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SUPPLEMENT
(To Prospectus dated May 19, 1992 and Prospectus Supplement dated August 18,
1992)
[LOGO OF THE PRUDENTIAL HOME MORTGAGE SECURITIES COMPANY, INC. APPEARS HERE]
SELLER
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1992-31
PRINCIPAL AND INTEREST PAYABLE MONTHLY, COMMENCING IN AUGUST 1997
VARIABLE RATE/1/ CLASS A-11 CERTIFICATES
/1/ ON THE CLASS A-11 NOTIONAL AMOUNT
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The Series 1992-31 Mortgage Pass-Through Certificates (the "Series 1992-31
Certificates") are the Series 1992-31 Certificates described in the
accompanying Prospectus Supplement dated August 18, 1992 (the "Prospectus
Supplement") and the accompanying Prospectus dated May 19, 1992 (the
"Prospectus"). The Series 1992-31 Certificates consist of one class of senior
certificates (the "Class A Certificates") and one class of subordinated
certificates (the "Class B Certificates"). The Class A Certificates consist of
thirteen subclasses (each a "Subclass") of Certificates designated as the Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-
8, Class A-9, Class A-10, Class A-11, Class A-R and Class A-LR Certificates.
The Class B Certificates are not divided into subclasses. Only the Class A-11
Certificates are being offered hereby. The Series 1992-31 Certificates evidence
in the aggregate the entire beneficial ownership interest in a trust fund (the
"Trust Estate") established by The Prudential Home Mortgage Securities Company,
Inc. (the "Seller") and consisting of a pool of fixed interest rate,
conventional, monthly pay, one- to four-family, residential first mortgage
loans having original terms to stated maturity of either approximately five or
seven years, with a substantial balloon payment due on the maturity date (the
"Mortgage Loans"), together with certain related property. See "Description of
the Mortgage Loans" herein and in the Prospectus Supplement. From the date of
the initial issuance of the Series 1992-31 Certificates until May 7, 1996, the
Mortgage Loans were serviced by The Prudential Home Mortgage Company, Inc.
("PHMC"). From May 7, 1996 until May 30, 1997, PHMC continued to be the
servicer of the Mortgage Loans under the Pooling and Servicing Agreement, but
the entity performing the actual servicing of the Mortgage Loans was Norwest
Mortgage, Inc. ("Norwest Mortgage"). On May 30, 1997, the servicing of the
Mortgage Loans under the Pooling and Servicing Agreement was sold to Citicorp
Mortgage, Inc. (in its capacity as servicer, the "Servicer," otherwise "CMI"),
and although, as of the date of this Supplement, Norwest Mortgage continues to
subservice the Mortgage Loans, it is anticipated that as a result of the sale,
Norwest Mortgage will cease to subservice and CMI will begin to service the
Mortgage Loans some months hereafter. See "Risk Factors--Recent Developments--
Sale of the Servicing" herein.
PROSPECTIVE INVESTORS IN THE CLASS A-11 CERTIFICATES SHOULD CONSIDER THE
FACTORS DISCUSSED UNDER "RISK FACTORS" HEREIN BEGINNING ON PAGE S1-3.
The credit enhancement for the Series 1992-31 Certificates is provided through
the use of a "shifting interest" type subordination, which has the effect of
allocating all payments of balloon amounts, principal prepayments and other
unscheduled receipts of principal to the Class A Certificates until their
principal balance has been reduced to zero. See "Summary Information--Credit
Enhancement" and "--Effects of Prepayments on Investment Expectations,"
"Description of the Certificates" and "Prepayment and Yield Considerations" in
the Prospectus Supplement.
THE YIELD TO MATURITY OF THE CLASS A-11 CERTIFICATES WILL BE HIGHLY SENSITIVE
TO THE RATE AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING PREPAYMENTS) ON THE
MORTGAGE LOANS, WHICH MAY BE PREPAID AT ANY TIME WITHOUT PENALTY. INVESTORS
SHOULD CONSIDER THE ASSOCIATED RISKS THAT A FASTER THAN ANTICIPATED RATE OF
PRINCIPAL PAYMENTS (INCLUDING PREPAYMENTS) ON THE MORTGAGE LOANS, PARTICULARLY
THOSE MORTGAGE LOANS WITH HIGHER RATES OF INTEREST, COULD RESULT IN AN ACTUAL
YIELD THAT IS LOWER THAN ANTICIPATED AND COULD RESULT IN THE FAILURE OF
INVESTORS TO FULLY RECOVER THEIR INITIAL INVESTMENTS. See "Risk Factors--Yield
Considerations" and "Sensitivity of the Pre-Tax Yield to Maturity and Weighted
Average Life of the Class A-11 Certificates" herein and "Description of the
Certificates--Principal (including Prepayments)" and "Prepayment and Yield
Considerations" in the Prospectus Supplement and in the Prospectus.
(continued on next page)
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THESE SECURITIES DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE PRUDENTIAL
HOME MORTGAGE SECURITIES COMPANY, INC. OR ANY AFFILIATE THEREOF. NEITHER THESE
SECURITIES NOR THE UNDERLYING 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 SUPPLEMENT, THE PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The Class A-11 Certificates will be purchased from the Seller by Salomon
Brothers Inc (the "Underwriter"), and will be offered by the Underwriter and
also by Lazard Freres & Co. LLC (the "Dealer") from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. Proceeds to the Seller are expected to be approximately 1.16% of the Pool
Scheduled Principal Balance as of the Distribution Date in August 1997 without
giving effect to partial principal prepayments or partial liquidation proceeds
received on or after the Determination Date in July 1997, plus accrued interest
from July 1, 1997 to (but not including) July 18, 1997, before deducting
expenses payable by the Seller estimated to be $75,000. See "Underwriting"
herein.
The Class A-11 Certificates are offered by the Underwriter and the Dealer when,
as and if delivered to and accepted by the Underwriter, subject to prior sale,
withdrawal or modification of the offer without notice, the approval of counsel
and other conditions. It is expected that the Class A-11 Certificates will be
available for delivery at the offices of Salomon Brothers Inc, Seven World
Trade Center, New York, New York 10048 on or about July 18, 1997.
SALOMON BROTHERS INC LAZARD FRERES & CO. LLC
The date of this Supplement is July 14, 1997.
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(Continued from previous page)
The Class A-11 Certificates are generally not appropriate investments for
individual investors. The Class A-11 Certificates are offered as a single
certificate with a denomination equal to the initial Class A-11 Notional Amount
as described herein under "Description of the Certificates." The Class A-11
Certificates are not to be directly or indirectly held or beneficially owned in
amounts lower than such minimum denomination.
There is currently no secondary market for the Class A-11 Certificates and
there can be no assurance that a secondary market will develop or, if it does
develop, that it will provide Certificateholders with liquidity of investment
at any particular time or for the life of the Class A-11 Certificates. The
Underwriter intends to act as a market maker in the Class A-11 Certificates,
subject to applicable provisions of federal and state securities laws and other
regulatory requirements, but is under no obligation to do so and any such
market making may be discontinued at any time. There can be no assurance that
any investor will be able to sell a Class A-11 Certificate at a price equal to
or greater than the price at which such Certificate was purchased.
Distributions in respect of interest and of principal are made on the 25th day
of each month or the next succeeding business day to the holders of record of
the Class A-11 Certificates on the last business day of the preceding month, to
the extent that their allocable portion of the Pool Distribution Amount (as
defined herein) is sufficient therefor. On each Distribution Date (as defined
herein), to the extent funds are available therefor, the amount of interest
distributed in respect of the Class A-11 Certificates will equal the interest
accrued during the applicable month. Interest will accrue monthly on the Class
A-11 Certificates at a per annum rate equal to the weighted average of the Net
Mortgage Interest Rates (as defined herein) of the Mortgage Loans as of the
first day of such period minus 7.00% on the Class A-11 Notional Amount (as
defined herein), less any Non-Supported Interest Shortfall (as defined in the
Prospectus Supplement) and certain other shortfalls of interest and the
interest portion of certain losses allocable to the Class A-11 Certificates as
described herein and in the Prospectus Supplement under "Description of the
Certificates--Interest." The Subclass Principal Balance of the Class A-11
Certificates as of the Determination Date in July 1997 is expected to be
approximately $127. The Subclass Principal Balance as of the Determination Date
in August 1997 will be equal to such balance as of the Determination Date in
July 1997 reduced by the amount of distributions or other reductions of
principal on the Distribution Date in July 1997. Distributions in reduction of
the principal balance of the Class A Certificates will be made monthly on each
Distribution Date in an aggregate amount equal to the Class A Principal
Distribution Amount (as defined in the Prospectus Supplement) to the extent
funds are available therefor. Distributions in reduction of the principal
balance of the Class A Certificates each month will be allocated among the
Subclasses of Class A Certificates, including the Class A-11 Certificates, in
the manner described in the Prospectus Supplement under "Description of the
Certificates--Principal (including Prepayments)." Distributions to the Class A-
11 Certificates will be made pro rata among Certificateholders of such
Subclass.
This Supplement does not contain complete information regarding the Class A-11
Certificates and should be read only in conjunction with the Prospectus
Supplement and the Prospectus. Sales of the Class A-11 Certificates may not be
consummated unless the purchaser has received this Supplement, the Prospectus
Supplement and the Prospectus. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the Prospectus
Supplement or the Prospectus, as applicable.
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GENERAL
The following is qualified in its entirety by reference to the detailed
information appearing in the Prospectus Supplement and in the Prospectus, both
of which should be read in conjunction with this Supplement. Capitalized terms
used in this Supplement and not otherwise defined herein have the meanings
assigned in the Prospectus Supplement or in the Prospectus. See "Index of
Significant Prospectus Supplement Definitions" in the Prospectus Supplement and
"Index of Significant Definitions" in the Prospectus.
The Series 1992-31 Certificates were issued on September 18, 1992. The Class
A-11 Certificates were not offered to the public at the time of the issuance of
the Series 1992-31 Certificates.
RISK FACTORS
YIELD CONSIDERATIONS
The yield to maturity of the Class A-11 Certificates will be directly related
to the rate of payments of principal on the Mortgage Loans in the Trust Estate,
particularly with respect to those Mortgage Loans with higher rates of
interest. The rate of principal payments on the Mortgage Loans will in turn be
affected by the amortization schedules of the Mortgage Loans, the rate of
principal prepayments (including partial prepayments and those resulting from
refinancing) thereon by mortgagors, liquidations of defaulted Mortgage Loans,
repurchases by the Seller of Mortgage Loans as a result of defective
documentation or breaches of representations and warranties, optional
repurchase by the Seller of defaulted Mortgage Loans and optional purchase by
the Servicer of all of the Mortgage Loans in connection with the termination of
the Trust Estate. See "Pooling and Servicing Agreement--Optional Termination"
herein, "Description of the Mortgage Loans--Optional Repurchase of Defaulted
Mortgage Loans" and "Pooling and Servicing Agreement--Optional Termination" in
the Prospectus Supplement and "The Trust Estates--Mortgage Loans--Assignment of
Mortgage Loans to the Trustee," "--Optional Repurchases" and "The Pooling and
Servicing Agreement--Termination; Purchase of Mortgage Loans" in the
Prospectus. Mortgagors are permitted to prepay the Mortgage Loans, in whole or
in part, at any time without penalty.
