As filed with the Securities and Exchange Commission on November 13, 1998
REGISTRATION STATEMENT NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
GREENWICH CAPITAL ACCEPTANCE, INC.
(Exact name of registrant as specified in its charter)
Delaware 61-1199884
(State of incorporation) (I.R.S. Employer
Identification No.)
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2700
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
John C. Anderson
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2700
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With a copy to:
Stephen B. Esko, Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT
TITLE OF TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT* OFFERING PRICE* FEE
<S> <C> <C> <C> <C>
===========================================================================================================================
Mortgage Pass-Through Certificates........$857,094,400 100% $857,094,400 $139,000**
===========================================================================================================================
</TABLE>
* Estimated for the purpose of calculating the registration fee.
** This amount relates to the $500,000,000 of additional Mortgage
Pass-Through Certificates registered hereby. The remaining
$357,094,400 of Mortgage Pass-Through Certificates relates to
registration statement No. 33-80740, and the registration fee with
respect thereto has been previously paid.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
THE PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED PROSPECTUS
AND ALSO RELATES TO REGISTRATION STATEMENT NO. 33-80740 AS PREVIOUSLY FILED BY
THE REGISTRANT ON FORM S-3. SUCH REGISTRATION STATEMENT NO. 333-80740 WAS
DECLARED EFFECTIVE IN 1994. THIS REGISTRATION STATEMENT, WHICH IS A NEW
REGISTRATION STATEMENT, ALSO CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT NO. 33-80740 AND SUCH POST-EFFECTIVE AMENDMENT NO. 1
SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY WITH THE EFFECTIVENESS OF THIS
REGISTRATION STATEMENT AND IN ACCORDANCE WITH SECTION 8(C) OF THE SECURITIES
ACT OF 1933, AS AMENDED.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
The following table sets forth the estimated expenses to be incurred
in connection with the offering of the Certificates, other than underwriting
discounts and commissions:
SEC Registration Fee........................... $139,000**
Trustee's Fees and Expenses.................... 30,000
Printing and Engraving......................... 75,000
Legal Fees and Expenses........................ 225,000
Blue Sky Fees.................................. 36,000
Accounting Fees and Expenses................... 75,000
Rating Agency Fees............................. 183,000
Miscellaneous.................................. 37,000
Total.......................................... $800,000
_____________________
* All amounts, except the SEC Registration Fee, are estimates of
aggregate expenses incurred or to be incurred in connection with the issuance
and distribution of Certificates in an aggregate principal amount assumed for
these purposes to be equal to $857,094,400 of Certificates registered hereby.
** This amount relates to the $500,000,000 of additional Mortgage
Pass-Through Certificates registered hereby. The remaining $357,094,400 of
Mortgage Pass-Through Certificates relates to registration statement No.
33-80740, and the registration fee with respect thereto has been previously
paid.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 8(b) of the proposed form of Underwriting Agreement,
the Underwriters are obligated under certain circumstances to indemnify certain
controlling persons of the Depositor against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Act").
The Depositor's By-laws provide for indemnification of directors and
officers of the Depositor to the full extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides, in
substance, that Delaware corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits or proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they are
or were such directors, officers, employees or agents, against expenses
incurred in any such action, suit or proceeding.
The Pooling and Servicing Agreements will provide that no director,
officer, employee or agent of the Depositor is liable to the Trust Fund or the
Certificateholders, except for such person's own willful misfeasance, bad
faith, gross negligence in the performance of duties or reckless disregard of
obligations and duties. The Pooling and Servicing Agreements will provide
further that, with the exceptions stated above, a director, officer, employee
or agent of the Depositor is entitled to be indemnified against any loss,
liability or expenses incurred in connection with legal actions relating to
such Pooling and Servicing Agreements and the related Certificates, other than
such expenses relating to particular Mortgage Loans.
ITEM 16. EXHIBITS.
(a) FINANCIAL STATEMENTS:
None.
(b) EXHIBITS:
1.1 Form of Underwriting Agreement*
3.1 Restated Certificate of Incorporation of Depositor*
3.2 By-laws of Depositor*
4.1(a) Form of Pooling and Servicing Agreement with respect to
fixed-rate Mortgage Loans, including forms of Certificates*
4.1(b) Form of Pooling and Servicing Agreement with respect to
adjustable-rate Mortgage Loans, including forms of Certificates**
5.1 Opinion of Brown & Wood LLP as to legality of the Certificates
8.1 Opinion of Brown & Wood LLP as to certain tax matters (included
in Exhibit 5.1)
10.1 Form of Mortgage Sale Agreement between Seller and Purchaser**
23.1 Consent of Brown & Wood (included in Exhibits 5.1 and 8.1 hereto)
24.1 Powers of Attorney (included on Page II-4)
24.2 Statement of Eligibility and Qualification of Trustee.***
* Filed as an exhibit to Registration Statement No. 33-42443 on Form S-11
and incorporated herein by reference.
** Filed as an exhibit to Registration Statement No. 33-52720 on Form S-11
and incorporated herein by reference.
*** To be filed on Form 8-K.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934, as amended), that is
incorporated by reference in the registration statement shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933, as amended,
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenwich, Connecticut, on the 13th
day of November, 1998.
GREENWICH CAPITAL ACCEPTANCE, INC.
By: /s/ Robert J. McGinnis
-----------------------
Robert J. McGinnis
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Robert J. McGinnis, John C.
Anderson, Jay N. Levine, Charles A. Forbes, John P. Graham, or any of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
President (Principal November 13, 1998
/s/ Robert J. McGinnis Executive Officer and
-------------------------- Principal Financial
Robert J. McGinnis Officer)
Senior Vice President November 13, 1998
/s/ Kevin C. Piccoli and Controller
-------------------------- (Principal Accounting
Kevin C. Piccoli Officer)
Senior Vice November 13, 1998
/s/ John C. Anderson Presient, Secretary
-------------------------- and Director
John C. Anderson
/s/ Jay N. Levine Director November 13, 1998
--------------------------
Jay N. Levine
The information in this prospectus supplment is not complete and may be
changed. We may not sell these certificates until the registration statement
filed with the Securities and Exchange commission (SEC) is effective. This
prospectus supplement is not an offer to sell these certificates and it is not
soliciting an offer to buy these certificates in any state where the offer or
sale is not permitted.
Consider carefully the risk factors beginning on page S-8 of this prospectus
supplement and on page 14 of the prospectus.
The certificates represent obligations of the trust only and do not represent
an interest in or obligation of Greenwich Capital Acceptance, Inc., [_______]
or any of their affiliates.
This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.
SUBJECT TO COMPLETION, DATED _________ ___, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199__)
GREENWICH CAPITAL ACCEPTANCE, INC.
Depositor
$________ (approximate) Class A, [ %] [Variable Pass-Through Rate]
$________ (approximate) Class M, [ %] [Variable Pass-Through Rate]
$________ (approximate) Class B, [ %] [Variable Pass-Through Rate]
Mortgage Backed Certificates, Series 199_-__
The trust will issue [___] classes of certificates. Only the three classes of
certificates identified above are being offered by this prospectus supplement
and the accompanying prospectus.
The Certificates
o The Class A certificates will be senior certificates.
o The Class M certificates will be mezzanine certificates.
o The Class B certificates will be subordinate certificates.
o Each class of certificates will accrue interest at a rate equal to
[one-month LIBOR plus a fixed margin, subject to certain limitations
described in this prospectus supplement.
Credit Enhancement
o Overcollateralization - Certain excess interest received from the mortgage
loans in the trust will be applied as payments of principal on the offered
certificates to establish and maintain a required level of
overcollateralization.
o Subordination - The mezzanine certificates and the subordinate certificates
are subordinate in right of certain payments to the senior certificates.
The Class B Certificates are subordinate to the mezzanine certificates.
o Allocation of Losses - Certain losses may be allocated among the mezzanine
and subordinate certificates in reverse order of seniority, which would
reduce the principal balances of the certificates affected. Although the
outstanding principal balance of the Class A Certificates will not be
reduced as a result of realized losses, in some circumstances such losses
may reduce the amount of principal ultimately paid to the holders of the
Class A Certificates.
Neither the Securities and Exchange Commission (SEC) nor any state securities
commission has approved these securities or determined that this prospectus
supplement or the prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The offered certificates are being offered by Greenwich Capital Markets, Inc.
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Proceeds to the depositor with respect to
the offered certificates are expected to be approximately $_____________,
before deducting issuance expenses payable by the depositor, estimated to be
$___________. See "Method of Distribution" in this prospectus supplement.
Delivery of the offered certificates will be made in book-entry form through
the facilities of The Depository Trust Company, [Cedel Bank, societe anonyme,
and the Euroclear System,] on or about __________________, 199__.
-------------------
GREENWICH CAPITAL MARKETS, INC.
____________ __, 199__
TABLE OF CONTENTS
SUMMARY OF TERMS...........................................................S-3
RISK FACTORS...............................................................S-8
THE MORTGAGE POOL..........................................................S-15
GENERAL.................................................................S-15
MORTGAGE LOAN STATISTICS................................................S-15
ADJUSTABLE RATE MORTGAGE LOANS..........................................S-22
THE INDEX...............................................................S-28
UNDERWRITING STANDARDS.....................................................S-28
THE MASTER SERVICER........................................................S-29
THE POOLING AND SERVICING AGREEMENT........................................S-31
GENERAL.................................................................S-31
ASSIGNMENT OF THE MORTGAGE LOANS........................................S-31
PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO COLLECTION ACCOUNT AND
DISTRIBUTION ACCOUNT..................................................S-33
ADVANCES................................................................S-34
THE TRUSTEE.............................................................S-35
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES................S-36
VOTING RIGHTS...........................................................S-36
AMENDMENT...............................................................S-36
TERMINATION.............................................................S-37
[OPTIONAL PURCHASE OF DEFAULTED LOANS]..................................S-37
EVENTS OF DEFAULT.......................................................S-37
RIGHTS UPON EVENT OF DEFAULT............................................S-38
DESCRIPTION OF THE CERTIFICATES............................................S-38
GENERAL.................................................................S-38
BOOK-ENTRY CERTIFICATES.................................................S-39
PRIORITY OF DISTRIBUTIONS AMONG CERTIFICATES............................S-45
ALLOCATION OF AVAILABLE FUNDS...........................................S-45
DEFINITIONS.............................................................S-46
PASS-THROUGH RATES......................................................S-51
CALCULATION OF [ONE-MONTH LIBOR]........................................S-51
APPLICATION OF ALLOCABLE LOSS AMOUNTS...................................S-52
[EXCESS RESERVE FUND ACCOUNT]...........................................S-53
REPORTS TO CERTIFICATEHOLDERS...........................................S-53
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS..............................S-55
OVERCOLLATERALIZATION PROVISIONS........................................S-56
[ADDITIONAL INFORMATION]................................................S-57
WEIGHTED AVERAGE LIVES..................................................S-57
USE OF PROCEEDS............................................................S-58
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES...........................S-59
TAXATION OF REGULAR INTERESTS...........................................S-59
STATUS OF THE OFFERED CERTIFICATES......................................S-60
NON-U.S. PERSONS........................................................S-60
PROHIBITED TRANSACTIONS TAX AND OTHER TAXES.............................S-61
BACKUP WITHHOLDING......................................................S-61
STATE TAXES................................................................S-62
ERISA CONSIDERATIONS.......................................................S-62
LEGAL INVESTMENT CONSIDERATIONS............................................S-65
METHOD OF DISTRIBUTION.....................................................S-65
LEGAL MATTERS..............................................................S-66
RATINGS....................................................................S-66
INDEX OF DEFINED TERMS.....................................................S-68
ANNEX I....................................................................A-1
SUMMARY OF TERMS
o This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
certificates, read carefully this entire document and the accompanying
prospectus.
o This summary provides an overview of certain calculations, cash flow
priorities and other information to aid your understanding and is qualified
by the full description of these calculations, cash flow priorities and
other information in this prospectus supplement and the accompanying
prospectus. Some of the information consists of forward-looking statements
relating to future economic performance or projections and other financial
items. Forward-looking statements are subject to a variety of risks and
uncertainties that could cause actual results to differ from the projected
results. Those risks and uncertainties include, among others, general
economic and business conditions, regulatory initiatives and compliance
with governmental regulations, and various other matters, all of which are
beyond our control. Accordingly, what actually happens may be very
different from what we predict in our forward-looking statements.
Offered Certificates
On the closing date, [_____________Trust] will issue [___] classes of
certificates, three of which are being offered pursuant to this prospectus
supplement and the accompanying prospectus. The assets of the trust that will
support the certificates will consist of a pool of [fixed-rate] mortgage loans
with a principal balance of approximately $ and [adjustable-rate] mortgage
loans with a principal balance of approximately $ as of , 199 . [All of the
adjustable rate mortgage loans are indexed to [six-month LIBOR], of which [ ]%
have initial fixed rate periods. The mortgage loans will have original terms
to maturity ranging from [ ] years to 30 years and will be secured by first
liens on one- to four-family residential properties.
Each class of certificates that is being offered will be book-entry securities
clearing through DTC [(in the United States) or Cedel or Euroclear (in
Europe)] in minimum denominations of $50,000.
