 Unanchored Retail
- --------------------------
230 Multifamily
231 Multifamily
48 Multifamily
221 Office
247 Multifamily
- --------------------------
250 Multifamily
74 Multifamily
114 Unanchored Retail
311 Unanchored Retail
238 Multifamily
- --------------------------
347 Multifamily
279 Industrial
63 Multifamily
7 Multifamily
160 Unanchored Retail
- --------------------------
239 Multifamily
286 Office
79 Multifamily
5 Multifamily
361 Multifamily
- --------------------------
319 Multifamily
211 Multifamily
28 Multifamily
323 Multifamily
105 Unanchored Retail
- --------------------------
<TABLE>
<CAPTION>
Control
No. Prepayment Restrictions
- -------------------------------------------------------------------------------------------
<S> <C>
6 15 yr lock, open last 10 years
212 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
151 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
261 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
15 1 yr lock, >1% or YM through yr 6, open last 12 mos
- -------------------------------------------------------------------------------------------
111 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
52 1 yr lock, >1% or YM through yr 6, open last 12 mos
161 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
246 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
348 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
220 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
76 2 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
203 5 yr lock, >1% or YM through yr 93/4, open last 3 months
20 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
320 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
291 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
280 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
216 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
214 8 yr lock, yearly @ 6%, 5.25, 4.5, 3.75, 3, 2.25, 9 mos @1.5%, open last 3 months
219 4 yr lock, yearly @ 4%, 3, 6 mos @ 2%, 3 mos @ 1%, open last 3 months
- -------------------------------------------------------------------------------------------
119 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
206 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
150 4 yr lock, >1% or YM through yr 9, open last 12 mos
289 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
272 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
99 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
46 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
254 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @ 1%, open last 3 months
3 1 yr lock, >1% or YM through yr 6, open last 12 mos
112 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
282 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
40 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
233 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
107 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
39 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
325 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
256 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
338 3 yr lock, >1% or YM through yr 4 3/4, open last 3 months
115 5 yr lock, >1% or YM through yr 9, open last 12 mos
109 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
230 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
231 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
48 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
221 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
247 3 yr lock, > 1%, or YM through yr 4 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
250 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
74 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
114 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
311 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
238 4 yr lock, yearly @ 4%, 3, 6 mos @ 2%, 3 mos @ 1%, open last 3 months
- -------------------------------------------------------------------------------------------
347 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
279 8 yr lock, >1% or YM through yr 14 3/4, open last 3 months
63 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
7 1 yr lock, >1% or YM through yr 6, open last 12 mos
160 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
239 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
286 10 yr lock, >1% or YM through yr 19 3/4, open last 3 months
79 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
5 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
361 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------------------
319 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
211 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
28 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
323 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
105 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 15,556 434,310 185,875 231,635 1.24 3,030,000 1996 65.73
212 15,147 663,604 445,487 218,117 1.20 2,600,000 1996 75.51
151 16,500 387,037 99,252 262,317 1.32 2,900,000 1996 67.20
261 16,445 338,046 78,390 252,346 1.28 2,700,000 1996 72.09
15 15,456 548,762 264,324 262,838 1.42 2,550,000 1996 76.00
- -------------------------------------------------------------------------------------------------------------------------------
111 16,738 413,513 126,176 264,168 1.32 3,600,000 1996 53.61
52 15,908 519,276 256,461 241,215 1.26 2,580,000 1996 74.79
161 16,014 430,216 136,074 259,414 1.35 2,800,000 1996 66.73
246 15,073 383,450 153,762 229,688 1.27 2,500,000 1996 74.68
348 17,523 947,998 651,720 296,279 1.41 2,985,000 1996 61.98
- -------------------------------------------------------------------------------------------------------------------------------
220 14,766 503,867 266,653 237,214 1.34 2,500,000 1996 73.75
76 15,301 614,344 337,689 239,575 1.30 2,900,000 1995 63.40
203 14,773 519,177 306,446 218,486 1.23 2,500,000 1996 72.35
20 14,322 453,520 215,176 218,844 1.27 2,425,000 1996 74.34
320 15,677 420,145 99,488 302,914 1.61 3,200,000 1996 56.25
- -------------------------------------------------------------------------------------------------------------------------------
291 17,670 1,032,248 672,563 359,685 1.70 3,100,000 1996 57.99
280 15,056 346,438 105,191 230,009 1.27 2,400,000 1996 74.86