The rate of payments (including prepayments) on pools of mortgage loans is
influenced by a variety of economic, geographic, social and other factors. If
prevailing rates for similar mortgage loans fall below the Mortgage Interest
Rates on the Mortgage Loans, the rate of prepayment would generally be expected
to increase. Conversely, if interest rates on similar mortgage loans rise above
the Mortgage Interest Rates on the Mortgage Loans, the rate of prepayment would
generally be expected to decrease. In general, mortgagors may be expected to
refinance mortgage loans with mortgage interest rates higher than the then-
current mortgage interest rates on mortgage loans. The rate of prepayment of
Balloon Loans may be affected by interest rates and other factors differently
than mortgage loans generally.
The yield to maturity on the Class A-11 Certificates may be affected by the
geographic concentration of the mortgaged properties securing the Mortgage
Loans. As of June 17, 1997, approximately 88.94% of the Aggregate Unpaid
Principal Balance of the Mortgage Loans was secured by Mortgaged Properties
located in California. In recent periods, California, the New York metropolitan
area, the mid-Atlantic region and several other regions in the United States
have experienced significant declines in housing prices at varying times and
adverse changes in economic conditions. In addition, California and several
other regions have experienced natural disasters, including earthquakes,
floods, wildfires and hurricanes, which may have damaged properties and
otherwise adversely affected property values and therefore the ability of
mortgagors to refinance and pay Balloon Amounts. See "Pooling and Servicing
Agreement" herein. Any deterioration in housing prices in California and the
other states in which Mortgaged Properties are located, and any deterioration
of
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economic conditions in states which adversely affects the ability of borrowers
to make payments on the Mortgage Loans or obtain refinancing, may increase the
frequency of delinquencies and the likelihood and amount of losses on the
Mortgage Loans. In addition, the failure by a mortgagor to have refinanced a
Balloon Loan, particularly as the date on which the Balloon Amount is due
approaches or when the spread between the mortgage interest rate on the Balloon
Loan and the current market rate for new mortgage loans is relatively large, is
likely to be indicative of some impediment to the mortgagor's ability to obtain
refinancing, such as a decline in property value (including, without
limitation, a decline due to property damage arising from the Earthquake or
other natural disaster), an adverse change in the creditworthiness of the
mortgagor or otherwise. To the extent that the mortgagor's inability to
refinance is due to a decline in the value of the Mortgaged Property, it is
more likely that losses will ensue if the mortgagor defaults and the Mortgaged
Property is required to be liquidated. Losses of the type described in this
paragraph, if they occur, may increase the likelihood of liquidations and
prepayments which may have an adverse effect on the yield to maturity of the
Class A-11 Certificates.
AN INVESTOR THAT PURCHASES CLASS A-11 CERTIFICATES, WHICH ARE EXPECTED TO BE
OFFERED AT A SUBSTANTIAL PREMIUM, SHOULD CONSIDER THE RISK THAT A FASTER THAN
ANTICIPATED RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS WILL RESULT IN AN
ACTUAL YIELD THAT IS LOWER THAN SUCH INVESTOR'S EXPECTED YIELD AND MAY RESULT
IN THE FAILURE OF SUCH INVESTOR TO FULLY RECOVER ITS INITIAL INVESTMENT.
For a more detailed discussion of prepayment and yield considerations with
respect to the Class A-11 Certificates, see "Sensitivity of the Pre-Tax Yield
to Maturity and Weighted Average Life of the Class A-11 Certificates" herein
and "Prepayment and Yield Considerations" in the Prospectus Supplement.
DELINQUENT, FORECLOSED AND REO MORTGAGE LOANS
As of June 17, 1997, the Trust Estate included certain Mortgage Loans with
respect to which payments were past due more than 30 days, Mortgage Loans for
which foreclosure proceedings have been instituted and REO Mortgage Loans. See
"Description of the Mortgage Loans" herein.
RECENT DEVELOPMENTS
Sale of the Servicing
On May 7, 1996, Norwest Mortgage and certain affiliated companies acquired
all of the mortgage origination, servicing and secondary marketing operations
of PHMC, and Norwest Bank Minnesota, National Association ("Norwest Bank")
acquired substantially all of the assets of PHMC Services Corporation (formerly
known as Securitized Asset Services Corporation) and succeeded to substantially
all of the obligations of PHMC Services Corporation (the "Asset Acquisition").
As a consequence of that transaction, PHMC effectively exited the mortgage loan
origination and servicing business. PHMC retained its right to service the
mortgage loans, including the Mortgage Loans, underlying mortgage pass-through
certificates created by the Seller pursuant to various pooling and servicing
agreements, including the Pooling and Servicing Agreement (the "Retained
Servicing"), but announced its intention to sell such servicing as
expeditiously as possible (such rights, duties and obligations under the
Pooling and Servicing Agreement, the "Servicing").
Under the Pooling and Servicing Agreement, the Servicer of the Mortgage Loans
may assign its rights and delegate its duties and obligations, and be released
from its duties and obligations, if (i) the purchaser or transferee is
qualified to service mortgage loans for the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation, is satisfactory to
the Trustee in the reasonable exercise of its judgment and executes and
delivers to the Trustee an agreement, in form and substance reasonably
satisfactory to the Trustee, assuming the due and punctual performance and
observance of each covenant and condition to be performed by the Servicer under
the Pooling
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and Servicing Agreement, and (ii) each Rating Agency's rating of the
Certificates in effect immediately prior to the assignment, sale or transfer
would not be qualified, downgraded or withdrawn and the Certificates would not
be placed on credit review status as a result of such assignment, sale or
transfer.
The conditions of the Pooling and Servicing Agreement for assignment, sale
and transfer of the Servicing by PHMC to CMI were met and, on May 30, 1997,
PHMC sold to CMI, and CMI assumed, PHMC's rights, duties and obligations under
the Pooling and Servicing Agreement.
Since May 7, 1996, the Mortgage Loans have been subserviced for PHMC by
Norwest Mortgage pursuant to a subservicing agreement (the "Subservicing
Agreement") among PHMC, The Prudential Insurance Company of America
("Prudential Insurance") and Norwest Mortgage under which Norwest Mortgage
agreed to perform all of PHMC's duties and obligations as mortgage loan
servicer under the Pooling and Servicing Agreement other than certain duties
with respect to the administration and disposition of real estate acquired in
foreclosure, which duties were performed for PHMC by Prudential Residential
Services, Limited Partnership, an affiliate of PHMC, pursuant to a Servicing
and Subservicing Asset Recovery Agreement (the "PRS Agreement"). On May 30,
1997, CMI assumed the rights, duties and obligations of PHMC under the
Subservicing Agreement and the PRS Agreement with respect to the Mortgage
Loans. PHMSC has been advised that the Mortgage Loans are expected to be
subserviced by Norwest Mortgage pursuant to the Subservicing Agreement until at
least November 1997 and thereafter will be serviced by CMI; however, there can
be no assurance of the date on which CMI will begin performing the servicing
function with respect to the Mortgage Loans nor that CMI will service the
Mortgage Loans in a manner identical to that of PHMC prior to May 7, 1996 or
Norwest Mortgage from May 7, 1996 to the date of the transfer of the servicing
function. The Mortgage Loans are required to be serviced in accordance with the
Pooling and Servicing Agreement.
Recent Litigation
In January 1997, the Seller, PHMC and others were served with a complaint in
a purported class action filed on November 18, 1996 in the Superior Court of
New Jersey, Essex County Law Division. The Capitol Life Insurance Co. v. The
Prudential Insurance Co. of America et al. Esx-L-13045-96. On March 26, 1997,
PHMC and others filed a motion to dismiss the complaint for failure to state a
claim on which relief can be granted. On June 2, 1997, an amended complaint was
filed, and American Investors Life Insurance Company joined The Capitol Life
Insurance Company as a named plaintiff in the action. As amended, the complaint
asserts claims against the Seller, PHMC, certain of their present and former
affiliates and certain former employees as well as Merrill Lynch & Co., Kidder,
Peabody & Co., Incorporated, Lehman Brothers Inc. and Salomon Brothers Inc for
common law fraud, negligent misrepresentation, violations of the New Jersey
RICO statute, violations of the New Jersey securities statute and negligence
arising out of the plaintiffs' purchase of Prudential Home Thirty-Year Mortgage
Trust 1992-A, Subordinated Mortgage Securities, Series 1992-A (the
"Securities") and seeks compensatory and punitive damages and injunctive
relief. PHMC originated or acquired the mortgage loans in the underlying trust
funds for the Securities and serviced the mortgage loans until May 7, 1996. The
complaint alleges that the defendants misrepresented and concealed material
facts relating to the quality and likely performance of the Securities,
including among other things the selection of assets underlying the Securities,
financial models and projections used, default and loss experience, sufficiency
of credit support, loan-to-value ratios, quality of the underwriting standards,
ability to affect the existence, timing, amount and reporting of defaults and
losses, and payment terms. PHMC, the Seller and affiliated defendants are
vigorously defending the lawsuit. The case is at a preliminary stage, and PHMC
is not now in a position to predict the outcome or effect of the litigation.
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ADDITIONAL INFORMATION
Norwest Mortgage currently offers by subscription detailed mortgage loan
information in machine readable format updated on a monthly basis (the
"Detailed Information") with respect to each outstanding series of mortgage
certificates issued by trusts formed by the Seller, including the Series 1992-
31 Certificates. The Detailed Information reflects payments made on the
individual mortgage loans, including prepayments in full and in part made on
such mortgage loans, as well as the liquidation of any such mortgage loans, and
identifies various characteristics of the mortgage loans. Among the subscribers
of the Detailed Information are a number of major investments brokerage firms
as well as financial information service firms. Some of such firms, including
certain investments brokerage firms as well as Bloomberg L.P. through the "The
Bloomberg(R)" service and Merrill Lynch Mortgage Capital Inc. through the "CMO
Passport(R)" service, may, in accordance with their individual business
practices and fee schedules, if any, make portions of, or summaries of portions
of, the Detailed Information available to their customers and subscribers. The
Seller, PHMC, the Servicer and any affiliates thereof and Norwest Mortgage take
no responsibility for the actions of such firms in processing, analyzing or
disseminating such information.
DESCRIPTION OF THE CERTIFICATES
The Class A-11 Certificates will be offered in fully registered, certificated
form as a single certificate with a denomination equal to the initial Class A-
11 Notional Amount. The Subclass Principal Balance of the Class A-11
Certificates as of the Determination Date in July 1997 is expected to be
approximately $127. The Subclass Principal Balance as of the Determination Date
in August 1997 will be equal to such balance as of the Determination Date in
July 1997 reduced by the amount of distributions or other reductions of
principal on the Distribution Date in July 1997.
Distributions of interest and in reduction of principal balance to holders of
Class A-11 Certificates will be made monthly, to the extent of such Subclass's
entitlement thereto, and to the extent funds are available therefor, on the
25th day of each month or, if such day is not a business day, on the succeeding
business day (each, a "Distribution Date"), beginning in August 1997.
Distributions (other than the final distribution in retirement of the Class
A-11 Certificates, as described in the Prospectus Supplement) will be made on
each Distribution Date by check mailed to the address of the person entitled
thereto as it appears on the Certificate Register or, provided that the
Servicer, or the paying agent acting on behalf of the Servicer, shall have been
furnished with appropriate wiring instructions not less than seven business
days prior to the related Distribution Date, by wire transfer in immediately
available funds.