Other Certificates
The trust will issue [two] additional classes of certificates. These
certificates will be designated the [Class OC and] Class R Certificates and are
not being offered to the public pursuant to this prospectus supplement and the
prospectus. [The Class OC Certificates will not have an original principal
certificate balance.] The Class R Certificates will have an original
certificate principal balance of [$100].
See "The Mortgage Pool" and "Dn of the Certificates-- General" and
"--Book-Entry Certificates" in this prospectus supplementTrust Fund--The
Mortgage Loans--General" in the prospectus.
Cut-off Date
__________ __, 199_
Closing Date
On or about __________ __, 199_
The Depositor
Greenwich Capital Acceptance, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2700
Seller
[--------------------]
Master Servicer
[--------------------]
Trustee
[--------------------]
Designations
Each class of certificates will have different characteristics, some of which
are reflected in the following general designations.
o Offered Certificates
Class A, Class M and Class B Certificates
o Senior Certificates
Class A Certificates
o Mezzanine Certificates
Class M Certificates
o Subordinate Certificates
Class B Certificates
o Residual Certificates
Class R Certificates
o Book-Entry Certificates
Class A, Class M and Class B Certificates
o [Excess Reserve Fund Support Certificates
Class OC Certificates]
o Physical Certificates
[Class OC and] Class R Certificates
Distribution Dates
The trustee will make distributions on the certificates on the __th day of
each calendar month beginning on ___________ __, 199_ to the holder of record
of the certificates as of the business day preceding such date of
distribution. If the __th day of a month is not a business day, then the
distribution will be made on the next business day.
Payments on the Certificates
Interest Payments
The pass-through rate for each class of offered certificates will be
calculated at the rates specified below, subject to the limitations described
under "Description of the Certificates -- Pass-Through Rates" in this
prospectus supplement:
Class A [Index] + __ basis points
Class M [Index] + __ basis points
Class B [Index] + __ basis points
Interest payable on the certificates on a distribution date will accrue during
the period commencing on the prior distribution date and ending on the day
before the current distribution date. The first accrual period will begin on
the Closing Date and end on _________ __, 199_. Interest will be calculated on
the basis of the actual number of days included in the interest accrual
period, based on a 360-day year.
See "Description of the Certificates" in this prospectus supplement.
Payment Priorities
On each distribution date, available funds in the trust will be paid in the
following order of priority and subject to the limitations described under
"Description of the Certificates--Allocation of Available Funds" in this
prospectus supplement:
(i) to the Class A Certificates, as current interest and any previously
unpaid interest;
(ii) as current interest sequentially to the Class M and Class B
Certificates;
(iii) as principal of the Class A, Class M and Class B Certificates, in that
order, to the extent such classes are entitled to receive distributions
of principal, up to the aggregate amount received on account of
principal of the mortgage loans;
(iv) as principal of the Class A, Class M and Class B Certificates, in that
order, to the extent such classes are entitled to receive distributions
of principal, up to the amount necessary to achieve the required levels
of overcollateralization;
(v) as unpaid interest and reimbursement of certain previously allocated
losses, if any, to the Class M and Class B Certificates;
[(vi) to the Class OC Certificates for deposit into a reserve account to cover
shortfalls or required reserves, before being released to the Class OC
Certificates;] and
(vi) any remaining amounts to the Class R Certificates.
See "Description of the Certificates" in this prospectus supplement.
Advances
The Master Servicer will make cash advances with respect to delinquent
payments of principal and interest to the extent the Master Servicer
reasonably believes that the cash advances are recoverable from future
payments on the related mortgage loans. Advances are intended to maintain a
regular flow of scheduled interest and principal payments on the certificates
and are not intended to guarantee or insure against losses.
See "The Pooling and-Advances" in this prospectus supplement.
Optional Termination
The holder of the majority interest in the residual certificates may purchase
all of the remaining assets of the trust after the principal balance of the
mortgage loans and any real estate owned by the trust declines below 10% of
the principal balance of the mortgage loans on [the Cut-off Date].
If the holder of the majority interest in the residual certificates does not
exercise this option, then the Master Servicer will have the right to exercise
this option. [If the option is not exercised, the offered certificates still
outstanding will accrue interest at a higher rate.]
See "The Pooling and ination" and "Description of the Certificates --
Pass-Through Rates" in this prospectus supplement.
Credit Enhancement
The credit enhancements include overcollateralization, subordination and
allocation of losses. These credit enhancements are designed to increase the
likelihood that certificateholders with a higher payment priority will receive
regular payments of interest and principal.
Overcollateralization
The mortgage loans owned by the trust pay interest each month that in the
aggregate is expected to exceed the amount needed to pay monthly interest on
the offered certificates and certain fees and expenses of the trust. A portion
of this excess interest applied to pay principal on the offered certificates,
which reduces the principal balance of the certificates at a faster rate than
the principal balance on the mortgage loans is being reduced. As a result, the
aggregate principal balance of the mortgage loans is expected to exceed the
aggregate principal balance of the offered certificates. This feature is
referred to as "overcollateralization." The required level of
overcollateralization may increase or decrease over time. We cannot assure you
that sufficient interest will be generated by the mortgage loans to maintain
the required level of overcollateralization.
See "Description of the Certificates" in this prospectus supplement.
Subordination and Allocation of Losses
The Class A Certificates will have a payment priority over the mezzanine
certificates and the subordinate certificates. The Class M Certificates will
have a payment priority over the Class B Certificates.
Subordination is designed to provide the holders of certificates with a higher
payment priority protection against losses up to a certain level that are
realized when the unpaid principal balance on a mortgage loan exceeds the
proceeds recovered upon the liquidation of that mortgage loan. Losses will
first be applied to reduce the overcollateralization amount. Thereafter, loss
protection is accomplished by allocating the realized losses first to the
subordinate certificates, until the principal amount of the subordinate
certificates is reduced to zero. Realized losses would then be allocated to
the next most junior class of certificates, the Class M Certificates, until
the principal amount of the Class M Certificates is reduced to zero. Although
the outstanding principal balance of the Class A Certificates will not be
reduced as a result of realized losses, in some circumstances such losses may
reduce the amount of principal ultimately paid to the holders of the Class A
Certificates.
See "Description of the Certificates" in this prospectus supplement.
Ratings
It is a condition of the issuance of the offered certificates that they be
assigned the following ratings by _____________ and _____________.
Rating Rating
Agency Agency
Class Rating Rating
----- ------ ------
A
M
B
A rating is not a recommendation to buy, sell or hold securities. These
ratings may be lowered or withdrawn at any time by either of the rating
agencies.
See "Ratings" in this prospectus supplement.
Tax Status
In the opinion of Brown & Wood LLP, for federal income tax purposes the trust
will include [multiple segregated asset pools]. An election will be made to
treat [each] pool as a [separate] "real estate mortgage investment conduit"
("REMIC"). Certain classes of certificates that are designated as the regular
certificates will constitute "regular interests" in the [Master] REMIC. The
Class R Certificates will represent the sole class of "residual interests" in
the [Master] REMIC. [The class of certificates designated as the residual
certificates will represent the sole class of residual interests in each
subsidiary REMIC.]
[The offered certificates will also represent the right to receive payments
from the excess reserve fund account. The excess reserve fund account will be
treated as an "outside reserve fund" and the right to receive payments from
such account will be treated as an interest rate cap agreement for federal
income tax purposes. Beneficial owners of the offered certificates will be
treated for federal income tax purposes as having purchased an undivided
beneficial interest in a regular interest in the [Master] REMIC and as having
acquired rights under an interest rate cap agreement, both to the extent of
the owner's proportionate interest in the offered certificates. A
certificateholder generally will recognize ordinary income equal to such
certificateholder's proportionate share of interest and original issue
discount, if any, accrued on the offered certificates and will take into
account a proportionate share of any payments received under the interest rate
cap agreement. A certificateholder's income derived from payments received
under the interest rate cap agreement generally must be accounted for under
the notional principal contract regulations.]
See "Certain Material Federal Income Tax Consequences" in this prospectus
supplement and "Certain Federal Income Tax Consequences" in the prospectus.
ERISA Considerations
It is expected that the Class A Certificates may be purchased by a pension or
other employee benefit plan subject to the Employee Retirement Income Security
Act of 1974 or section 4975 of the Internal Revenue Code of 1986, so long as
certain conditions are met. A fiduciary of an employee benefit plan must
determine that the purchase of a certificate is consistent with its fiduciary
duties under applicable law and does not result in a non-exempt prohibited
transaction under applicable law.
See "ERISA Considerations" in this prospectus supplement and in the
prospectus.
Legal Investment
The Class A Certificates and Class M Certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 as long as they are rated in one of the two highest rating categories by
at least one nationally recognized statistical rating organization. The Class
B Certificates will not be rated in one of the two highest rating categories
by a nationally recognized statistical rating organization and, therefore,
will not be "mortgage related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984.
See "Legal Investment Considerations" in this prospectus supplement and "Legal
Investment" in the prospectus.
RISK FACTORS
The following information, which you should carefully consider,
identifies certain significant sources of risk associated with an investment
in the certificates. You should also carefully consider the information set
forth under "Risk Factors" in the prospectus.
Unpredictability
of Prepayments and
Effect on Yields.............Borrowers may prepay their mortgage loans in whole
or in part at any time. We cannot predict the
rate at which borrowers will repay their mortgage
loans. A prepayment of a mortgage loan generally
will result in a prepayment on the certificates.
o If you purchase your certificates at a
discount and principal is repaid slower than
you anticipate, then your yield may be lower
than you anticipate.
o If you purchase your certificates at a premium
and principal is repaid faster than you
anticipate, then your yield may be lower than
you anticipate.
o The rate of prepayments on the mortgage loans
will be sensitive to prevailing interest
rates. Generally, if prevailing interest rates
decline significantly below the interest rates
on the fixed-rate mortgage loans, those
mortgage loans are more likely to prepay than
if prevailing rates remain above the interest
rates on such mortgage loans. In addition, if
interest rates decline, adjustable-rate
mortgage loan prepayments may increase due to
the availability of fixed-rate mortgage loans
at lower interest rates. Conversely, if
prevailing interest rates rise significantly,
the prepayments on fixed-rate and
adjustable-rate mortgage loans are likely to
decrease.
o [____% of the principal balance of the
mortgage loans on [the Cut-off Date] are
"balloon loans." Balloon loans generally
provide for scheduled monthly payments of
principal up to the ___th month with a final
lump sum payment in the ___th month. This lump
sum payment is substantially larger than the
previous scheduled payments. Having balloon
loans in the trust may cause the prepayment
rate to vary more than if there were no
balloon loans, because the borrower generally
must refinance the mortgage loan or sell the
mortgaged property prior to payment of the
lump sum on the maturity date.]
o [Some of the mortgage loans require the
mortgagor to pay a penalty if the mortgagor
prepays the mortgage loan during periods
ranging from [six months] to [five years]
after the mortgage loan was originated. A
prepayment penalty may discourage a borrower
from prepaying the mortgage loan during the
applicable period.]
o The Seller may be required to purchase
mortgage loans from the trust due to certain
breaches of representations and warranties
that have not been cured. These purchases will
have the same effect on the holders of the
offered certificates as a prepayment of the
mortgage loans.
o So long as the overcollateralization level
remains greater than zero, liquidations of
defaulted mortgage loans will have the same
effect on holders of the Offered Certificates
as a prepayment of the related mortgage loans.
o If the rate of default and the amount of
losses on the mortgage loans is higher than
you expect, then your yield may be lower than
you expect.
See "Yield, Prepayment and Maturity
Considerations" in this prospectus supplement
for a description of factors that may influence
the rate and timing of prepayments on the mortgage
loans.
Potential Inadequacy
of Credit Enhancement........The certificates are not insured by any financial
guaranty insurance policy. The
overcollateralization, subordination and
allocation of loss features described in the
summary are intended to enhance the likelihood
that holders of the Class A Certificates will
receive regular payments of interest and
principal.
If delinquencies or defaults occur on the
mortgage loans, neither the Master Servicer nor
any other entity will advance scheduled monthly
payments of interest and principal on delinquent
or defaulted mortgage loans if such advances are
not likely to be recovered. We cannot assure you
that the applicable credit enhancement will
adequately cover any shortfalls in cash available
to pay your certificates as a result of such
delinquencies or defaults.
If substantial losses occur as a result of
defaults and delinquent payments on the mortgage
loans, investors, particularly investors in the
subordinate certificates, may lose their initial
investment.
Overcollateralization........Because the weighted average of the interest rates
on the mortgage loans is expected to be higher
than the weighted average of the interest rates
on the certificates, the mortgage loans are
expected to generate more interest than is needed
to pay interest owed on the certificates as well
as certain fees and expenses of the trust. Any
remaining interest will then be used to
compensate for losses that occur on the mortgage
loans. After these financial obligations of the
trust are covered, the available excess interest
will be used to create and maintain
overcollateralization. We cannot assure you,
however, that enough excess interest will be
generated to maintain the overcollateralization
level required by the rating agencies. The
factors described below will affect the amount of
excess interest that the mortgage loans will
generate.
o Every time a mortgage loan is prepaid, excess
interest may be reduced because the mortgage
loan will no longer be outstanding and
generating interest or, in the case of a
partial prepayment, will be generating less
interest.
o Every time a mortgage loan is liquidated or
written off, excess interest will be reduced
because such mortgage loans will no longer be
outstanding and generating interest.
o........If the rates of delinquencies, defaults
or losses on the mortgage loans turn out to be
higher than expected, excess interest will be
reduced by the amount necessary to compensate
for any shortfalls in cash available on such
date to pay certificateholders.
o The mortgage loans have rates that are fixed
or that adjust based on an index that is
different from the index used to determine
rates on the certificates. As a result,
interest rates on the certificates may
increase relative to interest rates on the
mortgage loans, requiring that more of the
interest generated by the mortgage loans be
applied to cover interest on the certificates.