216 14,367 598,482 347,181 251,301 1.46 2,500,000 1995 71.76
214 15,217 486,870 223,004 263,866 1.45 2,515,000 1996 71.25
219 14,963 366,360 121,091 228,214 1.27 2,600,000 1996 67.76
- -------------------------------------------------------------------------------------------------------------------------------
119 15,057 356,946 97,052 234,885 1.30 2,600,000 1996 67.56
206 14,900 455,284 195,943 240,833 1.35 2,700,000 1996 64.93
150 14,911 353,656 74,720 254,650 1.42 3,450,000 1996 50.72
289 16,942 897,569 608,518 289,051 1.42 2,575,000 1996 66.80
272 13,715 371,278 149,826 221,452 1.35 2,550,000 1996 66.59
- -------------------------------------------------------------------------------------------------------------------------------
99 14,853 1,310,847 991,085 307,463 1.73 3,500,000 1996 48.29
46 14,023 602,748 340,089 233,459 1.39 2,500,000 1996 67.47
254 14,626 619,210 349,690 219,396 1.25 2,400,000 1996 69.47
3 13,183 533,765 269,660 241,705 1.53 2,250,000 1996 73.17
112 16,335 889,107 580,665 272,877 1.39 2,475,000 1996 66.50
- -------------------------------------------------------------------------------------------------------------------------------
282 15,967 870,542 586,148 284,394 1.48 2,950,000 1996 55.79
40 13,464 408,920 164,540 225,630 1.40 2,200,000 1996 72.78
233 13,442 295,100 80,524 202,614 1.26 2,140,000 1996 74.62
107 13,823 388,750 142,158 231,611 1.40 2,300,000 1996 69.30
39 13,355 369,414 121,988 228,797 1.43 2,125,000 1996 74.74
- -------------------------------------------------------------------------------------------------------------------------------
325 12,888 311,613 118,288 193,325 1.25 2,300,000 1996 68.26
256 14,876 898,090 672,366 225,724 1.26 2,810,000 1996 54.94
338 12,850 398,852 203,422 195,430 1.27 1,900,000 1996 79.93
115 13,368 329,042 101,491 216,622 1.35 2,250,000 1996 67.11
109 12,717 311,629 80,501 201,301 1.32 2,365,000 1995 63.26
- -------------------------------------------------------------------------------------------------------------------------------
230 13,612 673,123 465,293 207,830 1.27 2,100,000 1996 70.89
231 15,654 660,339 430,169 230,169 1.23 3,000,000 1996 49.36
48 12,378 398,250 169,552 206,855 1.39 2,035,000 1996 72.22
221 13,270 253,997 46,089 199,051 1.25 2,300,000 1996 63.64
247 12,224 385,213 201,840 183,373 1.25 1,900,000 1996 76.27
- -------------------------------------------------------------------------------------------------------------------------------
250 12,208 438,721 228,802 209,919 1.43 2,000,000 1996 72.24
74 11,705 346,189 130,022 197,687 1.41 1,900,000 1996 75.85
114 11,911 383,599 154,430 192,258 1.35 2,380,000 1996 60.52
311 12,601 349,034 111,102 225,476 1.49 2,100,000 1996 68.57
238 11,648 428,342 260,951 167,391 1.20 1,900,000 1996 75.15
- -------------------------------------------------------------------------------------------------------------------------------
347 11,648 491,637 278,566 213,071 1.52 1,900,000 1996 75.00
279 14,984 246,210 19,311 226,899 1.26 1,900,000 1996 74.81
63 11,803 355,706 148,278 188,101 1.33 1,900,000 1996 74.79
7 11,355 455,057 258,971 178,456 1.31 1,900,000 1995 74.47
160 12,319 332,419 112,221 199,779 1.35 2,250,000 1996 62.62
- -------------------------------------------------------------------------------------------------------------------------------
239 11,376 537,520 361,470 176,049 1.29 1,800,000 1996 77.93
286 12,447 351,560 124,451 189,043 1.27 2,600,000 1996 53.76
79 11,869 970,610 657,701 263,708 1.85 3,950,000 1996 35.38
5 11,463 395,964 183,699 195,277 1.42 1,840,000 1996 74.51
361 10,748 330,814 160,117 170,697 1.32 2,100,000 1996 65.24
- -------------------------------------------------------------------------------------------------------------------------------
319 10,572 337,528 179,925 157,603 1.24 1,700,000 1996 79.37
211 11,301 576,775 398,902 177,873 1.31 1,850,000 1996 72.64
28 11,030 835,802 600,010 189,928 1.43 2,650,000 1996 48.39
323 10,433 252,278 95,762 156,517 1.25 1,900,000 1996 66.90
105 11,044 403,121 166,713 185,573 1.40 2,900,000 1996 43.44
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6 25.28 1995 84 units 23,708.98/ unit 93.90 0.00 200 per unit
212 67.28 1969 134 units 14,650.31/units 93.28 585,677.00 250 per unit
151 58.73 1988 28,480 sqft 68.42/ sqft 95.40 6,250.00 0.15 per sq. ft.
261 59.99 1928 123,830 sqft 15.72/sqft 100.00 0.00 0.15 per sq. ft.
15 67.94 1965 108 units 17,945.41/ unit 93.28 3,325.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
111 44.96 1953 30,327 sqft 63.64/ sqft 100.00 25,732.50 0.11 per sq. ft.
52 67.09 1982 108 units 17,866.33/ unit 98.00 29,035.00 200 per unit
161 55.71 1969 58,988 sqft 31.67/ sqft 95.20 29,750.00 0.20 per sq. ft.
246 70.14 1958 105 pad 17,780.24/pad 97.14 0.00 79 per pad
348 NAP 1986 96 rooms 19,270.83/room NAP 0.00 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
220 66.17 1979 107 units 17,230.90/units 93.46 73,125.00 327 per unit
76 56.92 1972 120 units 15,321.94/ unit 100.00 9,375.00 309 per unit
203 65.07 1984 104 units 17,391.94/units 97.12 16,362.50 250 per unit
20 66.60 1969 78 units 23,111.94/ unit 100.00 2,375.00 250 per unit
320 47.14 1985 26,500 sqft 67.92/sqft 100.00 0.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
291 NAP 1969 97 rooms 18,533.05/room NAP 62,938.00 4% of gross rev.
280 62.16 1981 103,042 sqft 17.44/sqft 100.00 0.00 0.15 per sq. ft.
216 64.38 1975 138 units 12,999.11/units 100.00 55,375.00 283 per unit
214 47.82 1971 108 units 16,592.33/units 94.44 6,075.00 250 per unit
219 61.24 1976 95,086 sqft 18.53/sqft 100.00 187,022.50 0.16 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
119 59.30 1956 23,176 sqft 75.79/ sqft 100.00 82,500.00 0.23 per sq. ft.
206 54.26 1964 182,113 sqft 9.63/sqft 98.31 28,562.50 0.15 per sq. ft.
150 42.26 1989 69,804 sqft 25.07/ sqft 75.18 28,352.50 0.10 per sq. ft.
289 NAP 1967 64 rooms 26,875.00/room NAP 28,031.25 4% of gross rev.
272 59.74 1992 42 units 40,432.08/units 100.00 0.00 200 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
99 40.74 1993 41 beds 41,219.60/ bed 85.36 675.00 300 per bed
46 60.66 1985 100 units 16,867.28/ unit 93.00 21,262.50 292 per unit
254 65.33 1980 62,114 sqft 26.84/sqft 94.21 0.00 0.15 per sq. ft.
3 65.51 1973 112 units 14,698.49/ unit 95.33 1,250.00 200 per unit
112 49.40 1990 57 rooms 28,874.45/ room 78.00 0.00 4% of gross rev.