The Class A-11 Certificates will be entitled to a distribution in respect of
interest accrued during each month in an amount up to such Subclass's Subclass
Interest Accrual Amount. The Subclass Interest Accrual Amount for the Class A-
11 Certificates will equal the product of (i) 1/12th of the difference between
(a) the weighted average of the Net Mortgage Interest Rates of the Mortgage
Loans (based on the Scheduled Principal Balances of the Mortgage Loans as of
such Distribution Date) and (b) 7.00% and (ii) the Class A-11 Notional Amount.
The Subclass Interest Accrual Amount for the Class A-11 Certificates will be
reduced by the portion of (i) any Non-Supported Interest Shortfall allocable to
such Subclass, (ii) on or after the Cross-Over Date, any interest shortfalls
resulting from the timing of the receipt of partial principal prepayments and
(iii) on or after the Cross-Over Date, the interest portion of any losses
realized on Liquidated Loans allocable to such Subclass, as described under
"Description of the Certificates--Interest" in the Prospectus Supplement.
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The "Net Mortgage Interest Rate" on each Mortgage Loan is equal to the
Mortgage Interest Rate on such Mortgage Loan as stated in the related Mortgage
Note minus the Servicing Fee rate of 0.20% per annum. See "Pooling and
Servicing Agreement--Servicing Compensation and Payment of Expenses" in the
Prospectus Supplement.
The "Class A-11 Notional Amount" with respect to each Distribution Date will
be equal to the Pool Scheduled Principal Balance, as defined under "Description
of the Certificates--Principal (Including Prepayments)" in the Prospectus
Supplement, as of such Distribution Date. The Class A-11 Notional Amount with
respect to the Distribution Date in June 1997 was approximately $54,371,332.
The Class A-11 Notional Amount with respect to the Distribution Date in August
1997 will be equal to the Class A-11 Notional Amount with respect to the
Distribution Date in June 1997, less scheduled principal payments for June and
July 1997, principal prepayments in full and other unscheduled recoveries in
full, other than delinquent Balloon Amounts, received in May and June 1997,
partial principal prepayments and partial liquidation proceeds received in June
and July 1997 and Balloon Amounts that were due on or before July 1, 1997 and
received on or after the Determination Date in May and prior to the
Determination Date in July. A notional amount does not entitle a holder to
receive distributions of principal on the basis of such notional amount, but is
solely used for the purpose of computing the amount of interest accrued on a
subclass. The initial Class A-11 Notional Amount was approximately
$273,289,177. See "Description of the Certificates" in the Prospectus
Supplement.
Notwithstanding anything to the contrary in the Prospectus Supplement, the
definition of "Scheduled Principal Balance" set forth in the first full
paragraph on page S-22 of the Prospectus Supplement is hereby replaced in its
entirety with the following:
The "Scheduled Principal Balance" of a Mortgage Loan as of any
Distribution Date is the unpaid principal balance of such Mortgage Loan as
specified in the amortization schedule at the time relating thereto (before
any adjustment to such schedule by reason of bankruptcy, moratorium or
similar waiver or grace period) as of the Due Date occurring in the month
preceding the month in which such Distribution Date occurs, after giving
effect to any principal prepayments or other unscheduled recoveries of
principal previously received, to any partial prepayments applied as of
such Due Date and to the payment of principal due on such Due Date, and
irrespective of any delinquency in payment by the mortgagor; provided, that
with respect to any Mortgage Loan for which a Balloon Amount was due on or
prior to the first day of the month preceding the month in which such
Distribution Date occurs, the Scheduled Principal Balance of such Mortgage
Loan as of such Distribution Date shall be the amount of the Balloon Amount
due and unpaid as of the close of business on the day preceding the
Determination Date occurring in the month prior to the month in which such
Distribution Date occurs.
The aggregate amount available for distribution on each Distribution Date
will be the Pool Distribution Amount. Notwithstanding anything contained in the
Prospectus Supplement or the Prospectus to the contrary, the "Pool Distribution
Amount" for a Distribution Date will be the sum of all previously undistributed
payments or other receipts on account of principal (including principal
prepayments, Balloon Amounts and Liquidation Proceeds in respect of principal,
if any) and interest on or in respect of the Mortgage Loans received by the
Servicer after the Cut-Off Date (except for amounts due on or prior to the Cut-
Off Date), or received by the Servicer on or prior to the Cut-Off Date but due
after the Cut-Off Date, in either case received on or prior to the business day
preceding the Determination Date in the month in which such Distribution Date
occurs, plus (i) all Periodic Advances made by the Servicer, (ii) all
withdrawals from any reserve fund established to provide support for the
Servicer's obligation to make advances, as described under "Description of the
Certificates--Periodic Advances" in the Prospectus Supplement and (iii) all
other amounts required to be placed in the Certificate Account by the Servicer
pursuant to the Pooling and Servicing Agreement, but excluding the following:
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(a) amounts received as late payments of principal or interest respecting
which the Servicer previously has made one or more unreimbursed Periodic
Advances or an unreimbursed advance has been made from the Reserve Fund (as
defined in the Prospectus Supplement), if established;
(b) that portion of net Liquidation Proceeds used to reimburse any
unreimbursed Periodic Advances or unreimbursed advances from the Reserve
Fund, if established, with respect to Liquidated Loans;
(c) those portions of each payment of interest on a particular Mortgage
Loan which represent the applicable Servicing Fee, as adjusted in respect
of Prepayment Interest Shortfalls as described under "Description of the
Certificates--Interest" in the Prospectus Supplement;
(d) all amounts representing scheduled payments of principal and interest
due after the Due Date occurring in the month in which such Distribution
Date occurs;
(e) all principal prepayments in full and all proceeds of any Mortgage
Loans, or property acquired in respect thereof, liquidated, foreclosed,
purchased or repurchased pursuant to the Pooling and Servicing Agreement,
received on or after the Due Date occurring in the month in which such
Distribution Date occurs, and all partial principal prepayments received by
the Servicer on or after the Determination Date occurring in the month in
which such Distribution Date occurs, and all related payments of interest
on such amounts;
(f) to the extent permitted by the Pooling and Servicing Agreement, that
portion of Liquidation Proceeds or insurance proceeds with respect to a
Mortgage Loan which represents any unpaid Servicing Fee to which the
Servicer is entitled;
(g) all amounts representing certain expenses reimbursable to the
Servicer and other amounts permitted to be retained by the Servicer or
withdrawn by the Servicer from the Certificate Account pursuant to the
Pooling and Servicing Agreement;
(h) all amounts in the nature of late fees, assumption fees, prepayment
fees and similar fees which the Servicer is entitled to retain as
additional servicing compensation;
(i) reinvestment earnings on payments received in respect of the Mortgage
Loans; and
(j) Net Foreclosure Profits.
Notwithstanding anything contained in the Prospectus Supplement or the
Prospectus to the contrary, if, on any Determination Date, payments of
principal and interest due on any Mortgage Loan in the Trust Estate on the
related Due Date have not been received as of the close of business on the
business day preceding such Determination Date, the Servicer will be obligated
to make Periodic Advances on or before the related Distribution Date for the
benefit of holders of the Series 1992-31 Certificates.
The Pool Distribution Amount will be allocated among the Classes of Series
1992-31 Certificates as described in "Description of the Certificates" in the
Prospectus Supplement.
The Prospectus Supplement and the Prospectus contain significant additional
information concerning the characteristics of the Class A-11 Certificates.
Investors are urged to read "Description of the Certificates" in the Prospectus
Supplement and in the Prospectus.
DESCRIPTION OF THE MORTGAGE LOANS
Information with respect to the expected characteristics of the Mortgage
Loans as of September 1, 1992 is set forth in the Prospectus Supplement, which
contains substantial information relating to mortgage loans generally.
Investors are urged to read "Description of the Mortgage Loans" in the
Prospectus Supplement, such information being modified as set forth herein.
S1-8
<PAGE>
As of June 17, 1997, the Mortgage Loans in the Trust Estate consisted of
fixed interest rate, conventional, monthly pay, one- to four-family,
residential first mortgage loans originated or acquired by PHMC for its own
account or for the account of an affiliate having original terms to stated
maturity of either approximately five to seven years, with a substantial
balloon payment due on the maturity date. The "Unpaid Principal Balance" of a
Mortgage Loan as of June 17, 1997 is its unpaid principal balance as of such
date assuming no delinquencies and no prepayments in full between June 1, 1997
and June 17, 1997. As of June 17, 1997, the Mortgage Loans included 171
promissory notes, having an aggregate Unpaid Principal Balance (the "Aggregate
Unpaid Principal Balance") of approximately $51,241,833, secured by first liens
(the "Mortgages") on one- to four-family residential properties (the "Mortgaged
Properties"). However, as of June 17, 1997, six of such Mortgage Loans, having
an aggregate Unpaid Principal Balance of approximately $1,553,587, had been
paid or prepaid in full even though such Mortgage Loans and their Unpaid
Principal Balances are included in the following statistics and tables. The
Mortgage Loans have the additional characteristics described below and, except
as modified herein, in the Prospectus Supplement.
As of June 17, 1997, 53 of the Mortgage Loans representing approximately
30.10% of the Aggregate Unpaid Principal Balance of the Mortgage Loans had
original terms to stated maturity of approximately five years and 118 of the
Mortgage Loans representing approximately 69.90% of the Aggregate Unpaid
Principal Balance of the Mortgage Loans had original terms to stated maturity
of approximately seven years. However, in each case, the Mortgage Loans provide
for level monthly payments of principal and interest based on a 30-year
amortization schedule. Based on such amortization schedule, a substantial
principal payment will be due on each Mortgage Loan on its stated maturity
date. The full outstanding principal balance due and payable on any Mortgage
Loan's stated maturity date (other than the portion thereof, if any,
attributable to the delinquency of payments due prior to the stated maturity
date, and before taking into account the effect of any bankruptcy or similar
proceeding) is referred to herein as a "Balloon Amount." Each of the Mortgage
Loans provides for the accrual of interest on any unpaid portion of its Balloon
Amount which is not paid in full on the stated maturity date of such Mortgage
Loan.
No Mortgage Loan is a Buy-Down Loan. See "The Trust Estates--Mortgage Loans"
in the Prospectus.
Each of the Mortgage Loans is subject to a due-on-sale clause. See "Certain
Legal Aspects of the Mortgage Loans--"Due-on-Sale' Clause," and "Servicing of
the Mortgage Loans--Enforcement of Due-on-Sale Clauses; Realization Upon
Defaulted Mortgage Loans" in the Prospectus.
As of June 17, 1997, four of the Mortgage Loans, representing approximately
2.79% of the Aggregate Unpaid Principal Balance of the Mortgage Loans, were
Mortgage Loans originated in connection with the relocation of employees of
various corporate employers that participated in PHMC's relocation program and
of employees of various non-participant employers ("Relocation Mortgage
Loans").
As of June 17, 1997, each Mortgage Loan had an Unpaid Principal Balance of
not less than $58,373 or more than $720,480, and the average Unpaid Principal
Balance of the Mortgage Loans was approximately $299,660. The latest stated
maturity date of any of the Mortgage Loans was July 1, 2000; however, the
actual date on which any Mortgage Loan is paid in full may be earlier than the
stated maturity date due to unscheduled payments of principal. Based on
information supplied by the mortgagors in connection with their loan
applications at origination, all of the Mortgaged Properties were owner
occupied primary residences. See "PHMC--Mortgage Loan Underwriting" in the
Prospectus.