Subordination................When certain classes of certificates provide
credit enhancement for other classes of
certificates, this form of credit enhancement is
referred to as "subordination." For any
particular class, "related junior class" means
the class that is subordinate to such class. The
order of seniority, beginning with the most
senior class, is Class A, Class M and Class B.
Credit enhancement is provided for the
certificates first by the right of the holders of
certain classes of certificates to receive
certain payments of interest prior to the related
junior classes and certain payments of principal
prior to the related junior classes. This form of
credit enhancement is provided solely from
collections on the mortgage loans otherwise
payable to the holders of the related junior
classes. Credit enhancement also is provided by
the allocation of realized losses first to the
related junior classes. Accordingly, if the
aggregate principal balance of the related junior
classes were to be reduced to zero, delinquencies
and defaults on the mortgage loans would reduce
the amount of funds available for monthly
payments to holders of the remaining
certificates.
See "Description of the Certificates" in this
prospectus supplement and "Credit Enhancement --
Subordination" in the prospectus.
[Risk of Limitations
to Adjustments of
the Loan Rates...............The offered certificates accrue interest at
pass-through rates based on the [one-month LIBOR]
index plus a specified margin, but are subject to
certain caps. The caps on interest paid on the
certificates are based on the weighted average of
the interest rates on the mortgage loans in the
trust net of certain trust expenses. The trust
includes [fixed-rate] and [adjustable-rate
mortgage loans with rates that are based on the
[six-month LIBOR] index]. The adjustable-rate
mortgage loans have periodic and maximum
limitations on adjustments to the mortgage loan
rate. As a result, the offered certificates may
accrue less interest than they would accrue if
their rates were based solely on the one-month
LIBOR index plus the specified margin. If this
circumstance occurred, the value of the offered
certificates may be temporarily or permanently
reduced.
A variety of factors could limit the
pass-through rates on the offered certificates in
a rising interest rate environment. Some of these
factors are described below.
o The trust includes fixed-rate mortgage loans
on which the rate of interest does not adjust.
o The [one-month LIBOR] index used to calculate
the pass-through rates on the offered
certificates is different from the index used
to calculate the loan rates on the
adjustable-rate mortgage loans in the trust.
o The pass-through rates adjust monthly while
the loan rates on the adjustable-rate mortgage
loans adjust less frequently, [and some
adjustable-rate mortgage loans have initial
fixed rate periods of [ ] to [ ] years
following the date of origination.]
o It is possible that interest rates on the
adjustable-rate mortgage loans may decline
while interest rates on the certificates are
stable or rising. It is also possible that
interest rates on both the adjustable-rate
mortgage loans and the certificates may
decline or increase during the same period,
but that the interest rates on the
certificates may decline more slowly or
increase more rapidly.
These factors may adversely affect the yields
to maturity on the offered certificates.]
Prepayment Interest
Shortfalls...................When a mortgage loan is prepaid in full, the
borrower is charged interest only up to the date
on which payment is made, rather than for an
entire month. This may result in a shortfall in
interest collections available for payment on the
next distribution date. [The Master Servicer is
required to cover a portion of the shortfall in
interest collections that are attributable to
prepayments, but only up to the Master Servicer's
servicing fee for the related one-month accrual
period.]
Underwriting Standards and
Default Risks................The mortgage loans were originated by [various
originators], [none of which is affiliated with
the Depositor]. [Discussion of originators'
underwriting standards]
Risks of Early Default.......Defaults on mortgage loans are generally expected
to occur more frequently in the early years of
the terms of mortgage loans. [Many of] the
mortgage loans in the trust were originated
[within twelve months prior to ________ __,
199_.]
Geographic Concentration.....The following chart reflects the [_____] states
with highest concentrations of mortgage loans in
the trust based on the initial pool principal
balance.
[Table]
In addition, the conditions below will have
a disproportionate impact on the mortgage loans in
general.
o Economic conditions in [___________] (which
may or may not affect real property values)
may affect the ability of borrowers to repay
their loans on time.
o Declines in the [_______, ________, and
_________] residential real estate markets may
reduce the values of properties located in
those states, which would result in an
increase in the loan-to-value ratios.
o Any increase in the market value of properties
located in [_______, ________, and _________]
would reduce the loan-to-value ratios and
could, therefore, make alternative sources of
financing available to the borrowers at lower
interest rates, which could result in an
increased rate of prepayment of the mortgage
loans.
Certificates May Not Be
Appropriate for Certain
Investors....................The offered certificates may not be an
appropriate investment for investors who do not
have sufficient resources or expertise to
evaluate the particular characteristics of the
applicable class of offered certificates. This
may be the case because, among other things:
o The yield to maturity of offered certificates
purchased at a price other than par will be
sensitive to the uncertain rate and timing of
principal prepayments on the mortgage loans.
o The rate of principal distributions on and the
weighted average lives of the offered
certificates will be sensitive to the
uncertain rate and timing of principal
prepayments on the mortgage loans and the
priority of principal payments among the
classes of certificates. Therefore, the
offered certificates may be an inappropriate
investment if you are an investor that
requires a payment of a particular amount of
principal on a specific date or an otherwise
predictable stream of payments.
o You may be unable to reinvest amounts received
as principal on an offered certificate at a
rate comparable to the pass-through rate
applicable to the certificate. In general,
principal prepayments are expected to be
greater during periods of relatively low
interest rates.
o A market for resale of the offered
certificates may not develop or provide
certificateholders with liquidity of
investment.
You should also carefully consider the
further matters discussed under the heading
"Yield, Prepayment and Maturity Considerations"
in this prospectus supplement and under the
heading "Risk Factors" in the prospectus.
Year 2000 Systems Risk.......In the event that the computer systems of the
Trustee and the Master Servicer fail to be year
2000 compliant, the resulting potential
disruptions in the collection or distribution of
funds could adversely affect your investment.
Liquidity....................Greenwich Capital Markets, Inc. intends to make a
secondary market in the classes of certificates
actually purchased by it, but it has no
obligation to do so. There is no assurance that
such a secondary market will develop or, if it
develops, that it will continue. Consequently,
you may not be able to sell your certificates
readily or at prices that will enable you to
realize your desired yield. The market values of
the certificates are likely to fluctuate; these
fluctuations may be significant and could result
in significant losses to you.
The secondary markets for mortgage backed
securities have experienced periods of
illiquidity and can be expected to do so in the
future. Illiquidity can have a severely adverse
effect on the prices of securities that are
especially sensitive to prepayment, credit, or
interest rate risk, or that have been structured
to meet the investment requirements of limited
categories of investors.
THE MORTGAGE POOL
General
[____________] (the "Trust Fund") will consist of a pool of closed-end,
[fixed-rate and adjustable-rate] mortgage loans (the "Mortgage Pool") secured
by conventional, one- to four-family, first lien mortgage loans having
original terms to maturity ranging from [_] to 30 years (the "Mortgage
Loans"). All Mortgage Loan statistics set forth herein are based on principal
balances, interest rates, terms to maturity, mortgage loan counts and similar
statistics as of __________ ___, 199_ (the "Cut-off Date"), unless indicated
to the contrary herein. All weighted averages specified herein are weighted
based on the principal balances of the Mortgage Loans as of the Cut-Off Date
(the "Cut-off Date Principal Balance"). References to percentages of the
Mortgage Loans mean percentages based on the aggregate of the principal
balances of the Mortgage Loans (the "Pool Principal Balance") as of the
Cut-off Date, unless otherwise specified.
The description in this Prospectus Supplement of the Mortgage Pool and
the Mortgaged Properties (as defined herein) is based upon the Mortgage Pool
as constituted at the close of business on the Cut-off Date, as adjusted for
the principal payments received on or before such date. Prior to the issuance
of the Certificates by the Trust, Mortgage Loans may be removed from the
Mortgage Pool as a result of incomplete documentation or otherwise, if
Financial Asset Securities Corp. (the "Depositor") deems such removal
necessary or desirable, and may be prepaid at any time. A limited number of
other mortgage loans may be included in the Mortgage Pool prior to the
issuance of the Certificates unless including such mortgage loans would
materially alter the characteristics of the Mortgage Pool as described herein.
The Depositor believes that the information set forth herein will be
representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Certificates are issued, although the range of the
interest rates on the individual Mortgage Loans (the "Mortgage Rates") and
maturities and certain other characteristics of the Mortgage Loans may vary.
Mortgage Loan Statistics
The Mortgage Pool will consist of approximately [________] conventional,
[fixed-rate and adjustable-rate] Mortgage Loans secured by first liens on
residential real property (the "Mortgaged Property"). The Mortgage Loans have
original terms to maturity ranging from [___] years to 30 years. The Mortgage
Pool consists of [fixed-rate Mortgage Loans (the "Fixed Rate Mortgage
Loans")], which will consist of approximately [________] Mortgage Loans having
an aggregate principal balance as of the Cut-off Date of approximately
$[__________] and [adjustable-rate Mortgage Loans (the "Adjustable Rate
Mortgage Loans")], which will consist of approximately [_______] Mortgage
Loans having an aggregate principal balance as of the Cut-off Date of
approximately $[___________], in each case after application of payments of
principal due on or before the Cut-off Date whether or not received, and in
each case subject to a permitted variance of plus or minus [5]%. [Each
Adjustable Rate Mortgage Loan provides for [semi-annual] adjustment to the
mortgage rate thereon based on [six-month London interbank offered rates for
United States dollar deposits] (the "Index") and for corresponding adjustments
to the monthly payment amount due thereon, in each case subject to the
limitations described under "--Adjustable Rate Mortgage Loans" herein;
provided that in the case of [_____]% of the Adjustable Rate Mortgage Loans,
the first adjustment for such Mortgage Loan will occur after an initial period
of [___] years, by aggregate principal balance of the Adjustable Rate Mortgage
Loans as of the Cut-off Date (each such Mortgage Loan described in this
proviso, a "Delayed First Adjustment Mortgage Loan").]
The Mortgage Loans are secured by first mortgages or deeds of trust or
other similar security instruments (each, a "Mortgage") creating first liens on
one- to four-family residential properties consisting of detached or
semi-detached one- to four-family dwelling units and individual condominium
units. [Approximately [______]% of the Mortgage Loans had a Loan-to-Value Ratio
at origination in excess of 80%.] There can be no assurance that the
Loan-to-Value Ratio of any Mortgage Loan determined at any time after
origination is less than or equal to its original Loan-to-Value Ratio. The
Mortgage Loans have scheduled monthly payments due on [the first day of the
month] (with respect to each Mortgage Loan, a "Due Date"), [except for
approximately [____]% of the Mortgage Loans which have Due Dates on other dates
during the month.] [Each Mortgage Loan will contain a customary "due-on-sale"
clause.]
[Approximately [_____]% of the Mortgage Loans provide for payment by the
mortgagor of a prepayment charge in limited circumstances on certain
prepayments. Generally, each such Mortgage Loan provides for payment of a
prepayment charge on certain partial prepayments and all prepayments in full
made within [______] from the date of origination of such Mortgage Loan. The
amount of the prepayment charge is provided in the related Mortgage Note and
is generally equal to [______].
[___] Fixed Rate Mortgage Loans comprising approximately [____]% of the
Pool Principal Balance as of the Cut-off Date are balloon payment mortgage
loans (each, a "Balloon Loan"). Each Balloon Loan amortizes over [360] months,
but the final payment (the "Balloon Payment") on each Balloon Loan is due and
payable on the Due Date of the [___]th month. The amount of the Balloon
Payment on each Balloon Loan is substantially in excess of the amount of the
scheduled monthly payment on the Mortgage Loan for the period prior to the Due
Date of such Balloon Payment.
Each Mortgage Loan had a Loan Rate of not less than [___]% per annum and
not more than [_____]% per annum and as of the Cut-off Date the weighted
average Loan Rate was approximately [____]% per annum.
The weighted average remaining term to maturity of the Mortgage Loans
will be approximately [___] months as of the Cut-off Date. [None of the
Mortgage Loans will have a first Due Date prior to __________ __, 19__ or
after ___________ __, 199_ or will have a remaining term to maturity of less
than [___] months or greater than 30 years as of the Cut-off Date.] The month
of the latest maturity date of any Mortgage Loan is ___________ 20__].
The average principal balance of the Mortgage Loans at origination was
approximately $[________]. The average principal balance of the Mortgage Loans
as of the Cut-off Date was approximately $[_________].
No Mortgage Loan had a principal balance as of the Cut-off Date of
greater than approximately $[____________] or less than approximately
$[_______]. The Mortgage Loans are expected to have the following
characteristics as of the Cut-off Date (the sum in any column may not equal
the total indicated due to rounding):
<TABLE>
<CAPTION>
Principal Balances of the Mortgage Loans as of the Cut-off Date(1)
% of Aggregate
Number of Principal Balance Principal Balance
Mortgage Outstanding as of Outstanding as of
Principal Balance ($) Loans the Cut-off Date the Cut-off Date
----------------------------------------- -------------- --------------------- ------------------------
<S> <C> <C> <C>
$ %
-------------- --------------------- ------------------------
Total............................... $ 100.00%
============== ===================== ========================
- ----------------------
(1) The average principal balance of the Mortgage Loans as of the Cut-off Date was $[______].