- ------------------------------------------------------------------------------------------------------------------------------------
282 NAP 1966 92 rooms 17,887.59/room 60.00 56,943.75 4% of gross rev.
40 60.57 1987 75 units 21,349.10/ unit 90.67 6,050.00 250 per unit
233 67.53 1979 51,587 sqft 30.95/sqft 87.50 6,038.00 0.15 per sq. ft.
107 58.12 1987 26,420 sqft 60.33/ sqft 100.00 0.00 0.11 per sq. ft.
39 62.20 1987 72 units 22,058.74/ unit 91.67 5,687.50 270 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
325 61.09 1965 44 units 35,682.54/units 100.00 1,000.00 270 per unit
256 NAP 1963 79 beds 19,541.28/bed 94.94 0.00 250 per bed
338 74.80 1974 240 pad 6,327.77/pad 96.69 52,000.00 50 per pad
115 56.63 1887 11,950 sqft 126.37/ sqft 100.00 3,750.00 0.20 per sq. ft.
109 57.05 1986 36,926 sqft 40.51/ sqft 100.00 0.00 0.10 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
230 NAP 1971 148 units 10,059.27/units 91.28 0.00 250 per unit
231 NAP 1972 172 units 8,608.95/units 94.19 59,047.50 250 per unit
48 60.13 1986 86 units 17,089.28/ unit 93.18 8,571.25 254 per unit
221 54.03 1986 15,022 sqft 97.44/sqft 100.00 11,156.00 0.15 per sq. ft.
247 71.51 1969 84 units 17,250.83/units 92.86 4,666.25 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
250 60.20 1970 80 units 18,060.03/units 96.25 22,000.00 250 per unit
74 62.44 1987 78 units 18,477.29/ unit 89.74 6,412.50 240 per unit
114 50.24 1986 34,657 sqft 41.56/ sqft 100.00 0.00 0.30 per sq. ft.
311 57.54 1971 18,000 sqft 80.00/sqft 100.00 32,375.00 0.15 per sq. ft.
238 70.71 1983 60 units 23,798.70/units 93.33 64,100.00 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
347 61.76 1956 102 units 13,970.59/units 93.14 13,994.00 250 per unit
279 NAP 1959 43,635 sqft 32.58/sqft 100.00 0.00 0.15 per sq. ft.
63 61.99 1973 78 units 18,218.66/ unit 98.72 11,385.00 251 per unit
7 66.70 1979 86 units 16,452.62/ unit 98.00 28,118.75 205 per unit
160 56.67 1981 25,159 sqft 56.00/ sqft 97.00 0.00 0.18 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
239 70.00 1968 96 units 14,611.60/units 95.83 105,910.08 250 per unit
286 22.97 1979 60,125 sqft 23.25/sqft 100.00 0.00 0.04 per sq. ft.
79 29.49 1968 246 units 5,681.08/ unit 91.06 148,750.00 200 per unit
5 67.21 1972 62 units 22,112.98/ unit 93.55 36,640.00 274 per unit
361 58.13 1970 45 units 30,444.44/units 97.78 0.00 250 per unit
- ------------------------------------------------------------------------------------------------------------------------------------
319 74.18 1982 60 units 22,486.92/units 95.56 28,750.00 290 per unit
211 60.49 1973 134 units 10,028.79/units 97.76 0.00 250 per unit
28 40.55 1962 156 units 8,220.55/ unit 96.00 68,750.00 294 per unit
323 59.86 1964 40 units 31,775.27/units 97.50 0.00 270 per unit
105 36.56 1966 68,907 sqft 18.28/ sqft 100.00 18,750.00 0.15 per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Largest Retail Tenant
- --------------------------------------------------------------------------------------------------
Control Servicing Area Leased
No. Fees Name (Sq. Ft.)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6 0.1150
212 0.1350
151 0.1150 Boone Fabrics 5,291
261 0.1150 National Auto Classics 24,135
15 0.1150
- --------------------------------------------------------------------------------------------------
111 0.1150 CVS 10,662
52 0.1150
161 0.1150 Walgreens 12,267
246 0.1350
348 0.1150
- --------------------------------------------------------------------------------------------------
220 0.1150
76 0.1150
203 0.1350
20 0.1150
320 0.1350 Fabricland 10,000
- --------------------------------------------------------------------------------------------------
291 0.1150
280 0.1150 Reuben's Furniture 48,776
216 0.1150
214 0.1150
219 0.1150 Pikes Peak Moving 14,442
- --------------------------------------------------------------------------------------------------
119 0.1150 Christy's 3,288
206 0.1150 Chemtrusion/I-Pac 58,410
150 0.1150 Scan Source 13,937
289 0.1150
272 0.1350
- --------------------------------------------------------------------------------------------------
99 0.1150
46 0.1150
254 0.1150 Cadworks, Inc. 10,522
3 0.1150
112 0.1150
- --------------------------------------------------------------------------------------------------
282 0.1150
40 0.1150
233 0.1350 San Diego Sports Collectibles / NAS Amirtemour 5,293
107 0.2000 Aerial Company 4,320
39 0.1150
- --------------------------------------------------------------------------------------------------
325 0.1150
256 0.1150
338 0.1150
115 0.1150 Concrete 1,000
109 0.1500 Advance Auto Parts 6,000
- --------------------------------------------------------------------------------------------------
230 0.1150
231 0.1150
48 0.1150
221 0.1150 Pecos Trail Exec. Suites 7,626
247 0.1150
- --------------------------------------------------------------------------------------------------
250 0.1150
74 0.1150
114 0.1150 Nick's Tomato Pie 8,000
311 0.1150 The Pet Food Giant 18,000
238 0.1150
- --------------------------------------------------------------------------------------------------
347 0.1150
279 0.1150 American Trade Institute 43,635
63 0.1150
7 0.1150
160 0.1150 Realty Executives 3,300
- --------------------------------------------------------------------------------------------------
239 0.1150
286 0.1150 Landis & Gyr Powers Inc. 14,688
79 0.2000
5 0.1150
361 0.1350
- --------------------------------------------------------------------------------------------------
319 0.1150
211 0.1150
28 0.1150
323 0.1150
105 0.1150 Brand Name Sales 20,974
- --------------------------------------------------------------------------------------------------
</TABLE>
% of Total Lease Control
Area Leased Exp Date No.