S1-9
<PAGE>
MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE UNPAID AGGREGATE UNPAID
MORTGAGE INTEREST RATE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
7.250%............................ 3 $ 900,968.31 1.76%
7.375%............................ 5 1,728,010.23 3.37
7.500%............................ 8 2,139,391.00 4.18
7.625%............................ 13 3,234,837.28 6.31
7.750%............................ 12 3,563,202.18 6.95
7.875%............................ 20 6,308,283.77 12.31
8.000%............................ 16 4,936,271.74 9.63
8.125%............................ 18 5,445,493.56 10.63
8.250%............................ 10 3,060,798.66 5.97
8.375%............................ 30 8,839,576.62 17.25
8.500%............................ 13 3,602,292.57 7.03
8.625%............................ 11 3,073,421.91 6.00
8.750%............................ 3 1,150,519.72 2.25
8.875%............................ 5 1,154,303.08 2.25
9.000%............................ 2 894,475.26 1.75
9.250%............................ 2 1,209,986.68 2.36
--- -------------- ------
Total......................... 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
As of June 17, 1997, the weighted average Mortgage Interest Rate of the
Mortgage Loans was approximately 8.137% per annum. The Net Mortgage Interest
Rate of each Mortgage Loan is equal to the Mortgage Interest Rate of such
Mortgage Loan minus the Servicing Fee rate of 0.20% per annum. As of June 17,
1997, the weighted average Net Mortgage Interest Rate of the Mortgage Loans was
approximately 7.937% per annum.
REMAINING MONTHS TO STATED MATURITY(1) AND BALLOON AMOUNTS DUE
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
MORTGAGE PERCENTAGE OF
REMAINING STATED NUMBER OF INTEREST AGGREGATE UNPAID AGGREGATE UNPAID BALLOON AMOUNT
TERM (MONTHS)(/1/) LOANS RATE PRINCIPAL BALANCE PRINCIPAL BALANCE DUE AT MATURITY
- ------------------ --------- ---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
0...................... 11 8.102% $ 3,806,870.65 7.43% $ 3,806,870.65
1...................... 28 7.898 7,826,062.42 15.27 7,826,062.42
2...................... 11 7.539 2,976,441.18 5.81 2,973,095.97
3...................... 1 8.000 305,170.30 0.60 304,541.05
9...................... 1 8.000 216,345.26 0.42 214,606.38
13...................... 1 7.875 293,487.97 0.57 289,936.25
20...................... 3 7.919 709,808.06 1.39 692,192.92
23...................... 6 8.944 2,043,014.33 3.99 1,998,471.36
24...................... 27 8.556 8,048,908.14 15.71 7,843,327.91
25...................... 52 8.267 15,490,188.13 30.22 15,056,140.00
26...................... 28 7.790 8,942,658.08 17.45 8,657,885.96
34...................... 1 8.375 259,149.38 0.51 250,146.37
37...................... 1 8.500% 323,728.67 0.63 312,179.10
--- -------------- ------ --------------
Total................. 171 $51,241,832.57 100.00% $50,225,456.34
=== ============== ====== ==============
</TABLE>
- -------
(1) With respect to each Mortgage Loan which has reached its maturity date but
remains unpaid, or in the case of four of the Mortgage Loans for which
Balloon Amounts were delinquent but were paid in full, the remaining term
to stated maturity is considered to be zero. See "--Delinquency Status of
Mortgage Loans which have Reached their Maturity Dates" below.
S1-10
<PAGE>
As of June 17, 1997, the weighted average remaining term to stated maturity
of the Mortgage Loans was approximately 18 months. The actual rate and timing
of the payment of Balloon Amounts will depend upon a variety of factors,
including whether and at what time the mortgagors will be able to obtain
refinancings of the Mortgage Loans. See "Risk Factors--Yield Considerations"
herein and "Yield and Prepayment Considerations" in the Prospectus Supplement.
YEARS OF ORIGINATION
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE UNPAID AGGREGATE UNPAID
YEAR OF ORIGINATION LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
1992......................... 171 $51,241,832.57 100.00%
--- -------------- ------
Total...................... 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
As of June 17, 1997, the earliest month and year of origination of any
Mortgage Loan was January 1992 and the latest month and year of origination was
July 1992.
ORIGINAL LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE UNPAID AGGREGATE UNPAID
ORIGINAL LOAN-TO-VALUE RATIO LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
---------------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
50.0% or less................ 7 $ 2,140,500.98 4.18%
50.1-55.0%................... 4 945,474.54 1.85
55.1-60.0%................... 6 1,517,684.00 2.96
60.1-65.0%................... 12 4,272,398.38 8.34
65.1-70.0%................... 23 7,530,102.48 14.70
70.1-75.0%................... 44 13,053,704.69 25.47
75.1-80.0%................... 75 21,781,967.50 42.50
--- -------------- ------
Total...................... 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
As of June 17, 1997, the minimum and maximum Loan-to-Value Ratios at
origination of the Mortgage Loans were 35.9% and 80.0%, respectively, and the
weighted average Loan-to-Value Ratio at origination of the Mortgage Loans was
approximately 72.3%. The Loan-to-Value Ratio of a Mortgage Loan was calculated
using the lesser of (i) the appraised value of the related Mortgaged Property,
as established by an appraisal obtained by the originator from an appraiser in
connection with the origination of the Mortgage Loan, and (ii) the sale price
for such property. In some instances, the Loan-to-Value Ratio may have been
based on an appraisal that was obtained by the originator more than four months
prior to origination, provided that (i) a recertification of the original
appraisal was obtained and (ii) the original appraisal was obtained no more
than twelve months prior to origination. For the purpose of calculating the
Loan-to-Value Ratio of any Mortgage Loan that was the result of the refinancing
(including a refinancing for "equity take out" purposes) of an existing
mortgage loan, the appraised value of the related Mortgaged Property was
generally determined by reference to an appraisal obtained in connection with
the origination of the replacement loan. There can be no assurance that the
values determined by the appraisers as of the dates of appraisal represent the
prices at which the related Mortgaged Properties can be sold, either as of the
dates of appraisal or at foreclosure. Further, there can be no assurance that
the Loan-to-Value Ratio at origination of any Mortgage Loan is representative
of the ratio of the Unpaid Principal Balance of such Mortgage Loan to the value
of the related Mortgaged Property as of the date hereof. The Seller has taken
no action to establish the current value of any Mortgaged Property. See "PHMC--
Mortgage Loan Underwriting" and "The Trust Estates--Mortgage Loans" in the
Prospectus and "Pooling and Servicing Agreement" herein.
S1-11
<PAGE>
MORTGAGE LOAN DOCUMENTATION LEVELS
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE UNPAID AGGREGATE UNPAID
DOCUMENTATION LEVEL LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
Full Documentation......... 115 $35,403,029.63 69.09%
Asset & Income
Verification.............. 5 1,779,081.22 3.47
Asset & Mortgage
Verification.............. 43 12,098,099.44 23.61
Income & Mortgage
Verification.............. 0 0.00 0.00
Asset Verification......... 4 966,544.94 1.89
Income Verification........ 0 0.00 0.00
Mortgage Verification...... 3 687,484.19 1.34
Preferred Processing....... 1 307,593.15 0.60
--- -------------- ------
Total.................... 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
Documentation levels, and the degree of review and evaluation of such
documents, vary depending upon several factors, including loan amount, Loan-to-
Value Ratio and the type and purpose of the Mortgage Loan. Asset, income and
mortgage verifications were obtained for Mortgage Loans processed with "full
documentation." In the case of "preferred processing," neither asset, income
nor mortgage verifications were obtained. In most instances, a verification of
the borrower's employment was obtained. However, for all of the Mortgage Loans,
a credit report on the borrower and a property appraisal were obtained. See
"PHMC--Mortgage Loan Underwriting" in the Prospectus.
ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PERCENTAGE OF
OIGINAL MORTGAGE LOANR NUMBER OF AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE LOANS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ---------------------- --------- ----------------- -----------------
<S> <C> <C> <C>
$200,001-$250,000................ 45 $ 9,538,810.32 18.62%
$250,001-$300,000................ 57 14,730,528.09 28.74
$300,001-$350,000................ 28 8,374,682.27 16.34
$350,001-$400,000................ 11 3,897,914.25 7.61
$400,001-$450,000................ 8 3,216,086.80 6.28
$450,001-$500,000................ 8 3,640,914.03 7.11
$500,001-$550,000................ 4 1,943,794.69 3.79
$550,001-$600,000................ 6 3,332,377.42 6.50
$600,001-$650,000................ 3 1,846,245.31 3.60
$700,001-$750,000................ 1 720,479.39 1.41
--- -------------- ------
Total.......................... 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
As of June 17, 1997, the average Unpaid Principal Balance of the Mortgage
Loans was approximately $299,660. As of June 17, 1997, the weighted average
Loan-to-Value Ratio at origination and the maximum Loan-to-Value Ratio at
origination of the Mortgage Loans which had original principal balances in
excess of $600,000 were approximately 67.4% and 70.0%, respectively. See
"PHMC--Mortgage Loan Underwriting" in the Prospectus.
S1-12
<PAGE>
MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
AGGREGATE UNPAID PERCENTAGE OF
NUMBER OF PRINCIPAL AGGREGATE UNPAID
PROPERTY LOANS BALANCE PRINCIPAL BALANCE
- -------- --------- ---------------- -----------------
<S> <C> <C> <C>
Single-family detached............ 166 $50,013,396.66 97.60%
Two- to four-family units......... 0 0.00 0.00
Condominiums...................... 5 1,228,435.91 2.40
Townhouses........................ 0 0.00 0.00
Planned Unit Developments......... 0 0.00 0.00
Cooperative units................. 0 0.00 0.00
--- -------------- ------
Total........................... 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
AGGREGATE UNPAID PERCENTAGE OF
NUMBER OF PRINCIPAL AGGREGATE UNPAID
GEOGRAPHIC AREA LOANS BALANCE PRINCIPAL BALANCE
- --------------- --------- ---------------- -----------------
<S> <C> <C> <C>
California......................... 150 $45,567,930.23 88.94%
Colorado........................... 1 197,219.84 0.38
Connecticut........................ 3 937,663.20 1.83
Florida............................ 2 708,597.34 1.38
Maryland........................... 1 221,963.25 0.43
Massachusetts...................... 1 287,249.56 0.56
Nevada............................. 2 492,126.81 0.96
New Jersey......................... 4 917,287.07 1.79
New York........................... 1 58,373.29 0.11
Texas.............................. 1 378,898.33 0.74
Virginia........................... 5 1,474,523.65 2.88
--- -------------- ------
Total............................ 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
As of June 17, 1997, no more than approximately 3.62% of the Aggregate Unpaid
Principal Balance of the Mortgage Loans was secured by Mortgaged Properties
located in any one five digit zip code.
ORIGINATORS OF MORTGAGE LOANS
<TABLE>
<CAPTION>
AGGREGATE UNPAID PERCENTAGE OF
NUMBER OF PRINCIPAL AGGREGATE UNPAID
ORIGINATOR LOANS BALANCE PRINCIPAL BALANCE
- ---------- --------- ---------------- -----------------
<S> <C> <C> <C>
PHMC or Affiliate.................. 16 $ 4,843,845.25 9.45%
Other Originators.................. 155 46,397,987.32 90.55
--- -------------- ------
Total............................ 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
S1-13
<PAGE>
PURPOSE OF MORTGAGE LOANS
<TABLE>
<CAPTION>
AGGREGATE UNPAID PERCENTAGE OF
NUMBER OF PRINCIPAL AGGREGATE UNPAID
LOAN PURPOSE LOANS BALANCE PRINCIPAL BALANCE
- ------------ --------- ---------------- -----------------
<S> <C> <C> <C>
Purchase........................... 33 $ 9,299,010.64 18.15%
Rate/term refinance................ 102 31,750,175.12 61.96
Equity take out.................... 36 10,192,646.81 19.89
--- -------------- ------
Total............................ 171 $51,241,832.57 100.00%
=== ============== ======
</TABLE>
In general, in the case of a Mortgage Loan made for "rate/term" refinance
purposes, substantially all of the proceeds are used to pay in full the
principal balance of a previous mortgage loan of the mortgagor with respect to
a Mortgaged Property and to pay origination and closing costs associated with
such refinancing. However, in the case of a Mortgage Loan made for "equity take
out" refinance purposes, all or a portion of the proceeds are generally
retained by the mortgagor for uses unrelated to the Mortgaged Property. The
amount of such proceeds retained by the mortgagor may be substantial. See
"PHMC-Mortgage Loan Underwriting" in the Prospectus.