</TABLE>
<TABLE>
<CAPTION>
Original Terms to Maturity of the Mortgage Loans(1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Original Term (months) of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ -----------------------
Total................... $ 100.00%
=================== ======================== =======================
- --------------------
(1) The weighted average original term to maturity of the Mortgage Loans was [___] months.
</TABLE>
<TABLE>
<CAPTION>
Property Types of the Mortgage Loans
% of Aggregate
Number Principal Balance Principal Balance
of Mortgage Outstanding as of Outstanding as of
Property Type Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
%
2-4 Units.................... $
Condominium..................
Manufactured Housing.........
PUD..........................
Single Family Detached.......
Unknown.....................
------------------- ------------------------ -----------------------
Total................... $ 100.00%
=================== ======================== =======================
</TABLE>
<TABLE>
<CAPTION>
Occupancy Status of the Mortgage Loans
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Occupancy Status of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------- -----------------------
<S> <C> <C> <C>
Investor..................... $ %
Primary......................
Second Home..................
------------------- ------------------------- -----------------------
Total................... $ 100.00%
=================== ========================= =======================
</TABLE>
<TABLE>
<CAPTION>
Purpose of the Mortgage Loans
% of Aggregate
Number Principal Balance Principal Balance
of Mortgage Outstanding as of Outstanding as of
Purpose Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
Equity Refinance............. $ %
Purchase.....................
Rate/Term Refinance..........
------------------- ------------------------ -----------------------
Total................... $ 100.00%
=================== ======================== =======================
</TABLE>
<TABLE>
<CAPTION>
Loan Rates of the Mortgage Loans (1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Loan Rate (%) of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ -----------------------
Total....................... $ 100.00%
=================== ======================== =======================
- ------------------
(1) The weighted average Loan Rate of the Mortgage Loans as of the Cut-off Date was [____]%.
</TABLE>
<TABLE>
<CAPTION>
Original Loan-to-Value Ratios of the Mortgage Loans(1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Original Loan-to-Value Ratio(%) of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C>
$ %
------------------ ---------------------- --------------------
Total....................... $ 100.00%
================== ====================== ====================
- ------------------
(1) The weighted average original Loan-to-Value Ratio of the Mortgage Loans was [_____]%.
</TABLE>
<TABLE>
<CAPTION>
Geographic Distribution of the Mortgaged Properties
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Location of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C>
$ %
------------------ ---------------------- --------------------
Total................................... $ 100.00%
================== ====================== ====================
- -------------------
</TABLE>
<TABLE>
<CAPTION>
Prepayment Charges(1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Months of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C>
$ %
------------------ ---------------------- --------------------
Total............................... $ 100.00%
================== ====================== ====================
- --------------------
(1) Prepayment charges are assessed on any Mortgage Loans prepaid in full or in part within the specified
number of months.
</TABLE>
<TABLE>
<CAPTION>
Loan Rates of the Fixed Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Fixed Rate
Number Principal Balance Mortgage Loans
of Mortgage Outstanding as of Outstanding as of
Loan Rate (%) Loans the Cut-off Date the Cut-off Date
- --------------------------------- ----------------- --------------------------- -------------------------
<S> <C> <C> <C>
$ %
----------------- --------------------------- -------------------------
Total............. $ 100.00%
================= =========================== =========================
- --------------------
(1)The weighted average Loan Rate of the Fixed Rate Mortgage Loans as of the Cut-off Date was [_______]% per
annum.
</TABLE>
Adjustable Rate Mortgage Loans
Each Adjustable Rate Mortgage Loan provides for [semi-annual] adjustment
to the Loan Rate thereon and for corresponding adjustments to the monthly
payment amount due thereon, in each case on each adjustment date applicable
thereto (each such date, an "Adjustment Date"); provided that the first
adjustment for such Mortgage Loan will occur after an initial period of
[__________] in the case of [____]% of the Adjustable Rate Mortgage Loans, by
aggregate principal balance of the Adjustable Rate Mortgage Loans as of the
Cut-off Date. On each Adjustment Date for each Adjustable Rate Mortgage Loan,
the Loan Rate thereon will be adjusted to equal the sum, [rounded to the
nearest multiple of 0.125%,] of the Index (as described below) and a fixed
percentage amount (the "Gross Margin"); [provided, however, that the Loan Rate
on each such Mortgage Loan generally will not increase or decrease by more
than 1.50% per annum on any related Adjustment Date (the "Periodic Rate Cap"),
except that each such Mortgage Loan may increase or decrease by a higher
percentage per annum on the initial Adjustment Date.] Each Loan Rate on each
such Mortgage Loan will not exceed a specified maximum Loan Rate over the life
of such Mortgage Loan (the "Maximum Loan Rate") or be less than a specified
minimum Loan Rate over the life of such Mortgage Loan (the "Minimum Loan
Rate"). The Delayed First Adjustment Mortgage Loans have a weighted average
Periodic Rate Cap of approximately [___]% per annum. Effective with the first
monthly payment due on each Adjustable Rate Mortgage Loan after each related
Adjustment Date, the monthly payment amount will be adjusted to an amount that
will amortize fully the outstanding principal balance of the related Mortgage
Loan over its remaining term, and pay interest at the Loan Rate as so
adjusted. Due to the application of the Periodic Rate Caps and the Maximum
Loan Rates, the Loan Rate on each such Mortgage Loan, as adjusted on any
related Adjustment Date, may be less than the sum of the Index and the related
Gross Margin, rounded as described herein. See "--The Index" below. None of
the Adjustable Rate Mortgage Loans permits the related mortgagor to convert
the adjustable Loan Rate thereon to a fixed Loan Rate.
The Adjustable Rate Mortgage Loans had Loan Rates as of the Cut-off Date
of not less than [______]% per annum and not more than [_____]% per annum and
the weighted average Loan Rate was approximately [_____]% per annum. As of the
Cut-off Date, the Adjustable Rate Mortgage Loans had Gross Margins ranging
from [_______]% to [______]%, Minimum Loan Rates ranging from [_____]% per
annum to [_____]% per annum and Maximum Loan Rates ranging from [_____]% per
annum to [_____]% per annum. As of the Cut-off Date, the weighted average
Gross Margin was approximately [_____]%, the weighted average Minimum Loan
Rate was approximately [_____]% per annum [(exclusive of the Mortgage Loans
that do not have a Minimum Loan Rate)] and the weighted average Maximum Loan
Rate was approximately [_____]% per annum. The latest next Adjustment Date
following the Cut-off Date on any Adjustable Rate Mortgage Loan occurs in
[_______ 199_] and the weighted average next Adjustment Date for all of the
Adjustable Rate Mortgage Loans following the Cut-off Date is [_______ 200_].
The Adjustable Rate Mortgage Loans are expected to have the following
characteristics as of the Cut-off Date (the sum in any column may not equal
the total indicated due to rounding) and the percentages set forth in the
tables are percentages of the Adjustable Rate Mortgage Loans as of the Cut-off
Date.
<TABLE>
<CAPTION>
Loan Rates of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Loan Rate (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------ ------------------- ------------------------ --------------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ --------------------------
Total..................................... $ 100.00%
=================== ======================== ==========================
- -------------------
(1)The weighted average Loan Rate of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
[_______]% per annum.
</TABLE>
<TABLE>
<CAPTION>
Maximum Loan Rates of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Maximum Loan Rate (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------ ------------------- ------------------------ ----------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ ----------------------
$ 100.00%
=================== ======================== ======================
- ------------------
(1)The weighted average Maximum Loan Rate of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
approximately [____]% per annum.
</TABLE>
<TABLE>
<CAPTION>
Minimum Loan Rates of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Minimum Loan Rate (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ----------------------------------- ----------------- ------------------------- ----------------------
<S> <C> <C> <C>
$ %
----------------- ------------------------- ----------------------
Total.......................... $ 100.00%
================= ========================= ======================
- --------------------
(1)The weighted average Minimum Loan Rate of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
approximately [___]% per annum.
</TABLE>
<TABLE>
<CAPTION>
Gross Margins of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Number Principal Balance Mortgage Loans
of Mortgage Outstanding as of Outstanding as of
Gross Margins (%) Loans the Cut-off Date the Cut-off Date
- ---------------------------- ----------------- ------------------------ ------------------------
<S> <C> <C> <C>
$ %
================= ======================== ========================
Total.................. $ 100.00%
================= ======================== ========================
- ------------------
(1)The weighted average Gross Margin of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
approximately [_____]%.
</TABLE>
<TABLE>
<CAPTION>
Next Adjustment Date for the Adjustable Rate Mortgage Loans
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Next Adjustment Date Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------- ----------------- ----------------------- ------------------------
<S> <C> <C> <C>
$ %
----------------- ----------------------- ------------------------
Total.................. $ 100.00%
================= ======================= ========================
</TABLE>
<TABLE>
<CAPTION>
Initial Fixed Term/Subsequent Adjustable Rate Term of the Adjustable Rate Mortgage Loans
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Initial Fixed Term/Subsequent Number of Outstanding as of Outstanding as of
Adjustable Rate Term Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------------------- ----------------- ----------------------- -------------------------
<S> <C> <C> <C>
$ %
----------------- ----------------------- -------------------------
Total................................... $ 100.00%
================= ======================= =========================
</TABLE>
<TABLE>
<CAPTION>
Initial Adjustment Rate Caps of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Initial Periodic Rate Cap (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------------------- ----------------- ----------------------- -------------------------
<S> <C> <C> <C>
$ %
--------------- ------------------------- -------------------------
Total............................... $ 100.00%
=============== ========================= =========================
- ------------------
(1)Relates solely to initial rate adjustments.
</TABLE>
<TABLE>
<CAPTION>
Subsequent Periodic Rate Caps of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Periodic Rate Cap (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------------------- --------------- ------------------------- -------------------------
<S> <C> <C> <C>
$ %
=============== ========================= =========================
Total............................. $ 100.00%
=============== ========================= =========================
- ------------------
(1)Relates to all rate adjustments subsequent to initial rate adjustments.
</TABLE>
The Index
As of any Adjustment Date, the Index applicable to the determination of
the Loan Rate on each Adjustable Rate Mortgage Loan will be
[________________].
In the event that the Index becomes unavailable or otherwise unpublished,
the Master Servicer will select a comparable alternative index over which it
has no direct control and which is readily verifiable.
UNDERWRITING STANDARDS
All of the Mortgage Loans have been [originated by, or purchased in the
secondary market by], [__________] (the "Seller") in the ordinary course of
its business. The Mortgage Loans were purchased from [___________],
representing [___]% of the Pool Principal Balance as of the Cut-Off Date. Each
entity from which the Seller purchased the Mortgage Loans has represented and
warranted that each of the Mortgage Loans sold by it was underwritten in
accordance with standards utilized by it or the applicable originator in
originating mortgage loans generally comparable to such Mortgage Loans during
the period of origination. As described herein under "The Pooling and
Servicing Agreement--Assignment of the Mortgage Loans," the Seller, as Seller,
will make certain representations and warranties to the Trustee regarding the
Mortgage Loans. In the event of a breach that materially and adversely affects
the Certificateholders, the Seller will be obligated either to cure such
breach or repurchase or replace each affected Mortgage Loan.
Underwriting standards are applied by or on behalf of a lender to
evaluate a borrower's credit standing and repayment ability, and the value and
adequacy of the related mortgaged property as collateral. In general, a
prospective borrower applying for a loan is required to fill out a detailed
application designed to provide the underwriting officer pertinent credit
information. As part of the description of the borrower's financial condition,
the borrower generally is required to provide a current list of assets and
liabilities and a statement of income and expense, as well as an authorization
to apply for a credit report which summarizes the borrower's credit history
with local merchants and lenders and any record of bankruptcy.
When the Seller [originates or acquires] a mortgage loan, the
borrower's credit report is reviewed. [Generally, each credit report provides a
credit score] for the borrower. The credit score is based upon the credit
evaluation methodology developed by [_______] (the "SCORING COMPANY") a
consulting firm specializing in creating evaluation predictive models through a
high number of variables components. Scoring Company scores generally range
from [___] to [___] and are available from three major credit bureaus: Experian
(formerly TRW), Equifax and Trans Union. These scores estimate, on a relative
basis, which loans are most likely to default in the future. Lower scores imply
higher default risk relative to a higher score. Scoring Company scores are
empirically derived from historical credit bureau data and represent a
numerical weighing of a borrower's credit characteristics over a two-year
period. A Scoring Company score is generated through the statistical analysis
of a number of credit-related characteristics or variables. Common
characteristics include number of credit lines (trade lines), payment history,
past delinquencies, severity of delinquencies, current levels of indebtedness,
types of credit and length of credit history. Attributes are specific values of
each characteristic. A scorecard (the model) is created with weights or points
assigned to each attribute. An individual loan applicant's credit score is
derived by adding together the attribute weights for the applicant. With
respect to the Mortgage Loans, [_____]% have credit scores for the borrowers
and their weighted average Scoring Company score was [____] at the time of
scoring.]