- -------------------------------------------------------------------
6
212
3/31/2000 151
2/28/2000 261
15
- -------------------------------------------------------------------
1/31/2008 111
52
6/30/2041 161
246
348
- -------------------------------------------------------------------
220
76
203
20
4/30/1998 320
- -------------------------------------------------------------------
291
6/30/2009 280
216
214
7/01/1998 219
- -------------------------------------------------------------------
5/31/2001 119
4/14/1997 206
9/30/1998 150
289
272
- -------------------------------------------------------------------
99
46
12/31/2003 254
3
112
- -------------------------------------------------------------------
282
40
7/14/97 - 2/28/99 233
5/01/2001 107
39
- -------------------------------------------------------------------
325
256
338
9/01/1997 115
6/30/2001 109
- -------------------------------------------------------------------
230
231
48
8/31/2004 221
247
- -------------------------------------------------------------------
250
74
10/31/2001 114
10/14/2004 311
238
- -------------------------------------------------------------------
347
7/01/2011 279
63
7
5/31/1997 160
- -------------------------------------------------------------------
239
9/30/2000 286
79
5
361
- -------------------------------------------------------------------
319
211
28
323
3/01/2000 105
- -------------------------------------------------------------------
Page 4
<PAGE>
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
ANNEX A
Control
No. Property Name Address
- --------------------------------------------------------------------------------
55 Briar Hill 5946 54th Avenue North
310 Redbird Plaza Shopping Center 4099-4107 Camp Wisdom Road
205 Capital Tech Center 1611 N. Stemmons Freeway
19 The Ashford 115 South Lois Avenue
255 Grayridge Apartments 5625 Bissonnet Street
- --------------------------------------------------------------------------------
32 Mountain Top 48-A Forest Drive
78 Country View - Wisconsin 607 Reeve Drive
237 Westheimer House 5800 Wellington Drive
257 Pioneer Point Apartments 216 W. Pioneer Parkway
213 Friendship Square 1115 - 1195 Bridge Street
- --------------------------------------------------------------------------------
62 Aragon Woods 8152 Aragon Woods Drive
44 Heather Ridge 6200 Barnes Road South
217 Lakewood Village Apartments 200 E. Lakewood Drive
102 Norwest Bank Building 9719 North Hayden Road
10 Stonegate 217 White Drive
- --------------------------------------------------------------------------------
146 Allflex USA, Inc. 2805 E. 12th Street
54 Caribbean Towers 11100 62nd Avenue North
34 1512-24 Leland Avenue 1512-24 Leland Avenue
222 Pinecrest Apartments 2035 E. Pinetree Boulevard
64 Meadowood 820 Hospital Road
- --------------------------------------------------------------------------------
71 Spanish Oaks 3125 Clarksville Street
77 Ridgewood II 3863 Memorial Drive
208 Courtyard Apartments 15025 Saticoy Street
69 Old Archer Court 3001 SW Old Archer Road #29
26 Riverplace 102 North River Street
- --------------------------------------------------------------------------------
38 Spring Hollow 2703 N Buckner Blvd
41 Stillwater 1 Stillwater Court
31 Franklin 165 Franklin Street
72 Slate Run 248 S. Heincke Road
248 Westec Plaza 625 Digital Drive
- --------------------------------------------------------------------------------
96 801 Eastgate Drive 801 Eastgate Drive
14 Williamstown Bay III 3300 East Ramsey Avenue
100 G-5054 Miller Road G-5054 Miller Road
33 2540 Valentine Avenue 2540 Valentine Ave.
242 JMA - Woodcreek Village Apartments 3023 Woodcreek Lane
- --------------------------------------------------------------------------------
97 1700 East Dublin - Granville Road 1700 East Dublin - Granville Road
36 Greentree I 121 Covington Road
235 BCM-Westheimer Court Apts. 5820 Berkman Drive
95 5354 Dixie Highway 5354 Dixie Highway
104 4180 Plainfield Northeast 4180 Plainfield Northeast
- --------------------------------------------------------------------------------
103 4810 Outer Loop 4810 Outer Loop
117 Logan Healthcare Management Plaza 587 Washington Street
11 Villager 22 Wright Parkway
37 Greentree II 121 Covington Road
322 CAP-Millbrook Apartments 170 Spring Hill Road
- --------------------------------------------------------------------------------
321 CAP-Oakwood Apartments 114 South Eagleville Road
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Control Zip Original Current % of Cumulative
No. City State Code Balance Balance Pool % of Pool
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 Kenneth City FL 33709 1,256,000 1,252,543 0.11 96.25
310 Dallas TX 75237 1,250,000 1,250,000 0.11 96.36
205 Carrollton TX 75006 1,253,800 1,247,390 0.11 96.47
19 Tampa FL 33609 1,238,000 1,233,710 0.11 96.58
255 Houston TX 77081 1,225,000 1,222,721 0.11 96.69
- ------------------------------------------------------------------------------------------------------
32 Bloomingdale NJ 07403 1,220,000 1,215,788 0.11 96.80
78 Waunakee WI 53597 1,199,000 1,197,560 0.11 96.90
237 Austin TX 78723 1,200,000 1,196,902 0.11 97.01
257 Arlington TX 76010 1,200,000 1,195,825 0.11 97.11
213 Brighton CO 80601 1,175,000 1,167,533 0.10 97.21
- ------------------------------------------------------------------------------------------------------
62 Indianapolis IN 46214 1,155,000 1,151,712 0.10 97.31
44 Jacksonville FL 32216 1,147,000 1,143,598 0.10 97.42
217 Nacogdoches TX 75961 1,120,000 1,114,871 0.10 97.51
102 Scottsdale AZ 85258 1,110,000 1,105,277 0.10 97.61
10 Tallahassee FL 32304 1,106,000 1,100,333 0.10 97.71
- ------------------------------------------------------------------------------------------------------
146 Irving TX 75063 1,100,000 1,097,190 0.10 97.80
54 Seminole FL 33542 1,100,000 1,096,972 0.10 97.90