DELINQUENCY STATUS OF MORTGAGE LOANSWHICH HAVE NOT REACHED THEIR MATURITY DATES
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF ACTUAL AGGREGATE UNPAID AGGREGATE UNPAID
STATUS LOANS(1) PRINCIPAL BALANCE(1) PRINCIPAL BALANCE(2)
- ------ --------- ----------------------- --------------------
<S> <C> <C> <C>
30 to 59 days........... 3 $ 953,694.46 1.86%
60 to 89 days........... 1 305,994.30 0.60
90 days or more......... 0 0.00 0.00
Loans in Foreclosure.... 5 1,312,465.76 2.56
REO Mortgage Loans...... 5 1,899,875.25 3.71
--- ------------- ----
Total................. 14 $4,472,029.77 8.73%
=== ============= ====
</TABLE>
- -------
(1) Reflects the number of delinquent Mortgage Loans and the actual unpaid
principal balances of such Mortgage Loans based on information available to
Norwest Mortgage, as subservicer, as of June 17, 1997.
(2) As of June 17, 1997.
The indicated periods of delinquency are based on the number of days past
due, based on a 30-day month. No Mortgage Loan is considered delinquent for
these purposes until one month has passed since its contractual due date.
S1-14
<PAGE>
DELINQUENCY STATUS OF MORTGAGE LOANS WHICH HAVE REACHED THEIR MATURITY DATES
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF ACTUAL AGGREGATE UNPAID AGGREGATE UNPAID
STATUS LOANS(1) PRINCIPAL BALANCE(1) PRINCIPAL BALANCE(2)
- ------ --------- ----------------------- --------------------
<S> <C> <C> <C>
1 to 29 days............. 6 $2,227,620.10 4.35%
30 to 59 days............ 0 0.00 0.00
60 to 89 days............ 1 458,312.30 0.89
90 days or more.......... 0 0.00 0.00
Loans in Foreclosure..... 0 0.00 0.00
REO Mortgage Loans....... 0 0.00 0.00
--- ------------- ----
7 $2,685,932.40 5.24%
=== ============= ====
</TABLE>
- -------
(1) Reflects the number and actual unpaid principal balances, as of June 17,
1997, of Mortgage Loans which have reached their maturity dates and for
which a Balloon Amount has become due and has not been paid.
(2) As of June 17, 1997.
The indicated periods of delinquency are based on the number of days past
due, based on a 30 day month. A Mortgage Loan which has reached its maturity
date is considered delinquent for these purposes once the contractual date of
the Balloon Amount has passed.
On January 17, 1994, southern California experienced an earthquake (the
"Earthquake"). Certain of the underlying Mortgaged Properties sustained damage,
which may have been substantial, as a result of the Earthquake. In addition,
certain mortgagors experienced interruptions or reductions in their incomes as
a result of the Earthquake. As a result of damage to the Mortgaged Property or
the interruption or reduction of income of the mortgagor because of the
Earthquake, PHMC, as servicer entered into modification agreements with certain
mortgagors extending the terms of the related mortgage notes by up to 12
months. Modification agreements resulting from damage to the Mortgaged Property
or the interruption or reduction of income of the mortgagor have been entered
into with respect to five Mortgage Loans having an aggregate Unpaid Principal
Balance of approximately $1,397,882 and representing approximately 2.73% of the
Aggregate Unpaid Principal Balance of the Mortgage Loans. The modification
agreements were not conditioned on the repair of damaged property. In
connection with PHMC's entering into the modification agreements and in
connection with the foreclosure of certain delinquent Mortgage Loans, PHMC
obtained through one of several sources, certain materials that described the
condition of the Mortgaged Properties at that time. Such materials were not
current appraisals of the Mortgaged Properties and may not be indicative of the
actual extent of the damage sustained.
Neither the Seller, PHMC, the Servicer nor Norwest Mortgage has undertaken
the physical inspection of any Mortgaged Properties. As a result, there can be
no assurance that material damage to any Mortgaged Property in a region
affected by a natural disaster (including, without limitation, the Earthquake)
has not occurred. See "Pooling and Servicing Agreement" herein.
DELINQUENCY AND FORECLOSURE EXPERIENCE
The following tables set forth certain information concerning recent
delinquency, foreclosure and loan loss experience, (i) on the conventional
mortgage loans included in various mortgage pools underlying all series of the
Seller's mortgage pass-through certificates and other mortgage loans owned by
third parties (the "Program Loans"), (ii) on the Program Loans which are fixed
interest rate mortgage loans (the "Fixed Program Loans"), including in both
clause (i) and this clause (ii) Relocation Mortgage Loans, (iii) on the Fixed
Program Loans, other than Relocation Mortgage Loans (the "Fixed Non-Relocation
Program Loans") and (iv) on the Program Loans that are Balloon Loans (the
"Balloon
S1-15
<PAGE>
Program Loans"). See "Description of the Mortgage Loans" in the Prospectus
Supplement and PHMC--General" and "--Mortgage Loan Underwriting" and "Servicing
of the Mortgage Loans" in the Prospectus. The delinquency, foreclosure and loan
loss experience represents the experience of PHMC and The Prudential Mortgage
Capital Company, Inc., an affiliate of PHMC which serviced the Program Loans
prior to June 30, 1989. There can be no assurance that the delinquency,
foreclosure and loan loss experience set forth with respect to PHMC's total
servicing portfolio of Program Loans, which includes both fixed and adjustable
interest rate mortgage loans and loans having a variety of original terms to
stated maturity including Relocation Mortgage Loans and non-relocation mortgage
loans, and PHMC's servicing portfolios of Fixed Program Loans and Fixed Non-
Relocation Program Loans, each of which includes loans having a variety of
payment characteristics such as Subsidy Loans and Balloon Loans will be
representative of the results that have been or may be experienced with respect
to the Mortgage Loans. The Balloon Program Loans have only recently begun to
reach their maturity dates. As a result, the table with respect to Balloon
Program Loans does not reflect the results of defaults of such Mortgage Loans
after their maturity dates.
Historically, Relocation Mortgage Loans have experienced a significantly
lower rate of delinquency and foreclosure than other mortgage loans included in
the portfolios of total Program Loans, Fixed Program Loans and Fixed Non-
Relocation Program Loans. There can be no assurance that the future experience
on the Mortgage Loans, all of which are Balloon Loans and approximately 2.79%
(by Aggregate Unpaid Principal Balance) are Relocation Mortgage Loans, will be
comparable to that of the total Program Loans, the Fixed Program Loans, the
Fixed Non-Relocation Program Loans or the Balloon Program Loans.
The following tables reflect rapid growth during certain periods in PHMC's
mortgage loan servicing portfolio as a result of the substantially higher
volume of new loan originations and acquisitions of mortgage loans which were
originated at or shortly prior to the acquisition thereof. Delinquencies,
foreclosures and loan losses generally are expected to occur more frequently
after the first full year of the life of mortgage loans. Accordingly, because a
large number of mortgage loans which were serviced by PHMC prior to the Asset
Acquisition have been originated recently, the current level of delinquencies,
foreclosures and loan losses may not be representative of the levels which may
be experienced over the lives of such mortgage loans. In addition, because PHMC
ceased the mortgage loan origination and acquisition business subsequent to the
Asset Acquisition, the levels of delinquencies, foreclosures and loan losses as
percentages of PHMC's Retained Servicing portfolio prior to the Asset
Acquisition could rise significantly above the rates indicated in the following
tables.
On May 30, 1997, the servicing of the Mortgage Loans under the Pooling and
Servicing Agreement was sold to CMI. There can be no assurance that the
servicing experience of CMI with respect to the Mortgage Loans will be
comparable to the experience of PHMC and Norwest Mortgage with respect to the
total Program Loans, the Fixed Program Loans, the Fixed Non-Relocation Program
Loans or the Balloon Program Loans. See "Risk Factors--Recent Developments--
Sale of the Servicing" herein.
S1-16
<PAGE>
TOTAL PROGRAM LOANS
<TABLE>
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
-------------------- ------------------------------ --------------------
BY NO. BY DOLLAR BY DOLLAR BY NO. BY DOLLAR
OF AMOUNT BY NO. AMOUNT OF AMOUNT
LOANS OF LOANS OF LOANS OF LOANS LOANS OF LOANS
------- ----------- ------------- ---------------- ------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio of
Program Loans.......... 147,478 $36,537,000 134,499 $32,515,000 131,297 $31,512,000
======= =========== ============ ================ ======= ===========
Period of Delinquency(1)
30 to 59 days......... 1,502 $ 359,137 1,532 $ 354,102 1,492 $ 336,507
60 to 89 days......... 310 75,162 307 72,637 313 73,885
90 days or more....... 277 77,103 361 93,783 352 95,245
------- ----------- ------------ ---------------- ------- -----------
Total Delinquent Loans.. 2,089 $ 511,402 2,200 $ 520,522 2,157 $ 505,637
======= =========== ============ ================ ======= ===========
Percent of Portfolio.... 1.42% 1.40% 1.64% 1.60% 1.64% 1.60%
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
-------------------- ------------------------------ --------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Foreclosures(2)......... $346,096 $295,307 $271,655
Foreclosure Ratio(3).... 0.95% 0.91% 0.86%
<CAPTION>
AS OF AS OF THREE MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
-------------------- ------------------------------ --------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net Gain (Loss)(4)...... $(150,948) $(112,925) $(29,713)
Net Gain Loss Ratio(5).. (0.41)% (0.35)% (0.09)%
</TABLE>
- -------------------
(1) The indicated periods of delinquency are based on the number of days past
due, based on a 30-day month. No mortgage loan is considered delinquent for
these purposes until one month has passed since its contractual due date. A
mortgage loan is no longer considered delinquent once foreclosure
proceedings have commenced.
(2) Includes loans in the applicable portfolio for which foreclosure
proceedings had been instituted or with respect to which the related
property had been acquired as of the dates indicated.
(3) Foreclosures as a percentage of total loans in the applicable portfolio at
the end of each period.
(4) Does not include gain or loss with respect to loans in the applicable
portfolio for which foreclosure proceedings had been instituted but not
completed as of the dates indicated, or for which the related properties
have been acquired in foreclosure proceedings but not yet sold.
(5) Net gain (loss) as a percentage of total loans in the applicable portfolio
at the end of each period.