THE MASTER SERVICER
The information set forth in the following paragraphs has been provided
by [_________________]. None of the Depositor, the Trustee, the Underwriter or
any of their respective affiliates has made or will make any representation as
to the accuracy or completeness of such information.
The following table sets forth, for the servicing portfolio serviced by
the Master Servicer as of [December 31, 1996, as of December 31, 1997 and as
of September 30, 1998], certain information relating to the delinquency
experience (including loans in foreclosure included in the Master Servicer's
servicing portfolio (which portfolio does not include mortgage loans that are
subserviced by others)) at the end of the indicated periods. The indicated
periods of delinquency are based on the number of days past due on a
contractual basis. No mortgage loan is considered delinquent for these
purposes until it is one month past due on a contractual basis. The
information contained in the monthly remittance reports which will be sent to
investors will be compiled using the same methodology as that used to compile
the information contained in the table below.
<TABLE>
<CAPTION>
As of As of As of
December 31, 1996 December 31, 1997 September 30, 1998
--------------------------------- ---------------------------------- -----------------------------------
Percent Percent Percent Percent
By No. By Percent By By No. By No. By By No. Percent By
of Dollar By No. Dollar of By Dollar of Dollar of By Dollar By No. Dollar
Loans Amount of Loans Amount Loans Amount Loans Amount Loans Amount of Loans Amount
----- ------ -------- ------- ----- --------- ------- ------- ----- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Portfolio... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Period of
Delinquency:
30-59 Days....
60-89 Days....
90 Days or
more..............
Total Delinquent
Loans...........
Loans in
Foreclosure(1)..
- ---------------
(1) Loans in foreclosure are also included under the heading "Total Delinquent Loans."
</TABLE>
The following tables set forth, [December 31, 1996, as of December 31,
1997 and as of September 30, 1998], certain information relating to the
foreclosure, REO and loan loss experience of mortgage loans included in the
Master Servicer's servicing portfolio [(which portfolio does not include
mortgage loans that are subserviced by others)] at the end of the indicated
periods.
<TABLE>
<CAPTION>
Real Estate Owned
(Dollars in Thousands)
-----------------------------------------------------------------------------
As of
As of As of September 30,
December 31, 1996 December 31, 1997 1998
-----------------------------------------------------------------------------
By No. By By No. By By No. By
of Dollar of Dollar of Dollar
Loans Amount Loans Amount Loans Amount
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio...........
Foreclosed Loans(1).......
Foreclosed Ratio(2).......
(1) For the purposes of these tables, Foreclosed Loans means the principal balance of mortgage loans secured by
mortgaged properties the title to which has been acquired by the Master Servicer.
(2) The Foreclosure Ratio is equal to the aggregate principal balance or number of Foreclosed Loans divided by
the aggregate principal balance, or number, as applicable, or mortgage loans in the total portfolio at the
end of the indicated period.
</TABLE>
<TABLE>
<CAPTION>
Loan Gain/(Loss) Experience
(Dollars in Thousands)
----------------------------------------------------------------------
As of As of As of
December 31, 1996 December 31, 1997 September 30, 1998
----------------------- ----------------------- --------------------
<S> <C> <C> <C>
Total Portfolio (1)....................
Net Gains/(Losses) (2).................
Net Gains/(Losses) as a Percentage of
Total Portfolio.........................
- ----------------
(1)"Total Portfolio" on the date stated above is the principal balance of the mortgage loans outstanding on the
last day of the period.
(2)"Net Gains/(Losses)" are actual gains or losses incurred on liquidated properties and shortfall payoffs for
each respective period. Gains or losses on liquidated properties are calculated as net sales proceeds less
book value (exclusive of loan purchase premium or discount). Shortfall payoffs are calculated as the
difference between principal payoff amount and unpaid principal at the time of payoff.
</TABLE>
It is unlikely that the delinquency experience of the Mortgage Loans
comprising the Mortgage Pool will correspond to the delinquency experience of
the Master Servicer's mortgage portfolio set forth in the foregoing tables.
The statistics shown above represent the delinquency experience for the Master
Servicer's mortgage servicing portfolio only for the periods presented,
whereas the aggregate delinquency experience on the Mortgage Loans comprising
the Mortgage Pool will depend on the results obtained over the life of the
Mortgage Pool. There can be no assurance that the Mortgage Loans comprising
the Mortgage Pool will perform consistent with the delinquency or foreclosure
experience described herein. It should be noted that if the residential real
estate market should experience an overall decline in property values, the
actual rates of delinquencies and foreclosures could be higher than those
previously experienced by the Master Servicer. In addition, adverse economic
conditions may affect the timely payment by borrowers of scheduled payments of
principal and interest on the Mortgage Loans and, accordingly, the actual
rates of delinquencies and foreclosures with respect to the Mortgage Pool.
[The Master Servicer is in the process of completing its compliance goals
in connection with the year 2000 issue. The year 2000 issue is the result of
prior computer programs being written using two digits, rather than four
digits, to define the applicable year. Any of the Master Servicer's computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. Any such occurrence could result in
major computer system failure or miscalculations. The Master Servicer is
presently engaged in various procedures to ensure that their computer systems
and software will be year 2000 compliant.
However, in the event that the Master Servicer, or any of its suppliers,
customers, brokers or agents do not successfully and timely achieve year 2000
compliance, the performance of obligations of the Master Servicer under the
Pooling and Servicing Agreement could be materially adversely affected.]
THE POOLING AND SERVICING AGREEMENT
General
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement, dated as of ____________ __, 199__ (the "Pooling and Servicing
Agreement"), among the Depositor, the Seller, the Master Servicer and the
Trustee. The Trust Fund created under the Pooling and Servicing Agreement will
consist of (i) all of the Depositor's right, title and interest in the
Mortgage Loans, the related mortgage notes, Mortgages and other related
documents, (ii) all payments on or collections in respect of the Mortgage
Loans due after the Cut-off Date, together with any proceeds thereof, (iii)
any Mortgaged Properties acquired on behalf of Certificateholders by
foreclosure or by deed in lieu of foreclosure, and any revenues received
thereon, (iv) the rights of the Trustee under all insurance policies required
to be maintained pursuant to the Pooling and Servicing Agreement and (v) the
rights of the Depositor under the Mortgage Loan Purchase Agreement between the
Depositor and the Seller. The Offered Certificates will be transferable and
exchangeable at the corporate trust offices of the Trustee.
Assignment of the Mortgage Loans
On the Closing Date the Depositor will transfer to the Trust Fund all of
its right, title and interest in and to each Mortgage Loan, the related
mortgage notes, mortgages and other related documents (collectively, the
"Related Documents"), including all scheduled payments with respect to each
such Mortgage Loan due after the applicable Cut-off Date. The Trustee,
concurrently with such transfer, will deliver the Certificates to the
Depositor. Each Mortgage Loan transferred to the Trust Fund will be identified
on a schedule (the "Mortgage Loan Schedule") delivered to the Trustee pursuant
to the Pooling and Servicing Agreement. Such schedule will include information
such as the Principal Balance of each Mortgage Loan as of the Cut-off Date,
its Loan Rate as well as other information.
The Pooling and Servicing Agreement will require that, within the time
period specified therein, the Seller will deliver or cause to be delivered to
the Trustee (or a custodian, as the Trustee's agent for such purpose) the
Mortgage Loans endorsed to the Trustee on behalf of the Certificateholders and
the Related Documents. In lieu of delivery of original Mortgages, if such
original is not available, the Seller may deliver or cause to be delivered
true and correct copies thereof, together with a lost note affidavit executed
by the Seller.
Within [___] days of the Closing Date, the Trustee will review the
Mortgage Loans and the Related Documents pursuant to the Pooling and Servicing
Agreement and if any Mortgage Loan or Related Document is found to be
defective in any material respect and such defect is not cured within [___]days
following notification thereof to the Seller by the Trustee, the Seller will
be obligated to either (i) substitute for such Mortgage Loan an Eligible
Substitute Mortgage Loan; however, such substitution is permitted only within
two years of the Closing Date and may not be made unless an opinion of counsel
is provided to the effect that such substitution will not [disqualify the
Trust Fund as a REMIC or] result in a prohibited transaction tax under the
Code or (ii) purchase such Mortgage Loan at a price (the "Purchase Price")
equal to the outstanding Principal Balance of such Mortgage Loan as of the
date of purchase, plus all accrued and unpaid interest thereon, computed at
the Loan Rate (net of the Servicing Fee Rate and the Trustee Fee) through the
end of the calendar month in which the purchase is effected, plus the amount
of any unreimbursed Advances and Servicing Advances made by the Master
Servicer. The Purchase Price will be deposited in the Collection Account on or
prior to the next succeeding Determination Date after such obligation arises.
The obligation of the Seller to repurchase or substitute for a Defective
Mortgage Loan is the sole remedy regarding any defects in the Mortgage Loans
and Related Documents available to the Trustee or the Certificateholders.
In connection with the substitution of an Eligible Substitute
Mortgage Loan, the Seller will be required to deposit in the Collection
Account on or prior to the next succeeding Determination Date after such
obligation arises an amount (the "Substitution Adjustment") equal to the
excess of the Principal Balance of the related Defective Mortgage Loan over
the Principal Balance of such Eligible Substitute Mortgage Loan.
An "Eligible Substitute Mortgage Loan" is a mortgage loan substituted
by the Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of, and not more than 5% less
than, the Principal Balance of the Defective Mortgage Loan; (ii) have a Loan
Rate, with respect to a Fixed Rate Mortgage Loan, not less than the Loan Rate
of the Defective Mortgage Loan and not more than 1% in excess of the Loan Rate
of such Defective Mortgage Loan or, with respect to an Adjustable Rate
Mortgage Loan, have a Maximum Loan Rate and Minimum Loan Rate not less than
the respective rate for the Defective Mortgage Loan and have a Gross Margin
equal to or greater than the Defective Mortgage Loan; (iii) have the same Due
Date as the Defective Mortgage Loan; (iv) have a remaining term to maturity
not more than one year earlier and not later than the remaining term to
maturity of the Defective Mortgage Loan; (v) comply with each representation
and warranty as to the Mortgage Loans set forth in the Pooling and Servicing
Agreement (deemed to be made as of the date of substitution); and (vi) satisfy
certain other conditions specified in the Pooling and Servicing Agreement.
The Seller will make certain representations and warranties as to the
accuracy in all material respects of certain information furnished to the
Trustee with respect to each Mortgage Loan (e.g., Cut-off Date Principal
Balance and the Loan Rate). In addition, the Seller will represent and
warrant, on the Closing Date, that, among other things: (i) at the time of
transfer to the Depositor, the Seller has transferred or assigned all of its
right, title and interest in each Mortgage Loan and the Related Documents,
free of any lien; and (ii) each Mortgage Loan complied, at the time of
origination, in all material respects with applicable state and federal laws.
Upon discovery of a breach of any such representation and warranty which
materially and adversely affects the interests of the Certificateholders in
the related Mortgage Loan and Related Documents, the Seller will have a period
of [__] days after discovery or notice of the breach to effect a cure. If the
breach cannot be cured within the [__]-day period, the Seller will be obligated
to (i) substitute for such Defective Mortgage Loan an Eligible Substitute
Mortgage Loan or (ii) purchase such Defective Mortgage Loan from the Trust
Fund. The same procedure and limitations that are set forth above for the
substitution or purchase of Defective Mortgage Loans as a result of deficient
documentation relating thereto will apply to the substitution or purchase of a
Defective Mortgage Loan as a result of a breach of a representation or
warranty in the Pooling and Servicing Agreement that materially and adversely
affects the interests of the Certificateholders.
Mortgage Loans required to be transferred to the Seller as described
in the preceding paragraphs are referred to as "Defective Mortgage Loans."
Pursuant to the Pooling and Servicing Agreement, the Master Servicer
will service and administer the Mortgage Loans as more fully set forth herein.
Payments on Mortgage Loans; Deposits to Collection Account and Distribution
Account
The Master Servicer shall establish and maintain or cause to be
maintained a separate trust account (the "Collection Account") for the benefit
of the holders of the Certificates. The Collection Account will be an Eligible
Account (as defined herein). Upon receipt by the Master Servicer of amounts in
respect of the Mortgage Loans (excluding amounts representing the Servicing
Fee, the Trustee Fee, reimbursement for Advances and Servicing Advances and
insurance proceeds to be applied to the restoration or repair of a Mortgaged
Property or similar items), the Master Servicer will deposit such amounts in
the Collection Account. Amounts so deposited may be invested in Eligible
Investments (as described in the Pooling and Servicing Agreement) maturing no
later than one Business Day prior to the date on which the amount on deposit
therein is required to be deposited in the Distribution Account or on such
Distribution Date if approved by the Rating Agencies. The Trustee will
establish an account (the "Distribution Account") into which will be deposited
amounts withdrawn from the Collection Account for distribution to
Certificateholders on a Distribution Date. The Distribution Account will be an
Eligible Account. Amounts on deposit therein may be invested in Eligible
Investments maturing on or before the Business Day prior to the related
Distribution Date unless such Eligible Investments are invested in investments
managed or advised by the Trustee or an affiliate thereof, in which case such
Eligible Investments may mature on the related Distribution Date.