34 Bronx NY 10472 1,100,000 1,096,220 0.10 98.00
222 Thomasville GA 31792 1,085,000 1,080,422 0.09 98.09
64 Franklin IN 46131 1,067,000 1,064,063 0.09 98.18
- ------------------------------------------------------------------------------------------------------
71 Paris TX 75460 1,061,000 1,058,885 0.09 98.28
77 Unicorporated Decatur GA 30032 1,053,000 1,051,002 0.09 98.37
208 Van Nuys CA 91405 1,050,000 1,047,918 0.09 98.46
69 Gainesville FL 32608 1,035,000 1,032,292 0.09 98.55
26 Janesville WI 53545 1,033,000 1,030,148 0.09 98.64
- ------------------------------------------------------------------------------------------------------
38 Dallas TX 75228 990,000 987,268 0.09 98.73
41 Savannah GA 31406 985,000 981,351 0.09 98.82
31 Bloomfield NJ 07003 925,000 913,000 0.08 98.90
72 Miamisburg OH 45342 900,000 898,312 0.08 98.98
248 Plano TX 75075 896,000 893,751 0.08 99.05
- ------------------------------------------------------------------------------------------------------
96 Cincinnati OH 45245 865,000 857,446 0.08 99.13
14 Cudahy WI 53110 850,000 846,987 0.07 99.20
100 Flint MI 48507 849,000 841,586 0.07 99.28
33 Bronx NY 10458 825,000 821,562 0.07 99.35
242 Houston TX 77345 820,000 818,671 0.07 99.42
- ------------------------------------------------------------------------------------------------------
97 Columbus OH 43229 741,000 734,529 0.06 99.49
36 Thomasville GA 31792 725,000 722,427 0.06 99.55
235 Austin TX 78723 720,000 718,141 0.06 99.61
95 Louisville KY 40216 683,000 677,035 0.06 99.67
104 Grand Rapids MI 48505 659,000 653,424 0.06 99.73
- ------------------------------------------------------------------------------------------------------
103 Louisville KY 40219 657,000 651,262 0.06 99.79
117 Weymouth MA 02188 630,000 627,952 0.06 99.84
11 Fort Walton Beach FL 32548 568,000 564,953 0.05 99.89
37 Thomasville GA 31792 546,000 544,049 0.05 99.94
322 Storrs CT 06268 436,000 435,592 0.04 99.98
- ------------------------------------------------------------------------------------------------------
321 Storrs CT 06268 257,300 257,059 0.02 100.00
<CAPTION>
Stated Orig Rem
Orig Rem Amort Amort
Control Mortgage Term Term Term Term Orig Maturity Balloon
No. Rate (Mos.) (Mos.) (Mos.) (Mos.) Date Date Balance
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
55 8.8750 120 117 300 297 7/3/96 8/1/06 1,038,958
310 9.1400 120 120 300 300 10/2/96 11/1/06 1,040,231
205 9.3900 60 54 300 294 4/16/96 5/1/01 1,175,623
19 8.8200 120 114 360 354 4/30/96 5/1/06 1,105,203
255 8.7700 120 118 300 298 8/8/96 9/1/06 1,010,856
- ----------------------------------------------------------------------------------------------------------------
32 9.1250 120 115 330 325 5/22/96 6/1/06 1,060,343
78 8.5600 300 298 360 358 8/22/96 9/1/21 457,218
237 9.2600 120 117 300 297 7/1/96 8/1/06 1,001,291
257 9.2200 120 116 300 296 6/24/96 7/1/06 1,000,404
213 9.0300 120 113 300 293 3/26/96 4/1/06 975,399
- ----------------------------------------------------------------------------------------------------------------
62 8.6700 84 81 300 297 7/23/96 8/1/03 1,031,857
44 8.7200 84 80 330 326 6/27/96 7/1/03 1,051,609
217 8.9300 84 79 300 295 5/23/96 6/1/03 1,004,509
102 9.3750 120 115 300 295 5/21/96 6/1/06 928,537
10 8.8500 120 113 330 323 3/29/96 4/1/06 955,947
- ----------------------------------------------------------------------------------------------------------------
146 9.3750 180 179 180 179 9/16/96 10/1/11 NAP
54 8.8750 120 117 300 297 7/3/96 8/1/06 909,915
34 9.1500 120 115 330 325 5/22/96 6/1/06 956,520
222 9.3100 276 272 276 272 6/27/96 7/1/19 NAP
64 8.8750 120 117 300 297 7/23/96 8/1/06 882,618
- ----------------------------------------------------------------------------------------------------------------
71 9.2900 300 297 330 327 7/31/96 8/1/21 244,823
77 8.6500 120 118 300 298 8/21/96 9/1/06 866,487
208 9.5200 120 116 360 356 6/20/96 7/1/06 948,814
69 9.1800 120 117 300 297 7/30/96 8/1/06 862,081
26 9.0200 300 295 360 355 5/20/96 6/1/21 406,207
- ----------------------------------------------------------------------------------------------------------------
38 9.1100 120 116 330 326 6/11/96 7/1/06 860,186
41 8.8400 84 80 300 296 6/21/96 7/1/03 882,247
31 9.3750 180 175 180 175 5/20/96 6/1/11 NAP
72 8.7200 120 118 300 298 8/2/96 9/1/06 741,804
248 9.4300 60 57 300 297 7/25/96 8/1/01 840,450
- ----------------------------------------------------------------------------------------------------------------
96 9.3750 120 114 240 234 4/22/96 5/1/06 624,063
14 8.7100 300 294 360 354 4/4/96 5/1/21 327,437
100 9.3750 120 114 240 234 4/22/96 5/1/06 612,520
33 9.5000 120 115 300 295 5/22/96 6/1/06 692,002
242 9.0900 120 117 360 357 7/1/96 8/1/06 735,581
- ----------------------------------------------------------------------------------------------------------------
97 9.3750 120 114 240 234 4/22/96 5/1/06 534,602
36 9.1000 120 116 300 296 6/4/96 7/1/06 602,793
235 9.2600 120 117 300 297 7/1/96 8/1/06 600,774
95 9.3750 120 114 240 234 4/22/96 5/1/06 492,758
104 9.6250 120 114 240 234 4/22/96 5/1/06 478,717
- ----------------------------------------------------------------------------------------------------------------
103 9.3750 120 114 240 234 4/22/96 5/1/06 474,000
117 9.6250 84 80 300 296 6/10/96 7/1/03 570,652
11 8.6000 120 113 330 323 3/29/96 4/1/06 488,390
37 9.0600 120 116 300 296 6/4/96 7/1/06 453,557
322 8.7200 84 83 300 299 9/30/96 10/1/03 389,812
- ----------------------------------------------------------------------------------------------------------------
321 8.7200 84 83 300 299 9/30/96 10/1/03 230,043
</TABLE>
Control
No. Property Type
- --------------------------
55 Multifamily
310 Unanchored Retail
205 Office
19 Multifamily
255 Multifamily
- --------------------------
32 Multifamily
78 Sec. 42
237 Multifamily
257 Multifamily