S1-17
<PAGE>
FIXED PROGRAM LOANS
<TABLE>
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
--------------------- --------------------- ---------------------
BY DOLLAR BY DOLLAR BY DOLLAR
BY NO. AMOUNT BY NO. AMOUNT BY NO. AMOUNT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
-------- ----------- -------- ----------- -------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio of Fixed
Program Loans.......... 119,734 $29,152,000 113,528 $27,083,000 111,581 $26,442,000
======= =========== ======= =========== ======= ===========
Period of Delinquency(1)
30 to 59 days......... 1,073 $ 241,975 1,116 $ 243,152 1,118 $ 242,086
60 to 89 days......... 200 44,225 215 46,517 218 46,815
90 days or more....... 171 46,094 218 55,706 232 59,603
------- ----------- ------- ----------- ------- -----------
Total Delinquent Loans.. 1,444 $ 332,294 1,549 $ 345,375 1,568 $ 348,504
======= =========== ======= =========== ======= ===========
Percent of Fixed Program
Loan Portfolio......... 1.21% 1.14% 1.36% 1.28% 1.41% 1.32%
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
--------------------- --------------------- ---------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Foreclosures(2)......... $186,359 $161,724 $145,349
Foreclosure Ratio(3).... 0.64% 0.60% 0.55%
<CAPTION>
AS OF AS OF THREE MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
--------------------- --------------------- ---------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net Gain (Loss)(4)...... $(115,100) $(80,788) $(19,632)
Net Gain (Loss)
Ratio(5)............... (0.39)% (0.30)% (0.07)%
</TABLE>
- -------------------
(1) The indicated periods of delinquency are based on the number of days past
due, based on a 30-day month. No mortgage loan is considered delinquent for
these purposes until one month has passed since its contractual due date. A
mortgage loan is no longer considered delinquent once foreclosure
proceedings have commenced.
(2) Includes loans in the applicable portfolio for which foreclosure
proceedings had been instituted or with respect to which the related
property had been acquired as of the dates indicated.
(3) Foreclosures as a percentage of total loans in the applicable portfolio at
the end of each period.
(4) Does not include gain or loss with respect to loans in the applicable
portfolio for which foreclosure proceedings had been instituted but not
completed as of the dates indicated, or for which the related properties
have been acquired in foreclosure proceedings but not yet sold.
(5) Net gain (loss) as a percentage of total loans in the applicable portfolio
at the end of each period.
S1-18
<PAGE>
FIXED NON-RELOCATION PROGRAM LOANS
<TABLE>
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
--------------------- --------------------- ---------------------
BY DOLLAR BY DOLLAR BY DOLLAR
BY NO. AMOUNT BY NO. AMOUNT BY NO. AMOUNT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
-------- ----------- -------- ----------- -------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio of Fixed
Non-Relocation Program
Loans.................. 112,145 $27,137,000 103,736 $24,438,000 102,053 $23,880,000
======= =========== ======= =========== ======= ===========
Period of Delinquency(1)
30 to 59 days......... 1,029 $ 231,426 1,065 $ 229,462 1,070 $ 230,856
60 to 89 days......... 197 43,488 209 45,044 210 44,578
90 days or more....... 167 44,974 213 54,415 224 57,373
------- ----------- ------- ----------- ------- -----------
Total Delinquent Loans.. 1,393 $ 319,888 1,487 $ 328,921 1,504 $ 332,807
======= =========== ======= =========== ======= ===========
Percent of Fixed Non-
Relocation Program Loan
Portfolio.............. 1.24% 1.18% 1.43% 1.35% 1.47% 1.39%
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
--------------------- --------------------- ---------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Foreclosures(2)......... $183,856 $158,267 $142,492
Foreclosure Ratio(3).... 0.68% 0.65% 0.60%
<CAPTION>
YEAR ENDED YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
--------------------- --------------------- ---------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net Gain (Loss)(4)...... $(114,306) $(78,502) $(19,558)
Net Gain (Loss)
Ratio(5)............... (0.42)% (0.32)% (0.08)%
</TABLE>
- -------------------
(1) The indicated periods of delinquency are based on the number of days past
due, based on a 30-day month. No mortgage loan is considered delinquent for
these purposes until one month has passed since its contractual due date. A
mortgage loan is no longer considered delinquent once foreclosure
proceedings have commenced.
(2) Includes loans in the applicable portfolio for which foreclosure
proceedings had been instituted or with respect to which the related
property had been acquired as of the dates indicated.
(3) Foreclosures as a percentage of total loans in the applicable portfolio at
the end of each period.
(4) Does not include gain or loss with respect to loans in the applicable
portfolio for which foreclosure proceedings had been instituted but not
completed as of the dates indicated, or for which the related properties
have been acquired in foreclosure proceedings but not yet sold.
(5) Net gain (loss) as a percentage of total loans in the applicable portfolio
at the end of each period.
S1-19
<PAGE>
BALLOON PROGRAM LOANS
<TABLE>
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
------------------- ------------------- -------------------
BY DOLLAR BY DOLLAR BY DOLLAR
BY NO. AMOUNT BY NO. AMOUNT BY NO. AMOUNT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
-------- ---------- -------- ---------- -------- ----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio of
Balloon Program Loans.. 7,536 $2,269,000 6,146 $1,820,000 5,783 $1,706,000
===== ========== ===== ========== ===== ==========
Period of Delinquency(1)
30 to 59 days......... 75 $ 22,629 92 $ 28,465 74 $ 23,132
60 to 89 days......... 30 9,671 22 7,813 12 3,619
90 days or more....... 37 11,593 30 8,425 28 8,647
----- ---------- ----- ---------- ----- ----------
Total Delinquent Loans.. 142 $ 43,893 144 $ 44,703 114 $ 35,398
===== ========== ===== ========== ===== ==========
Percent of Balloon
Program Loan
Portfolio.............. 1.88% 1.93% 2.34% 2.46% 1.97% 2.07%
<CAPTION>
AS OF AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
------------------- ------------------- -------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Foreclosures(2)......... $53,457 $44,325 $44,425
Foreclosure Ratio(3).... 2.36% 2.44% 2.60%
<CAPTION>
YEAR ENDED YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996 MARCH 31, 1997
------------------- ------------------- -------------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Net Gain (Loss)(4)...... $(27,015) $(22,146) $(4,894)
Net Gain (Loss)
Ratio(5)............... (1.19)% (1.22)% (0.29)%
</TABLE>
- -------------------
(1) The indicated periods of delinquency are based on the number of days past
due, based on a 30-day month. No mortgage loan is considered delinquent for
these purposes until one month has passed since its contractual due date. A
mortgage loan is no longer considered delinquent once foreclosure
proceedings have commenced.
(2) Includes loans in the applicable portfolio for which foreclosure
proceedings had been instituted or with respect to which the related
property had been acquired as of the dates indicated.
(3) Foreclosures as a percentage of total loans in the applicable portfolio at
the end of each period.
(4) Does not include gain or loss with respect to loans in the applicable
portfolio for which foreclosure proceedings had been instituted but not
completed as of the dates indicated, or for which the related properties
have been acquired in foreclosure proceedings but not yet sold.
(5) Net gain (loss) as a percentage of total loans in the applicable portfolio
at the end of each period.
S1-20
<PAGE>
The likelihood that a mortgagor will become delinquent in the payment of his
or her mortgage loan, the rate of any subsequent foreclosures, and the severity
of any loan loss experience, may be affected by a number of factors related to
a borrower's personal circumstances, including, but not limited to,
unemployment or change in employment (or in the case of self-employed
mortgagors or mortgagors relying on commission income, fluctuations in income),
marital separation and the mortgagor's equity in the related mortgaged
property. In addition, delinquency, foreclosure and loan loss experience may be
sensitive to adverse economic conditions, either nationally or regionally, may
exhibit seasonal or cyclical variations and may be influenced by the level of
interest rates and servicing decisions on the applicable mortgage loans.
Regional economic conditions (including declining real estate values and the
effect of natural disasters) may particularly affect delinquency, foreclosure
and loan loss experience on mortgage loans to the extent that mortgaged
properties are concentrated in certain geographic areas. Furthermore, the level
of foreclosure is affected by the length of time (which will vary from time to
time and from jurisdiction to jurisdiction) to complete the foreclosure process
and take title to the related property. The Seller believes that the changes in
the delinquency, foreclosure and loan loss experience of PHMC's respective
servicing portfolios during the periods set forth in the preceding tables may
be attributable to factors such as those described above, although the Seller
is unable to assess to what extent these changes are the result of any
particular factor or a combination of factors. The delinquency, foreclosure and
loan loss experience on the Mortgage Loans may be particularly affected to the
extent that the related Mortgaged Properties are concentrated in areas which
experience adverse economic conditions or declining real estate values. See
"Risk Factors--Yield Consideration" and "Description of the Mortgage Loans"
herein and "Yield and Prepayment Considerations" in the Prospectus Supplement
and the Prospectus.
S1-21
<PAGE>
HISTORICAL PREPAYMENTS
The prepayment model used in this Supplement is a conditional (also known as
a constant) prepayment rate ("CPR"). CPR represents a rate of payment of
unscheduled principal on mortgage loans, expressed as an annualized percentage
of the outstanding principal balance of such mortgage loans at the beginning of
each period. CPR does not purport to be a historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
mortgage loans, including the Mortgage Loans. See "Prepayment and Yield
Considerations" in the Prospectus Supplement.
The Series 1992-31 Certificates were issued on September 18, 1992. Set forth
below are the approximate prepayment rates as a percentage of CPR as of the
Distribution Dates occurring in the indicated months.
HISTORICAL PREPAYMENT RATES
<TABLE>
<CAPTION>
PERCENTAGE
MONTH OF CPR
- ----- ----------
<S> <C>
October 1992............ 7.13%
November 1992........... 10.67%
December 1992........... 4.71%
January 1993............ 8.52%
February 1993........... 8.09%
March 1993.............. 8.89%
April 1993.............. 19.36%
May 1993................ 37.02%
June 1993............... 50.66%
July 1993............... 50.18%
August 1993............. 58.42%
September 1993.......... 54.79%
October 1993............ 57.26%
November 1993........... 72.08%
December 1993........... 68.40%
January 1994............ 59.52%
February 1994........... 39.59%
March 1994.............. 58.99%
April 1994.............. 54.40%
May 1994................ 31.73%
June 1994............... 27.47%
July 1994............... 16.07%
August 1994............. 20.19%
September 1994.......... 16.66%
October 1994............ 27.96%
November 1994........... 12.09%
December 1994........... 23.25%
January 1995............ 6.22%
February 1995........... 7.62%
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE
MONTH OF CPR
- ----- ----------
<S> <C>
March 1995.............. 0.19%
April 1995.............. 7.17%
May 1995................ 9.16%
June 1995............... 12.96%
July 1995............... 9.00%
August 1995............. 13.80%
September 1995.......... 10.69%
October 1995............ 22.37%
November 1995........... 16.16%
December 1995........... 17.36%
January 1996............ 16.33%
February 1996........... 15.40%
March 1996.............. 12.47%
April 1996.............. 20.55%
May 1996................ 16.43%
June 1996............... 22.42%
July 1996............... 4.40%
August 1996............. 11.56%
September 1996.......... 23.29%
October 1996............ 24.67%
November 1996........... 22.94%
December 1996........... 26.14%
January 1997............ 27.97%
February 1997........... 25.49%
March 1997.............. 30.85%
April 1997.............. 52.53%
May 1997................ 45.50%
June 1997............... 50.62%
</TABLE>
The prepayment rates described above were calculated based upon the weighted
average Mortgage Interest Rate of the Mortgage Loans for the applicable month
and an assumed weighted average remaining term to maturity for the Mortgage
Loans equal to the weighted average remaining
S1-22
<PAGE>
term to maturity at the date of the initial issuance of the Series 1992-31
Certificates with respect to October 1992, reduced by one-month for each month
thereafter. The prepayment history of the Mortgage Loans underlying the Series
1992-31 Certificates cannot be relied upon as an indicator of the future rate
of prepayments on the Mortgage Loans. Further, the rate of prepayment of a pool
of mortgage loans during any period should be considered in light of the amount
of time elapsed since the origination of such mortgage loans, the remaining
terms to stated maturity of such mortgage loans and the absolute levels of, and
changes in, prevailing market interest rates during such period. For a further
discussion of the factors affecting the rate of prepayments on mortgage loans,
see "Summary Information--Effects of Prepayments on Investment Expectations"
and "Prepayment and Yield Considerations" in the Prospectus Supplement.