An "Eligible Account" is a segregated account that is (i) an account
or accounts maintained with a federal or state chartered depository
institution or trust company the short-term unsecured debt obligations of
which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated P-1 by Moody's and A-1 by
Standard & Poor's (or comparable ratings if Moody's and Standard & Poor's are
not the Rating Agencies) at the time any amounts are held on deposit therein,
(ii) an account or accounts the deposits in which are fully insured by the
Federal Deposit Insurance Corporation (to the limits established by such
corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an opinion of counsel delivered to the Trustee and
to each Rating Agency, the Certificateholders will have a claim with respect
to the funds in such account or a perfected first priority security interest
against such collateral (which shall be limited to Eligible Investments)
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such account is maintained,
(iii) a trust account or accounts maintained with the trust department of a
federal or state chartered depository institution, national banking
association or trust company acting in its fiduciary capacity or (iv)
otherwise acceptable to each Rating Agency without reduction or withdrawal of
their then current ratings of the Certificates as evidenced by a letter from
each Rating Agency to the Trustee. Eligible Investments are specified in the
Pooling and Servicing Agreement and are limited to investments which meet the
criteria of the Rating Agencies from time to time as being consistent with
their then current ratings of the Certificates.
Advances
Subject to the following limitations, the Master Servicer will be
obligated to advance or cause to be advanced on or before each Distribution
Date its own funds, or funds in the Collection Account that are not included
in the Available Funds for such Distribution Date, in an amount equal to the
aggregate of all payments of principal and interest, net of the Servicing Fee,
and the Trustee Fee, that were due during the related Due Period on the
Mortgage Loans, other than Balloon Payments, and that were delinquent on the
related Determination Date, plus certain amounts representing assumed payments
not covered by any current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure, and, with respect to Balloon
Loans, with respect to which the Balloon Payment is not made when due, an
assumed monthly payment that would have been due on the related Due Date based
on the original principal amortization schedule for such Balloon Loan (any
such advance, an "Advance").
Advances are required to be made only to the extent they are deemed
by the Master Servicer to be recoverable from related late collections,
insurance proceeds or liquidation proceeds. The purpose of making such
Advances is to maintain a regular cash flow to the Certificateholders, rather
than to guarantee or insure against losses. The Master Servicer will not be
required to make any Advances with respect to reductions in the amount of the
monthly payments on the Mortgage Loans due to bankruptcy proceedings or the
application of the Relief Act.
All Advances will be reimbursable to the Master Servicer from late
collections, insurance proceeds and liquidation proceeds from the Mortgage
Loan as to which such unreimbursed Advance was made. In addition, any Advances
previously made in respect of any Mortgage Loan that are deemed by the Master
Servicer to be nonrecoverable from related late collections, insurance
proceeds or liquidation proceeds may be reimbursed to the Master Servicer out
of any funds in the Collection Account prior to the distributions on the
Certificates. In the event the Master Servicer fails in its obligation to make
any such advance, the Trustee, in its capacity as successor Master Servicer,
will be obligated to make any such advance, to the extent required in the
Pooling and Servicing Agreement.
In the course of performing its servicing obligations, the Master
Servicer will pay all reasonable and customary "out-of-pocket" costs and
expenses incurred in the performance of its servicing obligations, including,
but not limited to, the cost of (i) the preservation, restoration and
protection of the Mortgaged Properties, (ii) any enforcement or judicial
proceedings, including foreclosures, and (iii) the management and liquidation
of Mortgaged Properties acquired in satisfaction of the related mortgage. Each
such expenditure will constitute a "Servicing Advance."
The Master Servicer's right to reimbursement for Servicing Advances
is limited to late collections on the related Mortgage Loan, including
liquidation proceeds, released mortgaged property proceeds, insurance proceeds
and such other amounts as may be collected by the Master Servicer from the
related Mortgagor or otherwise relating to the Mortgage Loan in respect of
which such unreimbursed amounts are owed, unless such amounts are deemed to be
nonrecoverable by the Master Servicer, in which event reimbursement will be
made to the Master Servicer from general funds in the Collection Account.
The Trustee
[__________], a [________], will be named trustee (the "Trustee")
pursuant to the Pooling and Servicing Agreement. The Trustee will initially
serve as custodian of the Mortgage Loans.
The principal compensation (the "Trustee Fee") to be paid to the
Trustee in respect of its obligations under the Pooling and Servicing
Agreement will be equal to [____________]. The Pooling and Servicing Agreement
will provide that the Trustee and any director, officer, employee or agent of
the Trustee will be indemnified by the Trust Fund and will be held harmless
against any loss, liability or expense (not including expenses, disbursements
and advances incurred or made by the Trustee, including the compensation and
the expenses and disbursements of its agents and counsel, in the ordinary
course of the Trustee's performance in accordance with the provisions of the
Pooling and Servicing Agreement) incurred by the Trustee arising out of or in
connection with the acceptance or administration of its obligations and duties
under the Pooling and Servicing Agreement, other than any loss, liability or
expense (i) that constitutes a specific liability of the Trustee under the
Pooling and Servicing Agreement or (ii) incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's
duties under the Pooling and Servicing Agreement or as a result of a breach,
or by reason of reckless disregard, of the Trustee's obligations and duties
under the Pooling and Servicing Agreement.
Servicing and Other Compensation and Payment of Expenses
The principal compensation (the "Servicing Fee") to be paid to the
Master Servicer in respect of its servicing activities for the Certificates
will be at the "Servicing Fee Rate" of up to [____]% per annum on the Principal
Balance of each Mortgage Loan. The amount resulting from the difference, if
any, between the Servicing Fee Rate for any Mortgage Loan and [____]% per annum
(the "Excess Servicing Fee") will be [retained by the Seller]. As additional
servicing compensation, the Master Servicer is entitled to retain all
service-related fees (other than prepayment penalties), including assumption
fees, modification fees, extension fees and late payment charges, to the extent
collected from mortgagors, together with any interest or other income earned on
funds held in the Collection Account and any escrow accounts. [The Master
Servicer is obligated to offset any Prepayment Interest Shortfall on any
Distribution Date (payments made by the Master Servicer in satisfaction of such
obligation, "Compensating Interest") by an amount not in excess of its
Servicing Fee for such Distribution Date.] The Master Servicer is obligated to
pay certain insurance premiums and certain ongoing expenses associated with the
Mortgage Pool and incurred by the Master Servicer in connection with its
responsibilities under the Pooling and Servicing Agreement and is entitled to
reimbursement therefor as provided in the Pooling and Servicing Agreement.
The "Determination Date" with respect to any Distribution Date will
be the [__]th day of the calendar month in which such Distribution Date occurs
or, if such [___]th day is not a Business Day, the Business Day immediately
following such [___]th day. [With respect to any Determination Date and each
Mortgage Loan as to which a principal prepayment in full or in part was
applied during the related Due Period, the "Prepayment Interest Shortfall" is
an amount equal to the interest at the applicable Loan Rate (net of the
Servicing Fee) on the amount of such principal prepayment for the number of
days commencing on the date on which the principal prepayment is applied and
ending on the last day of the related Due Period.]
Voting Rights
With respect to any date of determination, the percentage of all the
voting rights ("Voting Rights") allocated among holders of the Offered
Certificates shall be the fraction, expressed as a percentage, the numerator
of which is the aggregate Certificate Principal Balance of all the
Certificates of such Class then outstanding and the denominator of which is
the aggregate Certificate Principal Balance of all the Certificates then
outstanding. The Voting Rights allocated to each Class of Offered Certificates
shall be allocated among all holders of each such Class in proportion to the
outstanding Certificate Principal Balance of such Certificates.
<PAGE>
Amendment
The Pooling and Servicing Agreement may be amended by the Seller, the
Depositor, the Master Servicer and the Trustee, without the consent of the
holders of the Certificates, for any of the purposes set forth under "The
Pooling and Servicing Agreement--Amendment" in the Prospectus. In addition,
the Pooling and Servicing Agreement may be amended by the Seller, the
Depositor, the Master Servicer and the Trustee and the holders of a majority
in interest of any Class of Offered Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Pooling and Servicing Agreement or of modifying
in any manner the rights of the holders of Offered Certificates; provided,
however, that no such amendment may (i) reduce in any manner the amount of, or
delay the timing of, distributions required to be made on any Offered
Certificate without the consent of the holder of such Certificate; (ii)
adversely affect in any material respect the interests of the holders of any
Class of the Offered Certificates in a manner other than as described in
clause (i) above, without the consent of the holders of Offered Certificates
of such Class evidencing percentage interests aggregating at least 66%; or
(iii) reduce the aforesaid percentage of aggregate outstanding principal
amounts of Offered Certificates, the holders of which are required to consent
to any such amendment, without the consent of the holders of all such
Certificates.
Termination
The holder of the majority interest in the Residual Certificate (or
if such holder does not exercise such option, the Master Servicer) will have
the right to repurchase all remaining Mortgage Loans and REO Properties and
thereby effect the early retirement of the Certificates, on any Distribution
Date following the Due Period during which the aggregate principal balance of
the Mortgage Loans and any real estate owned by the Trust is less than or
equal to 10% of the Pool Principal Balance as of the Cut-off Date. In the
event that the option is exercised, the repurchase will be made at a price
generally equal to par plus accrued interest for each Mortgage Loan at the
related Loan Rate to but not including the first day of the month in which
such repurchase price is distributed plus the amount of any unreimbursed
Advances and Servicing Advances made by the Master Servicer. Proceeds from
such repurchase will be included in Available Funds and will be distributed to
the holders of the Certificates in accordance with the Pooling and Servicing
Agreement. Any such repurchase of the Mortgage Loans and REO Properties will
result in the early retirement of the Certificates.
[Optional Purchase of Defaulted Loans
As to any Mortgage Loan which is delinquent in payment by [__] days
or more, the Master Servicer may, at its option, purchase such Mortgage Loan
from the Trust Fund at the Purchase Price for such Mortgage Loan.]
Events of Default
Events of Default will consist, among other things, of: (i) (a) any
failure by the Master Servicer to make an Advance and (b) any other failure by
the Master Servicer to deposit in the Collection Account or Distribution
Account the required amounts or remit to the Trustee any payment which
continues unremedied for one Business Day following written notice to the
Master Servicer; (ii) any failure of the Master Servicer to make any Advance
or to cover any Prepayment Interest Shortfalls, as described herein, which
failure continues unremedied for one Business Day; (iii) any failure by the
Master Servicer to observe or perform in any material respect any other of its
covenants or agreements in the Pooling and Servicing Agreement, which
continues unremedied for 30 days after the first date on which (x) the Master
Servicer has knowledge of such failure or (y) written notice of such failure
is given to the Master Servicer; (iv) insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, and certain
actions by or on behalf of the Master Servicer indicating its insolvency or
inability to pay its obligations or (v) cumulative Realized Losses as of any
Distribution Date exceed the amount specified in the Pooling and Servicing
Agreement.
Rights upon Event of Default
So long as an Event of Default under the Pooling and Servicing
Agreement remains unremedied, the Trustee at the direction of the holders of
Offered Certificates evidencing not less than 51% of the Voting Rights may
terminate all of the rights and obligations of the Master Servicer in its
capacity as servicer with respect to the Mortgage Loans, as provided in the
Pooling and Servicing Agreement, whereupon the Trustee will succeed to all of
the responsibilities and duties of the Master Servicer under the Pooling and
Servicing Agreement, including the obligation to make Advances. No assurance
can be given that termination of the rights and obligations of the Master
Servicer under the Pooling and Servicing Agreement would not adversely affect
the servicing of the related Mortgage Loans, including the delinquency
experience of such Mortgage Loans.
No holder of an Offered Certificate, solely by virtue of such
holder's status as a holder of an Offered Certificate, will have any right
under the Pooling and Servicing Agreement to institute any proceeding with
respect thereto, unless such holder previously has given to the Trustee
written notice of default and unless the holders of Offered Certificates
having not less than 51% of the Voting Rights evidenced by the Offered
Certificates so agree and have offered reasonable indemnity to the Trustee.
DESCRIPTION OF THE CERTIFICATES
General
The Offered Certificates will be issued pursuant to a Pooling and
Servicing Agreement. Set forth below are summaries of the specific terms and
provisions pursuant to which the Offered Certificates will be issued. The
following summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the provisions of the Pooling and
Servicing Agreement. When particular provisions or terms used in the Pooling
and Servicing Agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference.
[_______________________] will issue the Class A Certificates (the
"Senior Certificates"), (ii) the Class M Certificates (the "Mezzanine
Certificates"), (iii) the Class B Certificates (the "Subordinate
Certificates") and (iv) the Class R Certificates (the "Residual
Certificates"). The Senior Certificates, the Mezzanine Certificates and the
Subordinate Certificates (collectively, the "Offered Certificates") and the
Residual Certificates are collectively referred to herein as the
"Certificates." Only the Offered Certificates are offered hereby.
The Class A, the Class M and the Class B Certificates will have the
respective Original Certificate Principal Balances specified on the cover
hereof. The aggregate of the Original Certificate Principal Balances of the
Offered Certificates is approximately $[_____________].
The Class R Certificates will have an Original Certificate Principal
Balance of $[___] and will [not] bear interest.