213 Anchored Retail
- --------------------------
62 Multifamily
44 Multifamily
217 Multifamily
102 Unanchored Retail
10 Multifamily
- --------------------------
146 Industrial
54 Multifamily
34 Multifamily
222 Multifamily
64 Multifamily
- --------------------------
71 Multifamily
77 Multifamily
208 Multifamily
69 Multifamily
26 Sec. 42
- --------------------------
38 Multifamily
41 Multifamily
31 Multifamily
72 Multifamily
248 Office
- --------------------------
96 Unanchored Retail
14 Sec. 42
100 Unanchored Retail
33 Multifamily
242 Multifamily
- --------------------------
97 Unanchored Retail
36 Multifamily
235 Multifamily
95 Anchored Retail
104 Unanchored Retail
- --------------------------
103 Unanchored Retail
117 Unanchored Retail
11 Multifamily
37 Multifamily
322 Multifamily
- --------------------------
321 Multifamily
- --------------------------
Control
No. Prepayment Restrictions
- -------------------------------------------------------------------------------
55 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
310 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
205 3 yr lock, 6 mos @ 4%, 3, 2, 3 mos @1%, open last 3 months
19 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
255 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------
32 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
78 15 yr lock, open last 10 years
237 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
257 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
213 5 yr lock, yearly @ 5%, 4, 3, 2, 9 mos @ 1%, open last 3 months
- -------------------------------------------------------------------------------
62 5 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
44 3 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
217 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
102 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
10 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------
146 4 yr lock, >1% or YM through yr 14 1/2, open last 6 mos
54 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
34 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
222 12 yr lock >1% or YM through yr 22 3/4, open last 3 months
64 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------
71 >1% or YM through yr 15, 5%,4%,3%,2%,1%, open last 5 years
77 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
208 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
69 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
26 15 yr lock, open last 10 years
- -------------------------------------------------------------------------------
38 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
41 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
31 4 yr lock, >1% or YM through yr 14 1/2, open last 6 mos
72 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
248 3 yr lock, > 1%, or YM through yr 4 3/4, open last 3 months
- -------------------------------------------------------------------------------
96 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
14 15 yr lock, open last 10 years
100 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
33 1 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
242 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
- -------------------------------------------------------------------------------
97 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
36 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
235 5 yr lock, >1% or YM through yr 9 3/4, open last 3 months
95 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
104 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
- -------------------------------------------------------------------------------
103 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
117 4 yr lock, >1% or YM through yr 6 1/2, open last 6 mos
11 5 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
37 4 yr lock, >1% or YM through yr 9 1/2, open last 6 mos
322 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- -------------------------------------------------------------------------------
321 4 yr lock, >1% or YM through yr 6 3/4, open last 3 months
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Control Debt Total Total Appraised Appraisal Current
No. Service Revenue Expense NCF DSCR Value Year LTV
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
55 10,433 414,458 213,930 183,928 1.47 2,000,000 1996 62.63
310 10,610 258,840 71,619 172,183 1.35 1,670,000 1996 74.85
205 10,859 289,424 108,977 162,888 1.25 2,200,000 1996 56.70
19 9,801 308,675 146,792 147,211 1.25 1,800,000 1996 68.54
255 10,088 512,856 341,510 171,346 1.42 1,850,000 1996 66.09
- ------------------------------------------------------------------------------------------------------------------------------------
32 10,107 373,813 203,394 158,179 1.30 1,700,000 1996 71.52
78 9,270 267,309 128,812 131,148 1.18 1,410,000 1996 84.93
237 10,285 525,530 353,306 172,224 1.40 1,600,000 1996 74.81
257 10,252 441,992 282,216 159,776 1.30 1,600,000 1996 74.74
213 9,885 280,002 106,790 158,158 1.33 1,600,000 1996 72.97
- ------------------------------------------------------------------------------------------------------------------------------------
62 9,433 316,823 144,859 153,134 1.35 1,540,000 1996 74.79
44 9,176 550,949 349,092 173,297 1.57 1,900,000 1996 60.19
217 9,345 311,334 155,953 155,381 1.39 1,500,000 1996 74.32
102 9,602 231,757 76,926 148,333 1.29 1,700,000 1996 65.02
10 8,949 279,223 116,308 147,389 1.37 1,475,000 1996 74.60
- ------------------------------------------------------------------------------------------------------------------------------------
146 11,404 217,621 28,790 171,032 1.25 1,600,000 1996 68.57
54 9,137 396,532 204,196 173,256 1.58 1,700,000 1996 64.53
34 9,132 372,467 198,050 157,739 1.44 1,500,000 1996 73.08