INVESTORS ARE URGED TO MAKE AN INDEPENDENT DECISION AS TO THE APPROPRIATE
PREPAYMENT ASSUMPTIONS TO BE USED IN DECIDING WHETHER TO PURCHASE A CLASS A-11
CERTIFICATE.
SENSITIVITY OF THE PRE-TAX YIELD TO MATURITY AND WEIGHTED
AVERAGE LIFE OF THE CLASS A-11 CERTIFICATES
The Prospectus Supplement and the Prospectus contain important information
concerning factors that will affect the yield and weighted average life of the
Class A-11 Certificates. Investors are urged to read "Risk Factors--Yield
Considerations" herein and "Prepayment and Yield Considerations" in the
Prospectus Supplement and the Prospectus particularly carefully.
THE YIELD TO INVESTORS IN THE CLASS A-11 CERTIFICATES, WHICH ARE EXPECTED TO
BE OFFERED AT A SUBSTANTIAL PREMIUM, WILL BE HIGHLY SENSITIVE TO BOTH THE
TIMING OF RECEIPT AND THE OVERALL RATE OF PRINCIPAL PREPAYMENTS (FOR THIS
PURPOSE, THE TERM "PREPAYMENT" INCLUDES FULL AND PARTIAL PREPAYMENTS BY
MORTGAGORS, LIQUIDATIONS DUE TO DEFAULT, CASUALTY, CONDEMNATION AND THE LIKE,
REPURCHASES DUE TO BREACH OF REPRESENTATIONS AND OPTIONAL PURCHASES) ON THE
MORTGAGE LOANS, PARTICULARLY WITH RESPECT TO THOSE MORTGAGE LOANS WITH HIGHER
RATES OF INTEREST, WHICH OVERALL RATE MAY FLUCTUATE SIGNIFICANTLY FROM TIME TO
TIME. AN INVESTOR IN THE CLASS A-11 CERTIFICATES SHOULD FULLY CONSIDER THE
ASSOCIATED RISKS, INCLUDING THE RISK THAT A RAPID RATE OF PRINCIPAL PAYMENTS
(INCLUDING PREPAYMENTS) COULD RESULT IN THE FAILURE OF SUCH INVESTOR TO FULLY
RECOVER ITS INITIAL INVESTMENT.
For purposes of the table set forth below, the weighted average life of a
Class A-11 Certificate is the average amount of time that will elapse from July
18, 1997 until the Adjusted Unpaid Principal Balances (as defined below) of the
Mortgage Loans are reduced to zero. The weighted average life of the Class A-11
Certificates will be influenced by, among other things, the rate and timing of
principal payments on the Mortgage Loans, which may be in the form of scheduled
amortization, payments at maturity, prepayments or liquidation proceeds.
The following table has been prepared on the basis of the characteristics of
the Mortgage Loans that are included in the Trust Estate as of June 17, 1997,
as described above under "Description of the Mortgage Loans" adjusted to
reflect calculated payments of principal on July 1, 1997 assuming a constant
prepayment rate equal to 20% CPR for the month of June 1997. This adjustment
has the effect of reducing the remaining terms to stated maturity of each
Mortgage Loan by one month from the table shown on page S1-10. The Unpaid
Principal Balances of the Mortgage Loans adjusted as described above are
referred to herein as the "Adjusted Unpaid Principal Balances." The following
table indicates the sensitivity to various rates of prepayment on the Mortgage
Loans of the pre-tax yield to maturity, on a corporate bond equivalent ("CBE")
basis, and of the weighted average life of the Class A-11 Certificates at
various percentages of CPR. Such calculations are based on distributions made
in accordance with "Description of the Certificates" herein and in the
Prospectus Supplement, on the assumptions described in clauses (i) and (iii) of
the last paragraph beginning on page S-45 of
S1-23
<PAGE>
the Prospectus Supplement, and on the further assumptions that (i) the Class A-
11 Certificates will be purchased on July 18, 1997 for an aggregate purchase
price equal to approximately $467,174 which includes accrued interest from July
1, 1997 to (but not including) July 18, 1997, (ii) distributions to holders of
Class A-11 Certificates will be made on the 25th day of each month commencing
in August 1997, (iii) scheduled monthly payments of principal (including
Balloon Amounts) and interest on the Mortgage Loans will be timely received on
the first day of each month (with no defaults), commencing in August 1997, (iv)
principal prepayments on the Mortgage Loans will be received on the last day of
each month commencing in July 1997 at the respective percentages of CPR set
forth in the table and there are no Prepayment interest Shortfalls, (v) the
Class A-11 Notional Amount applicable to the Distribution Date occurring in
August 1997 will be approximately $38,839,803, (vi) the Subclass Principal
Balance of the Class A-11 Certificates as of the Determination Date occurring
in August 1997 will be approximately $78 and (vii) each Mortgage Loan for which
a Balloon Amount has come due but which remained unpaid as of June 17, 1997 was
paid in full on June 30, 1997.
SENSITIVITY OF THE PRE-TAX YIELD TO MATURITY AND WEIGHTED AVERAGE LIFE
OF THE CLASS A-11 CERTIFICATES TO PREPAYMENTS
<TABLE>
<CAPTION>
PERCENTAGES OF CPR
----------------------------------------------
10% 15% 20% 25% 30% 35% 40%
----- ----- ----- ----- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Pre-Tax Yield to
Maturity................. 39.24% 33.26% 27.09% 20.70% 14.07% 7.18% (0.02)%
Weighted Average Life
(years).................. 1.65 1.57 1.49 1.41 1.33 1.26 1.18
</TABLE>
The pre-tax yields to maturity set forth in the preceding table were
calculated by (i) determining the monthly discount rates which, when applied to
the assumed stream of cash flows to be paid on the Class A-11 Certificates,
would cause the discounted present value of such assumed stream of cash flows
to equal an assumed purchase price for the Class A-11 Certificates equal to
approximately $467,174, which includes accrued interest from July 1, 1997 to
(but not including) July 18, 1997, and (ii) converting such monthly rates to
corporate bond equivalent rates. Such calculation does not take into account
the interest rates at which an investor may be able to reinvest funds received
by such investor as distributions on the Class A-11 Certificates and
consequently does not purport to reflect the return on any investment in the
Class A-11 Certificates when such reinvestment rates are considered.
The weighted average lives of the Class A-11 Certificates set forth in the
preceding table were determined by (i) multiplying the amount of net reduction
of the Adjusted Unpaid Principal Balances of the Mortgage Loans by the number
of years from July 18, 1997 to the related Distribution Date, (ii) adding the
results and (iii) dividing the sum by the aggregate net reduction of the
Adjusted Unpaid Principal Balances of the Mortgage Loans referred to in clause
(i).
The assumptions set forth above and reflected in the above table are for
illustrative purposes only and vary considerably in terms of likelihood of
occurrence on an individual basis, but the likelihood of all occurring is
extremely remote. The Seller makes no representation with respect to the
reasonableness of such assumptions or that the actual rates of prepayments will
in any way correspond to any of the percentages of CPR assumed for purposes of
the table. It is highly unlikely that the Mortgage Loans will prepay at the
constant rate or combination of rates, or that all of the Mortgage Loans will
prepay at the same rate. It is also unrealistic to assume that there will be no
losses with respect to the Mortgage Loans. As a result of these factors, the
pre-tax yield to maturity and weighted average life of the Class A-11
Certificates are likely to differ from those shown in such table, even if all
of the Mortgage Loans prepay at the indicated percentages of CPR.
S1-24
<PAGE>
POOLING AND SERVICING AGREEMENT
REPRESENTATIONS AND WARRANTIES
At the time of the initial issuance of the Series 1992-31 Certificates, the
Seller made certain representations and warranties to the Trustee relating to
the Mortgage Loans. Those representations and warranties were made as of the
date of such initial issuance, and are not made as of any date or with respect
to any period after such issuance, or in connection with the sale of the Class
A-11 Certificates. See "The Trust Estates--Mortgage Loans--Representations and
Warranties" in the Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Elections have been made to treat the Trust Estate as two REMICs (the "Upper-
Tier REMIC") and the "Lower-Tier REMIC") for federal income tax purposes. The
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10 and Class A-11 Certificates and the Class B
Certificates are designated as the regular interests in the Upper-Tier REMIC
and the Class A-R and Class A-LR Certificates are designated as the residual
interests in the Upper-Tier REMIC and Lower-Tier REMIC, respectively.
The Class A-11 Certificates are treated as "loans . . . secured by an
interest in real property which is . . . residential real property" for
domestic building and loan associations and "real estate assets" for real
estate investment trusts to the extent described in the Prospectus.
The Class A-11 Certificates generally are treated as debt instruments
originated on the date of original issuance of the Series 1992-31 Certificates
for federal income tax purposes. Holders of the Class A-11 Certificates will be
required to report income thereon in accordance with the accrual method of
accounting. Final and temporary Treasury regulations regarding original issue
discount (the "OID Regulations") were issued on February 2, 1994, indicating
that either the OID Regulations or the Proposed OID Regulations (as defined and
discussed in the Prospectus) may be relied upon as authority with respect to
debt instruments issued on the date of original issuance of the Series 1992-31
Certificates. Although not free from doubt, the Seller believes that, under
both the OID Regulations (as subsequently amended effective June 14, 1996) and
the Proposed OID Regulations, the Class A-11 Certificates are considered to
have been issued with original issue discount in an amount equal to the excess
of all distributions of principal and interest expected to be received thereon
over their issue price (including accrued interest). Any "negative" amounts of
original issue discount on the Class A-11 Certificates attributable to rapid
prepayments will not be deductible currently, but may be offset against future
positive accruals of original issue discount, if any. The holder of a Class A-
11 Certificate may be entitled to a loss deduction to the extent it becomes
certain that such holder will not recover a portion of its basis in such
Certificate, assuming no further prepayments. The Seller makes no
representation as to the timing or amount of such losses, if any, or how any
such losses will be reported to the holders. See "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Original Issue Discount and "--Treatment of Losses" in
the Prospectus. The adjusted issue price of a Class A-11 Certificate as of the
date of purchase by an investor is its original issue price, plus original
issue discount accrued since the date of original issuance of the Series 1992-
31 Certificates, less distributions made, and losses, if any, incurred, on the
Class A-11 Certificates since the date of original issuance of the Series 1992-
31 Certificates. A purchase price for a Class A-11 Certificate that is less
than or greater than the adjusted issue price of such Class A-11 Certificate
will result in market discount or acquisition premium, respectively, to the
beneficial owner thereof, as discussed in the Prospectus under "Certain Federal
Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount" and "--
Acquisition Premium."
S1-25
<PAGE>
The Prepayment Assumption that is to be used in determining the rate of
accrual of original issue discount is set forth in the Prospectus Supplement
under "Federal Income Tax Considerations--Regular Certificates." No
representation is made as to the actual rate at which the Mortgage Loans will
prepay.