The Offered Certificates will be issued in book-entry form as
described below. The Offered Certificates will be issued in minimum dollar
denominations of $[______] and integral multiples of $[_______] in excess
thereof (except that one Certificate of each Class may be issued in a
denomination which is not an integral multiple thereof). The assumed final
maturity date for each Class of Offered Certificates is the Distribution Date
occurring in [___________ 20__].
Distributions on the Offered Certificates will be made by the Trustee
on the [__]th day of each month, or if such day is not a Business Day, on the
first Business Day thereafter, commencing on _________ __, 199_ (each, a
"Distribution Date"), to the persons in whose names such Certificates are
registered at the close of business on the Business Day immediately preceding
such Distribution Date (each, a "Record Date").
Book-Entry Certificates
The Offered Certificates will be book-entry Certificates (the
"Book-Entry Certificates"). Persons acquiring beneficial ownership interests
in the Offered Certificates ("Certificate Owners") will hold their Offered
Certificates through The Depository Trust Company ("DTC") [in the United
States, or Cedel Bank, societe anonyme ("Cedel"), or Euroclear (in Europe)] if
they are participants of such system[s], or indirectly through organizations
which are participants in such system[s]. The Book-Entry Certificates will be
issued in one or more certificates which equal the aggregate principal balance
of the Offered Certificates and will initially be registered in the name of
Cede & Co., ("Cede"), the nominee of DTC. [Cedel and Euroclear will hold
omnibus positions on behalf of their participants through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries which in turn will hold such positions in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank
will act as depositary for Cedel and The Chase Manhattan Bank will act as
depositary for Euroclear (in such capacities, individually the "Relevant
Depositary" and collectively the "European Depositaries").] Investors may hold
such beneficial interests in the Book-Entry Certificates in minimum
denominations of $50,000. Except as described below, no person acquiring a
Book-Entry Certificate (each, a "beneficial owner") will be entitled to
receive a physical certificate representing such Certificate (a "Definitive
Certificate"). Unless and until Definitive Certificates are issued, it is
anticipated that the only "Certificateholder" of the Offered Certificates will
be Cede, as nominee of DTC. Certificate Owners will not be Certificateholders
as that term is used in the Pooling and Servicing Agreement. Certificate
Owners are only permitted to exercise their rights indirectly through
Participants and DTC.
The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or
other financial intermediary (each, a "Financial Intermediary") that maintains
the beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded on
the records of DTC (or of a participating firm that acts as agent for the
Financial Intermediary, whose interest will in turn be recorded on the records
of DTC if the beneficial owner's Financial Intermediary is not a DTC
participant [and on the records of Cedel or Euroclear, as appropriate]).
Certificate Owners will receive all distributions of principal of and
interest on the Offered Certificates from the Trustee through DTC and DTC
participants. While the Offered Certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required
to make book-entry transfers among participants on whose behalf it acts with
respect to the Offered Certificates and is required to receive and transmit
distributions of principal of, and interest on, the Offered Certificates.
Participants and indirect participants with which Certificate Owners have
accounts with respect to Offered Certificates are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates representing their respective interests in the
Offered Certificates, the Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interest.
Certificateholders will not receive or be entitled to receive
certificates representing their respective interests in the Offered
Certificates, except under the limited circumstances described below. Unless
and until Definitive Certificates are issued, Certificateholders which are not
DTC participants may transfer ownership of Offered Certificates only through
participants and indirect participants by instructing such participants and
indirect participants to transfer Offered Certificates, by book-entry
transfer, through DTC for the account of the purchasers of such Offered
Certificates, which account is maintained with their respective participants.
Under the Rules and in accordance with DTC's normal procedures, transfers of
ownership of Offered Certificates will be executed through DTC and the
accounts of the respective participants at DTC will be debited and credited.
Similarly, the participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Certificateholders.
[Because of time zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a DTC participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. Such credits or any transactions in
such securities settled during such processing will be reported to the
relevant Euroclear or Cedel Participants on such business day. Cash received
in Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant (as defined below) or Euroclear Participant (as defined below) to
a DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Cedel or Euroclear cash account only as of
the business day following settlement in DTC. For information with respect to
tax documentation procedures relating to the Certificates, see "Certain
Federal Income Tax Consequences--REMIC Certificates --Regular Certif.S.
Persons" and "--Information Reporting and Backup Withholding" in the
Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures--Certain U.S. Federal Income Tax Documentation Requirements" in
Annex I hereto.]
Transfers between DTC participants will occur in accordance with the
Rules. [Transfers between Cedel Participants and Euroclear Participants will
occur in accordance with their respective rules and operating procedures.]
[Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly through
Cedel Participants or Euroclear Participants, on the other, will be effected
in DTC in accordance with the Rules on behalf of the relevant European
international clearing system by the Relevant Depositary; however, such cross
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the European Depositaries.]
DTC which is a New York-chartered limited purpose trust company,
performs services for its participants, some of which (and/or their
representatives) own DTC. In accordance with its normal procedures, DTC is
expected to record the positions held by each DTC participant in the
Book-Entry Certificates, whether held for its own account or as a nominee for
another person. In general, beneficial ownership of Book-Entry Certificates
will be subject to the Rules, as in effect from time to time.
[Cedel Bank, societe anonyme, 67 Bd Grande-Duchesse Charlotte, L-1331
Luxembourg, was incorporated in 1970 as a limited company under Luxembourg
law. Cedel is owned by banks, securities dealers and financial institutions,
and currently has about 100 shareholders, including U.S. financial
institutions or their subsidiaries. No single entity may own more than five
percent of Cedel's stock.]
[Cedel is registered as a bank in Luxembourg, and as such is subject
to regulation by the Institut Monetaire Luxembourgeois (i.e., the Luxembourg
Monetary Authority), which supervises Luxembourg banks.]
[Cedel holds securities for its customers ("Cedel Participants") and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
also deals with domestic securities markets in several countries through
established depository and custodial relationships. Cedel has established an
electronic bridge with Morgan Guaranty Trust as the Euroclear Operator in
Brussels to facilitate settlement of trades between systems. Cedel currently
accepts over 70,000 securities issues on its books.]
[Cedel's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's United States customers are limited to
securities brokers and dealers and banks. Currently, Cedel has approximately
3,000 customers located in over 60 countries, including all major European
countries, Canada, and the United States. Indirect access to Cedel is
available to other institutions which clear through or maintain a custodial
relationship with an account holder of Cedel.]
[Euroclear was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement
of certificates and any risk from lack of simultaneous transfers of securities
and cash. Transactions may be settled in any of 29 currencies, including
United States dollars. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. Euroclear is operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York (the "Euroclear
Operator"), under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of
Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.]
[The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.]
[Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.]
Distributions on the Book-Entry Certificates will be made on each
Remittance Date by the Trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the beneficial owners of the
Book-Entry Certificates that it represents and to each Financial Intermediary
for which it acts as agent. Each such Financial Intermediary will be
responsible for disbursing funds to the beneficial owners of the Book-Entry
Certificates that it represents.
Under a book-entry format, beneficial owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since
such payments will be forwarded by the Trustee to Cede. [Distributions with
respect to Certificates held through Cedel or Euroclear will be credited to
the cash accounts of Cedel Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Certain Federal Income Tax Consequences--REMIC Certificates--Regular
Certificates--Non-U.S. Persons" and "--Information Reporting and Backup
Withholding" in the Prospectus.] Because DTC can only act on behalf of
Financial Intermediaries, the ability of a beneficial owner to pledge
Book-Entry Certificates to persons or entities that do not participate in DTC,
or otherwise take actions in respect of such Book-Entry Certificates, may be
limited due to the lack of physical certificates for such Book-Entry
Certificates. In addition, issuance of the Book-Entry Certificates in
book-entry form may reduce the liquidity of such Certificates in the secondary
market since certain potential investors may be unwilling to purchase
Certificates for which they cannot obtain physical certificates.
Monthly and annual reports on the Trust will be provided to Cede, as
nominee of DTC, and may be made available by Cede to beneficial owners upon
request, in accordance with the rules, regulations and procedures creating and
affecting the Depository, and to the Financial Intermediaries to whose DTC
accounts the Book-Entry Certificates of such beneficial owners are credited.
DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Certificates under the Agreement only at the
direction of one or more Financial Intermediaries to whose DTC accounts the
Book-Entry Certificates are credited, to the extent that such actions are
taken on behalf of Financial Intermediaries whose holdings include such
Book-Entry Certificates. [Cedel or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Certificateholder under
the Agreement on behalf of a Cedel Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to the
ability of the Relevant Depositary to effect such actions on its behalf
through DTC.] DTC may take actions, at the direction of the related
participants, with respect to some Offered Certificates which conflict with
actions taken with respect to other Offered Certificates.
Definitive Certificates will be issued to beneficial owners of the
Book-Entry Certificates, or their nominees, rather than to DTC, only if (a)
DTC or [______________] advises the Trustee in writing that DTC is no longer
willing, qualified or able to discharge properly its responsibilities as
nominee and depository with respect to the Book-Entry Certificates and
[________________] or the Trustee is unable to locate a qualified successor,
(b) [_________________], at its sole option, with the consent of the Trustee,
elects to terminate a book-entry system through DTC or (c) after the
occurrence of an Event of Default, beneficial owners having Percentage
Interests aggregating not less than 51% of the Book-Entry Certificates advise
the Trustee and DTC through the Financial Intermediaries and the DTC
participants in writing that the continuation of a book-entry system through
DTC (or a successor thereto) is no longer in the best interests of beneficial
owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and
thereafter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Agreement.
Although DTC [, Cedel and Euroclear] have agreed to the foregoing
procedures in order to facilitate transfers of Offered Certificates among
participants of DTC, [Cedel and Euroclear,] they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
None of [_________], the Master Servicer or the Trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Certificates held
by Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Priority of Distributions Among Certificates
As more fully described herein, distributions on the Certificates
will be made on each Distribution Date from Available Funds and will be made
to the Classes of Certificates (subject to the prior payment of principal
distributions to the Class R Certificates on the first Distribution Date as
described herein) in the following order of priority: (i) to interest on each
Class of Offered Certificates in the priority and subject to the limitations
described under "--Allocations of Available Funds" below; (ii) to current
principal of the Classes of Certificates then entitled to receive
distributions of principal, in the order and subject to the priorities set
forth herein under "--Allocation of Available Funds"; (iii) to principal of
the Classes of Certificates then entitled to receive distributions of
principal in order to maintain the Overcollateralization Target Amount; (iv)
to unpaid interest and the Loss Reimbursement Entitlement in the order and
subject to the priorities described herein under "--Allocation of Available
Funds"; (v) to the Class OC Certificates for deposit into the Excess Reserve
Fund Account first to cover any Basis Risk Shortfall Amount and then to cover
any Required Reserve Amount, and then to be released to the Class OC
Certificates, in each case subject to certain limitations set forth herein
under "--Allocation of Available Funds"; and (vi) any remaining amounts to the
holders of the Class R Certificates.
Allocation of Available Funds
Distributions to holders of each Class of Offered Certificates will
be made on each Distribution Date from Available Funds. "Available Funds" for
any Distribution Date is equal to the sum, net of amounts reimbursable
therefrom to the Master Servicer, of (i) the aggregate amount of monthly
payments on the related Mortgage Loans due on the related Due Date and
received by the Trustee on or prior to the related Determination Date, after
deduction of the Servicing Fee, the Excess Servicing Fee and the Trustee Fee,
(ii) certain unscheduled payments in respect of the Mortgage Loans, including
prepayments, insurance proceeds, Net Liquidation Proceeds and proceeds from
repurchases of and substitutions for such Mortgage Loans occurring during the
related Prepayment Period [,excluding prepayment penalties] and (iii) all
Advances with respect to the related Mortgage Loans received by the Trustee
for such Distribution Date.
The "Prepayment Period" with respect to any Distribution Date is the
period commencing on the Determination Date in the month preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, the day following the Cut-off Date) and ending on the
Determination Date relating to such Distribution Date.