222 9,549 333,006 186,496 146,510 1.28 1,460,000 1996 74.00
64 8,863 272,415 115,535 141,223 1.33 1,550,000 1996 68.65
- ------------------------------------------------------------------------------------------------------------------------------------
71 8,913 479,886 296,067 153,019 1.43 1,700,000 1996 62.29
77 8,586 294,877 134,959 144,475 1.40 1,350,000 1996 77.85
208 8,844 288,758 141,175 147,583 1.39 1,550,000 1996 67.61
69 8,814 317,774 151,762 142,900 1.35 1,400,000 1996 73.74
26 8,327 254,538 129,827 117,011 1.17 1,360,000 1996 75.75
- ------------------------------------------------------------------------------------------------------------------------------------
38 8,191 341,058 193,636 128,972 1.31 1,460,000 1996 67.62
41 8,158 259,264 118,656 126,774 1.29 1,325,000 1996 74.06
31 9,589 482,949 247,958 219,241 1.91 2,500,000 1996 36.52
72 7,381 237,556 109,371 112,358 1.27 1,250,000 1996 71.86
248 7,785 205,185 82,081 116,758 1.25 1,200,000 1996 74.48
- ------------------------------------------------------------------------------------------------------------------------------------
96 7,992 180,357 9,018 158,607 1.65 1,725,000 1995 49.71
14 6,663 223,776 122,450 95,325 1.19 1,020,000 1995 83.04
100 7,845 157,677 7,884 142,886 1.52 1,350,000 1995 62.34
33 7,208 263,436 125,221 125,371 1.45 1,100,000 1996 74.69
242 6,651 243,743 135,194 108,549 1.36 1,060,000 1996 77.23
- ------------------------------------------------------------------------------------------------------------------------------------
97 6,847 142,888 7,144 123,210 1.50 1,300,000 1995 56.50
36 6,134 178,720 73,949 93,161 1.27 930,000 1996 77.68
235 6,171 218,137 124,086 94,051 1.27 900,000 1996 79.79
95 6,311 131,062 6,553 122,558 1.62 1,250,000 1995 54.16
104 6,197 141,608 7,080 126,850 1.71 1,300,000 1995 50.26
- ------------------------------------------------------------------------------------------------------------------------------------
103 6,071 175,340 8,767 156,464 2.15 1,660,000 1995 39.23
117 5,559 133,326 40,016 91,330 1.37 1,100,000 1996 57.09
11 4,497 175,974 92,487 72,531 1.34 710,000 1996 79.57
37 4,604 135,178 55,421 69,581 1.26 700,000 1996 77.72
322 3,576 86,460 32,813 53,648 1.25 630,000 1996 69.14
- ------------------------------------------------------------------------------------------------------------------------------------
321 2,110 51,034 19,373 31,661 1.25 345,000 1996 74.51
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Loan per
Scheduled Sq Ft, Units Sq Ft, Unit Initial
Control Maturity Year Beds, Pads Bed, Pad Occupancy Reserves Underwriting
No. LTV Built or Room or Room Percentage At Closing Reserves
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 51.95 1972 83units 15,090.88/ unit 99.00 42,450.00 200per unit
310 62.29 1984 25,340sqft 49.33/sqft 100.00 0.00 0.15per sq. ft.
205 53.44 1985 51,920sqft 24.03/sqft 88.38 0.00 0.15per sq. ft.
19 61.40 1967 56units 22,030.53/ unit 98.21 1,000.00 262per unit
255 54.64 1970 152units 8,044.22/units 99.33 67,437.50 225per unit
- ------------------------------------------------------------------------------------------------------------------------------------
32 62.37 1965 40units 30,394.70/ unit 94.80 95,508.75 306per unit
78 32.43 1995 42units 28,513.33/ unit 90.48 0.00 175per unit
237 62.58 1971 86units 13,917.46/units 98.84 34,832.50 296per unit
257 62.53 1973 96units 12,456.51/units 96.00 30,312.50 265per unit
213 60.96 1978 32,326sqft 36.12/sqft 100.00 37,500.00 0.16per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
62 67.00 1986 70units 16,453.03/ unit 90.60 6,185.00 269per unit
44 55.35 1969 120units 9,529.98/ unit 92.00 91,500.00 238per unit
217 66.97 1973 72units 15,484.32/units 100.00 40,375.00 250per unit
102 54.62 1985 10,053sqft 109.95/ sqft 100.00 0.00 0.15per sq. ft.
10 64.81 1972 69units 15,946.85/ unit 92.75 12,250.00 225per unit
- ------------------------------------------------------------------------------------------------------------------------------------
146 NAP 1986 59,500sqft 18.44/ sqft 100.00 7,687.50 0.22per sq. ft.
54 53.52 1973 72units 15,235.73/ unit 97.00 32,687.50 265per unit
34 63.77 1930 62units 17,680.96/ unit 97.00 687.50 269per unit
222 NAP 1978 80units 13,505.27/units 100.00 26,175.00 268per unit
64 56.94 1983 51units 20,863.99/ unit 95.10 29,782.50 307per unit
- ------------------------------------------------------------------------------------------------------------------------------------
71 14.40 1976 112units 9,454.33/ unit 88.40 34,500.00 275per unit
77 64.18 1983 52units 20,211.58/ unit 98.08 4,025.00 297per unit
208 61.21 1965 60units 17,465.30/units 95.00 14,372.50 225per unit
69 61.58 1978 72units 14,337.39/ unit 90.40 24,937.50 321per unit
26 29.87 1995 44units 23,412.45/ unit 100.00 0.00 175per unit
- ------------------------------------------------------------------------------------------------------------------------------------
38 58.92 1984 82units 12,039.86/ unit 97.56 52,200.00 225per unit
41 66.58 1982 53units 18,516.05/ unit 96.23 5,437.50 261per unit
31 NAP 1928 63units 14,492.06/ unit 100.00 12,000.00 250per unit
72 59.34 1985 49units 18,332.90/ unit 98.00 41,756.25 323per unit
248 70.04 1986 27,669sqft 32.30/sqft 100.00 0.00 0.15per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
96 36.18 1986 16,101sqft 53.25/ sqft 100.00 8,450.00 0.67per sq. ft.
14 32.10 1995 40units 21,174.68/ unit 97.50 0.00 150per unit
100 45.37 1980 15,814sqft 53.22/ sqft 100.00 17,549.00 0.37per sq. ft.
33 62.91 1930 38units 21,620.06/ unit 97.00 5,187.50 338per unit
242 69.39 1984 42units 19,492.17/units 100.00 0.00 250per unit
- ------------------------------------------------------------------------------------------------------------------------------------
97 41.12 1971 13,860sqft 53.00/ sqft 100.00 34,990.00 0.77per sq. ft.