See "Summary Information--Federal Income Tax Status" and "Federal Income Tax
Considerations" in the Prospectus Supplement and "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates" in the
Prospectus.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement dated as of
June 17, 1997, and the terms agreement dated as of July 11, 1997 (together, the
"Underwriting Agreement") among the Seller, Prudential Insurance and Salomon
Brothers Inc, as underwriter (the "Underwriter"), the Class A-11 Certificates
offered hereby are being purchased from the Seller by the Underwriter on or
about July 18, 1997. The Underwriter is committed to purchase all of the Class
A-11 Certificates offered hereby if any Class A-11 Certificates are purchased.
The Underwriter has advised the Seller that it proposes to offer the Class A-11
Certificates, from time to time, for sale in negotiated transactions or
otherwise at prices determined at the time of sale and that Lazard Freres & Co.
LLC (the "Dealer") also proposes to offer the Class A-11 Certificates, from
time to time, for sale in negotiated transactions or otherwise at prices
determined at the time of sale. Proceeds to the Seller from the sale of the
Class A-11 Certificates are expected to be approximately 1.16% of the Pool
Scheduled Principal Balance as of the Distribution Date in August 1997 without
giving effect to partial principal prepayments or partial liquidation proceeds
received on or after the Determination Date in July 1997, plus accrued interest
from July 1, 1997 to (but not including) July 18, 1997. The Underwriter, the
Dealer and any other dealers that participate with the Underwriter in the
distribution of the Class A-11 Certificates may be deemed to be underwriters,
and any discounts or commissions received by them and any profit on the resale
of Class A-11 Certificates by them may be deemed to be underwriting discounts
or commissions, under the Securities Act of 1933, as amended (the "Securities
Act").
The Underwriting Agreement provides that the Seller and Prudential Insurance
will indemnify the Underwriter against certain civil liabilities under the
Securities Act or contribute to payments which the Underwriter may be required
to make in respect thereof.
SECONDARY MARKET
There will not be any market for the Class A-11 Certificates offered hereby
prior to the offering thereof. The Underwriter intends to act as a market maker
in the Class A-11 Certificates, subject to applicable provisions of federal and
state securities laws and other regulatory requirements, but is under no
obligation to do so. There can be no assurance that a secondary market in the
Class A-11 Certificates will develop or, if such a market does develop, that it
will provide holders of Class A-11 Certificates with liquidity of investment at
any particular time or for the life of the Class A-11 Certificates. As a source
of information concerning the Class A-11 Certificates and the Mortgage Loans,
prospective investors may obtain copies of the reports included in monthly
statements to Certificateholders described under "Description of Certificates--
Reports" in the Prospectus Supplement upon written request to the Trustee at
the Corporate Trust Office.
ERISA CONSIDERATIONS
As described in the Prospectus under "ERISA Considerations," ERISA and the
Code impose certain duties and restrictions on any person which is an employee
benefit plan subject to Title I of
S1-26
<PAGE>
ERISA and/or Code Section 4975 (each, an "ERISA Plan") or is utilizing the
assets of an ERISA Plan and on certain persons who perform services for ERISA
Plans. Comparable duties and restrictions may exist under federal, state or
local laws ("Similar Law"), which are, to a material extent, similar to the
foregoing sections of ERISA or the Code, on governmental plans and certain
persons who perform services for governmental plans. For example, unless
exempted, investment by an ERISA Plan in the Class A-11 Certificates may
constitute a prohibited transaction under ERISA or the Code. There are certain
exemptions issued by the United States Department of Labor (the "DOL") that may
be applicable to an investment by an ERISA Plan in the Class A-11 Certificates,
including the individual administrative exemption described below and
Prohibited Transaction Class Exemption 83-1 ("PTE 83-1"). For a further
discussion of PTE 83-1, including the necessary conditions to its
applicability, and other important factors to be considered by an ERISA Plan
contemplating investing in the Class A-11 Certificates, see "ERISA
Considerations" in the Prospectus.
On October 17, 1989, the DOL issued to the Underwriter an individual
administrative exemption, Prohibited Transaction Exemption 89-89, 54 Fed. Reg.
42589 (the "Exemption"), from certain of the prohibited transaction rules of
ERISA and corresponding provisions of Code Section 4975 with respect to the
initial purchase, the holding and the subsequent resale by an ERISA Plan of
certificates in pass-through trusts that meet the considerations and
requirements of the Exemption. The Exemption might apply to the acquisition,
holding and resale of the Class A-11 Certificates by an ERISA Plan, provided
that specified conditions are met.
Among the conditions which would have to be satisfied for the Exemption to
apply to the acquisition by an ERISA Plan of the Class A-11 Certificates is the
condition that the ERISA Plan investing in the Class A-11 Certificates be an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act.
Before purchasing a Class A-11 Certificate, a fiduciary of an ERISA Plan
should make its own determination as to the availability of the exemptive
relief provided in the Exemption or the availability of any other prohibited
transaction exemptions (including PTE 83-1), and whether the conditions of any
such exemption will be applicable to the Class A-11 Certificates; a fiduciary
of a governmental plan should make its own determination as to the need for and
the availability of any exemptive relief under Similar Law. A fiduciary of an
ERISA Plan considering whether to purchase a Class A-11 Certificate should also
carefully review with its own legal advisors the applicability of the fiduciary
duty and prohibited transaction provisions of ERISA and the Code to such
investment. See "ERISA Considerations" in the Prospectus.
LEGAL INVESTMENT
The Class A-11 Certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984 (the
"Enhancement Act") so long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization. As such, the Class A-11 Certificates are legal investments for
certain entities to the extent provided in the Enhancement Act. However,
institutions subject to the jurisdiction of the Office of the Comptroller of
the Currency, the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, the Office of Thrift Supervision, the National
Credit Union Administration or state banking or insurance authorities should
review applicable rules, supervisory policies and guidelines of these agencies
before purchasing a Class A-11 Certificate, as such Certificates may be deemed
to be unsuitable investments under one or more of these rules, policies and
guidelines and certain restrictions may apply to investments in the Class A-11
Certificates. It should also be noted that certain states have enacted, or have
proposed enacting, legislation limiting to varying extents the ability of
certain entities (in particular insurance companies) to invest in mortgage
related securities. Investors should consult with their own legal advisors in
determining whether and to what extent the Class A-11 Certificates constitute
legal investments for such investors. See "Legal Investment" in the Prospectus.
S1-27
<PAGE>
LEGAL MATTERS
The validity of the Class A-11 Certificates and certain tax matters with
respect thereto will be passed upon for the Seller by Cadwalader, Wickersham &
Taft, New York, New York. Certain legal matters will be passed upon for the
Underwriter by Brown & Wood LLP, New York, New York.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Class A-11 Certificates
will be applied by the Seller to the purchase from an affiliate of the Class A-
11 Certificates.
RATINGS
The Class A-11 Certificates have been rated "Aaa" by Moody's and "AAA" by
Fitch. See "Ratings" in the Prospectus Supplement for a further discussion of
the ratings of the Certificates. The ratings of Moody's and Fitch do not
address the possibility that, as a result of principal prepayments,
Certificateholders may receive a lower than anticipated yield or the
possibility that, as a result of prepayments, investors in the Class A-11
Certificates may fail to fully recoup their initial investment.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed or
caused to be filed by the Seller with respect to the Trust Estate pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of the offering of the Class A-11 Certificates. PHMSC will provide or cause to
be provided without charge to each person to whom this Supplement is delivered
in connection with the offering of the Class A-11 Certificates, a list
identifying all filings with respect to a Trust Estate pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, since the Seller's latest fiscal
year covered by its annual report on Form 10-K and 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 the Class A-11 Certificates, other
than the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests to the Seller should be
directed to: The Prudential Home Mortgage Securities Company, Inc., 7470 New
Technology Way, Frederick, Maryland 21703, telephone number (301) 624-1700.
S1-28
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND PROSPECTUS IN CONNEC-
TION WITH THE OFFER MADE BY THIS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT AND PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER OR BY
THE UNDERWRITER. NEITHER THIS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS SUP-
PLEMENT OR PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION OF ANY
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS SUPPLE-
MENT AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND PROSPECTUS, NOR DO THEY
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY SUCH SECURI-
TIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT OR PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
--------------
INDEX
SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
General................................................................. S1-3
Risk Factors............................................................ S1-3
Additional Information.................................................. S1-6
Description of the Certificates......................................... S1-6
Description of the Mortgage Loans....................................... S1-8
Delinquency and Foreclosure Experience.................................. S1-15
Historical Prepayments.................................................. S1-22
Sensitivity of the Pre-Tax Yield to Maturity and Weighted Average Life
of the Class A-11 Certificates......................................... S1-23
Pooling and Servicing Agreement......................................... S1-25
Certain Federal Income Tax Consequences................................. S1-25
Underwriting............................................................ S1-26
Secondary Market........................................................ S1-26
ERISA Considerations.................................................... S1-26
Legal Investment........................................................ S1-27
Legal Matters........................................................... S1-28
Use of Proceeds......................................................... S1-28
Ratings................................................................. S1-28
Incorporation of Certain Information by Reference....................... S1-28
PROSPECTUS SUPPLEMENT
Table of Contents....................................................... S-3
Summary Information..................................................... S-4
Description of the Certificates......................................... S-16
Description of the Mortgage Loans....................................... S-32
Origination, Delinquency and Foreclosure Experience..................... S-38
Prepayment and Yield Considerations..................................... S-43
Pooling and Servicing Agreement......................................... S-50
Federal Income Tax Considerations....................................... S-51
ERISA Considerations.................................................... S-54
Legal Investment........................................................ S-55
Secondary Market........................................................ S-55
Underwriting............................................................ S-55
Legal Matters........................................................... S-56
Use of Proceeds......................................................... S-56
Ratings................................................................. S-56
Index of Significant Prospectus Supplement Definitions.................. S-57
PROSPECTUS
Reports................................................................. 2
Additional Information.................................................. 2
Table of Contents....................................................... 3
Summary of Prospectus................................................... 7
The Trust Estates....................................................... 12
Description of the Certificates......................................... 21
Credit Support.......................................................... 34
Prepayment and Yield Considerations..................................... 39
The Seller.............................................................. 41
PHMC.................................................................... 42
Use of Proceeds......................................................... 48
Servicing of the Mortgage Loans......................................... 48
The Pooling and Servicing Agreement..................................... 58
Certain Legal Aspects of the Mortgage Loans............................. 61
Certain Federal Income Tax Consequences................................. 67
ERISA Considerations.................................................... 90
Legal Investment........................................................ 94
Plan of Distribution.................................................... 95
Legal Matters........................................................... 97
Rating.................................................................. 97
Index of Significant Definitions........................................ 98
</TABLE>
--------------
UNTIL OCTOBER 14, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES
DESCRIBED IN THIS SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBU-
TION, MAY BE REQUIRED TO DELIVER THIS SUPPLEMENT, THE PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
THIS SUPPLEMENT, THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THE PRUDENTIAL HOME
MORTGAGE SECURITIES
COMPANY, INC.
SELLER
MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES
1992-31
VARIABLE RATE/1/
CLASS A-11 CERTIFICATES
/1/ON THE CLASS A-11 NOTIONAL AMOUNT
SALOMON BROTHERS INC
LAZARD FRERES & CO. LLC
SUPPLEMENT
DATED JULY 14, 1997