36 64.82 1983 43units 16,800.63/ unit 100.00 78,945.90 270per unit
235 66.75 1968 40units 17,953.52/units 100.00 32,007.50 290per unit
95 39.42 1987 12,351sqft 54.82/ sqft 100.00 3,630.00 0.13per sq. ft.
104 36.82 1971 11,582sqft 56.42/ sqft 100.00 2,875.00 0.53per sq. ft.
- ------------------------------------------------------------------------------------------------------------------------------------
103 28.55 1988 11,830sqft 55.05/ sqft 100.00 9,703.00 0.70per sq. ft.
117 51.88 1984 9,900sqft 63.43/ sqft 100.00 3,250.00 0.20per sq. ft.
11 68.79 1974 33units 17,119.78/ unit 100.00 12,856.25 332per unit
37 64.79 1984 32units 17,001.54/ unit 90.63 79,594.90 318per unit
322 61.87 1975 12units 36,299.34/units 100.00 0.00 270per unit
- ------------------------------------------------------------------------------------------------------------------------------------
321 66.68 1964 10units 25,705.91/units 100.00 0.00 271per unit
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Largest Retail Tenant
----------------------------------------------------------------------------------------------------------
Servicing Area Leased % of Total Lease Control
Fees Name (Sq. Ft.) Area Leased Exp Date No.
- ---------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <S>
0.1150 55
0.1150 Pier 1 Imports 6,500 1/31/2000 310
0.1150 Triple T 8,200 1/31/2000 205
0.1150 19
0.1350 255
- ---------------------------------------------------------------------------------------------------------------------
0.1150 32
0.1150 78
0.1150 237
0.1150 257
0.1350 It's 99 Cents ("Shadow"-Safeway) 9,072 7/01/2000 213
- ---------------------------------------------------------------------------------------------------------------------
0.1150 62
0.1150 44
0.1150 217
0.2000 Norwest Bank 5,000 2/28/2000 102
0.1150 10
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Allflex 59,500 146
0.1150 54
0.1150 34
0.1150 222
0.1150 64
- ---------------------------------------------------------------------------------------------------------------------
0.2000 71
0.1150 77
0.1350 208
0.1150 69
0.1150 26
- ---------------------------------------------------------------------------------------------------------------------
0.2000 38
0.1150 41
0.1150 31
0.1150 72
0.1150 Digital Computers 14,332 5/31/2002 248
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Frank's Nursery & Crafts 17,264 96
0.1150 14
0.1150 Frank's Nursery & Crafts 18,670 100
0.1150 33
0.1350 242
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Frank's Nursery & Crafts 13,860 97
0.1150 36
0.1150 235
0.1150 Frank's Nursery & Crafts ("Shadow"-Winn Dixie) 15,012 95
0.1150 Frank's Nursery & Crafts 23,769 104
- ---------------------------------------------------------------------------------------------------------------------
0.1150 Frank's Nursery & Crafts 14,442 103
0.1150 Logan Healtcare 5,300 3/31/2001 117
0.1150 11
0.1150 37
0.1150 322
- ---------------------------------------------------------------------------------------------------------------------
0.1150 321
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Anchor stores not included as part of Mortgaged Property
Page 5
<PAGE>
[GPAPHIC OMITTED]
This diskette contains a file: The file "distdisk.xls." The file is a
Microsoft Excel(1), Version 5.0 spreadsheet that provides, in electronic format,
the information shown in Annex A of the Prospectus Supplement(2).
Open the file as you would normally open any spreadsheet in Microsoft
Excel. Before the file is displayed, a message will appear notifying you that
the file is Read Only. Click the "READ ONLY" button, and after the file is
opened, a securities law legend will be displayed. READ THE LEGEND CAREFULLY.
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
(2) Please note that with respect to Control No. 23, the Servicing Fee, as set
forth on Annex A, is 0.3250% and not the percentage set forth on the diskette.
<PAGE>
================================================================================
No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement and the accompanying Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or by the Underwriters. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby to anyone in any jurisdiction in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make any such offer or solicitation. Neither
the delivery of this Prospectus Supplement and the accompanying Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that information herein or therein is correct as of any time since the date of
this Prospectus Supplement or the accompanying Prospectus.
--------------
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Summary .................................................................. S-5
Risk Factors ............................................................. S-24
Description of the Mortgage Pool ......................................... S-28
Servicing of the Mortgage Loans .......................................... S-42
Description of the Certificates .......................................... S-48
Yield and Maturity Considerations ........................................ S-60
Use of Proceeds .......................................................... S-67
Certain Federal Income Tax
Consequences ............................................................ S-67
ERISA Considerations ..................................................... S-68
Legal Investment ......................................................... S-70
Method of Distribution ................................................... S-71
Legal Matters ............................................................ S-71
Ratings .................................................................. S-72
Index of Principal Definitions ........................................... S-73
Annex A .................................................................. A-1
Annex B .................................................................. B-1
Prospectus
Prospectus Supplement .................................................... 2
Available Information .................................................... 2
Incorporation of Certain Information by
Reference ............................................................... 3
Summary of Prospectus .................................................... 8
Risk Factors ............................................................. 16
Description of the Trust Funds ........................................... 21
Yield and Maturity Considerations ........................................ 25
The Depositor ............................................................ 30
Use of Proceeds .......................................................... 30
Description of the Certificates .......................................... 30
Description of the Pooling Agreements .................................... 37
Description of Credit Support ............................................ 48
Certain Legal Aspects of Mortgage Loans .................................. 50
Certain Federal Income Tax Consequences .................................. 59
State and Other Tax Considerations ....................................... 81
ERISA Considerations ..................................................... 81
Legal Investment ......................................................... 84
Method of Distribution ................................................... 85
Legal Matters ............................................................ 85
Financial Information .................................................... 86
Rating ................................................................... 86
Index of Principal Definitions ........................................... 87
================================================================================
<PAGE>
================================================================================
Merrill Lynch Mortgage
Investors, Inc.
(Depositor)
$1,001,713,000
(Approximate)
Mortgage Pass-Through
Certificates
Series 1996-C2
---------------------
PROSPECTUS SUPPLEMENT
---------------------
Merrill Lynch & Co.
FIRST
UNION(R)
Capital Markets Corp.
November __, 1996
================================================================================