On each Distribution Date, the Trustee will withdraw from the
Distribution Account all Available Funds then on deposit therein and will
distribute the same in the following order of priority (provided, however, on
the first Distribution Date, the Trustee will first distribute all principal
due to the Class R Certificates):
(i) on account of interest to the holders of each Class of Offered
Certificates in the following order of priority:
(a) to the Class A Certificates, the Interest Distributable
Amount for such Class for such Distribution Date; and
(b) sequentially, to the Class M and Class B Certificates, in
that order, the related Monthly Interest Distributable Amount for such
Distribution Date;
(ii) from the Principal Distribution Amount (giving effect
first to the component of the Principal Distribution Amount equal to the Basic
Principal Distribution Amount and then to the component of the Principal
Distribution Amount equal to the Extra Principal Distribution Amount pursuant
to clause (iii)(a) below):
(a) on each Distribution Date (1) before the Stepdown Date or (2)
with respect to which a Trigger Event is in effect,
sequentially to the holders of the Class A, Class M and Class
B Certificates, in that order, the respective Class Principal
Distribution Amount; or
(b) on each Distribution Date (1) on or after the Stepdown Date
and (2) as long as a Trigger Event is not in effect, to the
holders of the Class or Classes of Offered Certificates then
entitled to distribution of principal, in an amount equal to
in the aggregate the Principal Distribution Amount in the
following amounts and order of priority:
(1) the lesser of (x) the Principal Distribution Amount
and (y) the Class A Principal Distribution Amount to the Class
A Certificateholders, until the Certificate Principal Balance
thereof is reduced to zero;
(2) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(b)(1) above and (y)
the Class M Principal Distribution Amount, to the Class M
Certificateholders, until the Certificate Principal Balance
thereof is reduced to zero;
(3) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Class A Certificateholders in clause
(ii)(b)(1) above and the amount distributed to the Class M
Certificateholders in clause (ii)(b)(2) above and (y) the
Class B Principal Distribution Amount, to the Class B
Certificateholders, until the Certificate Principal Balance
thereof is reduced to zero;
(iii) any amounts remaining after the distributions in clauses (i)
through (ii) above shall be distributed in the following order of priority:
(a) to fund the Extra Principal Distribution Amount for such
Distribution Date to be paid as a component of the Principal Distribution
Amount in the same order of priority described in clause (ii) above;
(b) to the Class M Certificateholders, the related Unpaid Interest
Shortfall Amount for such Distribution Date and then the related Loss
Reimbursement Entitlement, if any, for such Distribution Date;
(c) to the Class B Certificateholders, the related Unpaid Interest
Shortfall Amount for such Distribution Date and then the related Loss
Reimbursement Entitlement, if any, for such Distribution Date; and
(d) to the holders of the Class OC Certificates for deposit into the
Excess Reserve Fund Account first to cover any Basis Risk Shortfall
Amount and then to cover any Required Reserve Amount, and then to be
released to the holders of the Class OC Certificates, such amounts, if
any, as described in the Pooling and Servicing Agreement; and
(iv) to the holders of the Class R Certificates, the remaining
amount.
On each Distribution Date, all amounts representing prepayment
penalties received during the related Due Period will be distributed to the
holders of the Class OC Certificates.
Definitions
The "Accrual Period" for the Offered Certificates for a given
Distribution Date will be the actual number of days (based on a 360-day year)
included in the period commencing on the immediately preceding Distribution
Date and ending on the day immediately preceding the current Distribution
Date; provided, however, that the initial Accrual Period for the Offered
Certificates will be the actual number of days included in the period
commencing on the Closing Date and ending on ________ __, 199__.
The "Allocable Loss Amount" with respect to each Distribution Date
means the excess, if any, of (a) the aggregate of the Certificate Principal
Balances of all Classes of Offered Certificates (after giving effect to all
distributions on such Distribution Date) over (b) the Pool Principal Balance
as of the end of the preceding Due Period.
The "Basic Principal Distribution Amount" means with respect to any
Distribution Date the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Overcollateralization Release Amount, if any,
for such Distribution Date.
The "Call Option Date" is the first Distribution Date on which the
Pool Principal Balance is less than or equal to 10% of the Pool Principal
Balance as of the Cut-off Date.
The "Certificate Principal Balance" of any Class of Offered
Certificates, as of any Distribution Date, will be equal to the Certificate
Principal Balance thereof on the Closing Date (the "Original Certificate
Principal Balance") reduced by the sum of (i) all amounts actually distributed
in respect of principal of such Class on all prior Distribution Dates and (ii)
with respect to any Mezzanine Certificates and the Class B Certificates, all
related Allocable Loss Amounts applied in reduction of principal of such
Certificates on all prior Distribution Dates.
"Class A Principal Distribution Amount" means as of any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
is in effect, the lesser of (i) 100% of the Principal Distribution Amount and
(ii) the aggregate Certificate Principal Balance of the Class A Certificates
and (b) on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately [____]% and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the last day of the related Due Period and (B) the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period minus approximately $[--------].
"Class M Principal Distribution Amount" means as of any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
is in effect, the lesser of (i) 100% of the Principal Distribution Amount and
(ii) the aggregate Certificate Principal Balance of the Class M Certificates
and (b) on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount
on such Distribution Date) and (ii) the Certificate Principal Balance of the
Class M Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) approximately [____]% and (ii) the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period and (B) the aggregate Principal Balance of the Mortgage Loans as of the
last day of the related Due Period minus approximately $[__________].
"Class B Principal Distribution Amount" means as of any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
is in effect, the lesser of (i) 100% of the Principal Distribution Amount and
(ii) the aggregate Certificate Principal Balance of the Class B Certificates
and (b) on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount
on such Distribution Date), (ii) the Certificate Principal Balance of the
Class M Certificates (after taking into account the payment of the Class M
Principal Distribution Amount on such Distribution Date) and (iii) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately [_____]% and (ii) the aggregate Principal Balance of the
Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Principal Balance of the Mortgage Loans as of the last day of the
related Due Period minus approximately $[________].
The "Delinquency Percentage," with respect to any Distribution Date
and the related Due Period, is the fraction, expressed as a percentage, the
numerator of which is the aggregate of the Principal Balances of all Mortgage
Loans that are 60 or more days Delinquent, in foreclosure or relating to REO
Properties as of the close of business on the last day of the related Due
Period and the denominator of which is the Pool Principal Balance as of the
close of business on the last day of such Due Period.
A Mortgage Loan is "Delinquent" if any monthly payment due thereon is
not made by the close of business on the day such monthly payment is scheduled
to be due. A Mortgage Loan is "30 days Delinquent" if such monthly payment has
not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such monthly payment was due
or, if there was no such corresponding day (e.g., as when a 30-day month
follows a 31-day month in which a payment was due on the 31st day of such
month), then on the last day of such immediately succeeding month; and
similarly for "60 days Delinquent", etc.
A "Due Period" with respect to the any Distribution Date is the
period commencing on the [second] day of the month preceding the month in
which such Distribution Date occurs and ending on the [first] day of the month
in which such Distribution Date occurs.
The "Extra Principal Distribution Amount" for any Distribution Date,
is the lesser of (x) the General Excess Available Amount for such Distribution
Date and (y) Overcollateralization Deficiency Amount for such Distribution
Date.
The "General Excess Available Amount" means with respect to each
Distribution Date is the amount, if any, by which the Available Funds for such
Distribution Date exceeds the aggregate amount distributed on such
Distribution Date pursuant to clauses (i) and (ii) under "--Allocation of
Available Funds" above (other than the Extra Principal Distribution Amount).
The "Interest Distributable Amount" for any Distribution Date and
each Class of Offered Certificates equals the sum of (i) the Monthly Interest
Distributable Amount for such Class for such Distribution Date and (ii) the
Unpaid Interest Shortfall Amount for such Class for such Distribution Date.
"Loss Reimbursement Entitlement" means, with respect to any
Distribution Date and the Class M Certificates or Class B Certificates, the
amount of Allocable Loss Amounts applied to the reduction of the Certificate
Principal Balance of such Class and not reimbursed pursuant to "--Allocation
of Available Funds" above as of such Distribution Date.
The "Monthly Interest Distributable Amount" for any Distribution Date
and each Class of Offered Certificates equals the amount of interest accrued
during the related Accrual Period at the related Pass-Through Rate on the
Certificate Principal Balance of such Class immediately prior to such
Distribution Date (or, in the case of the first Distribution Date, from the
Closing Date).
An "Overcollateralization Deficiency Amount" with respect to any
Distribution Date equals the amount, if any, by which the
Overcollateralization Target Amount exceeds the related Overcollateralized
Amount on such Distribution Date (after giving effect to distributions in
respect of the Basic Principal Distribution Amount but without giving effect
to any Allocable Loss Amounts on such Distribution Date).
"Overcollateralization Release Amount" means, with respect to any
Distribution Date on or after the Stepdown Date on which an
Overcollateralization Stepdown Trigger Event is not in effect, the lesser of
(x) the Principal Remittance Amount for such Distribution Date and (y) the
excess, if any, of (i) the Overcollateralized Amount for such Distribution
Date, assuming that 100% of the Principal Remittance Amount is applied to as a
principal payment on the Offered Certificates on such Distribution Date over
(ii) the Overcollateralization Target Amount for such Distribution Date.
The "Overcollateralization Target Amount" means with respect to (a)
any Distribution Date occurring prior to the Stepdown Date, an amount equal to
[____]% of the Pool Principal Balance as of the Cut-off Date; and (b) with
respect to any Distribution Date on or after the Stepdown Date and (A) as long
as an Overcollateralization Stepdown Trigger Event is not in effect, an amount
equal to the greater of (x) [____]% of the Pool Principal Balance as of the
end of the related Due Period and (y) approximately $[_________] or (B) for so
long as an Overcollateralization Stepdown Trigger Event is in effect, the
Overcollateralization Target Amount for the preceding Distribution Date.
The "Overcollateralized Amount" for any Distribution Date is the
amount, if any, by which (i) the Pool Principal Balance on the last day of the
immediately preceding Due Period exceeds (ii) the aggregate Certificate
Principal Balance of the Offered Certificates as of such Distribution Date
after giving effect to distributions to be made on such Certificates on such
Distribution Date.
The "Principal Distribution Amount" for any Distribution Date will
equal the sum of (i) the Basic Principal Distribution Amount and (ii) the
Extra Principal Distribution Amount for such Distribution Date.
A "Principal Prepayment" with respect to any Distribution Date is any
mortgagor payment or other recovery of principal on a Mortgage Loan that is
received in advance of its scheduled Due Date and is not accompanied by an
amount representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
The "Principal Remittance Amount" means with respect to any
Distribution Date, the sum of (i) each scheduled payment of principal
collected on the Mortgage Loans by the Master Servicer in the related Due
Period, (ii) the principal portion of all partial and full principal
prepayments of such Mortgage Loans applied by the Master Servicer during such
Due Period, (iii) the principal portion of all Net Liquidation Proceeds and
Insurance Proceeds received during such Due Period, (iv) that portion of the
Purchase Price, representing principal of any repurchased Mortgage Loan,
required to be deposited to the Collection Account during such Due Period, (v)
the principal portion of any Substitution Adjustments required to be deposited
in the Collection Account during such Due Period, and (vi) on the Distribution
Date on which the Trust Fund is to be terminated in accordance with the
Pooling and Servicing Agreement, that portion of the Termination Price, in
respect of principal.
A "Realized Loss" with respect to any defaulted Mortgage Loan that is
finally liquidated (a "Liquidated Mortgage Loan") is (i) the amount of loss
realized equal to the portion of the Principal Balance remaining unpaid after
application of all liquidation proceeds net of amounts reimbursable to the
Master Servicer for related Advances, Servicing Advances and Servicing Fees
(such amount, the "Net Liquidation Proceeds") in respect of such Mortgage Loan
and (ii) with respect to certain Mortgage Loans the principal balances or the
scheduled payments of principal and interest of which have been reduced in
connection with bankruptcy proceedings, (a) in the case of a reduction of the
principal balance of a Mortgage Loan, the amount of such principal reduction,
and (b) in the case of a reduction in the scheduled payments of principal and
interest of a Mortgage Loan, the net present value (using as the discount rate
the higher of the Loan Rate on such Mortgage Loan or the rate of interest, if
any, specified by the court in such order) of the scheduled payments as so
modified or restructured.
The "Rolling Delinquency Percentage" means, with respect to any
Distribution Date, the average of the Delinquency Percentages with respect to
the last day of each of the three immediately preceding Due Periods.
The "Senior Credit Enhancement Percentage," with respect to any
Distribution Date, is the percentage obtained by dividing (i) the sum of (a)
the aggregate of the Certificate Principal Balances of the Mezzanine
Certificates and the Class B Certificates and (b) the Overcollateralized
Amount, in each case after giving effect to the distributions of principal on
such Distribution Date, by (ii) the Pool Principal Balance as of the end of
the related Due Period.
The "Senior Specified Enhancement Percentage" on any date of
determination thereof means [_____]%.
The "Stepdown Date" means the earlier of (A) the Distribution Date on
which the Certificate Principal Balance of the Senior Certificates equals zero
and (B) the later to occur of (x) the Distribution Date in ______________ 200_
and (y) the first Distribution Date on which the Senior Credit Enhancement
Percentage (calculated for this purpose only using the Pool Principal Balance
as of the end of the related Due Period but prior to any application of
Principal Distribution Amount to the Certificates) is greater than or equal to
the Senior Specified Enhancement Percentage.
A "Trigger Event" has occurred on any Distribution Date, if the
Rolling Delinquency Percentage exceeds [__]% of the Senior Credit Enhancement
Percentage for such Distribution Date.
An "Overcollateralization Stepdown Trigger Event" means the
occurrence on any Distribution Date of either of the following: (i) the
Cumulative Loss Trigger has occurred or (ii) the Trigger Event has occurred.
The "Cumulative Loss Trigger" has occurred on a Distribution Date if
cumulative Realized Losses as of such Distribution Date exceed the percentages
of the Pool Principal Balance as of the Cut-off Date set forth below with
respect to such Distribution Date.
Percentage of
the Pool Principal
Balance as of the
Distribution Date Cut-off Date
----------------- --------------------
The "Unpaid Interest Shortfall Amount" means (i) for each Class of
Offered Certificates and the first Distribution Date, zero, and (ii) with
respect to each Class of Offered Certificates and any Distribution Date after
the first Distribution Date, the amount, if any, by which (a) the sum of (1)
the Monthly Interest Distributable Amount for such Class for the immediately
preceding Distribution Date and (2) the outstanding Unpaid Interest Shortfall
Amount, if any, for such Class for such preceding Distribution Date exceeds
(b) the aggregate amount distributed on such Class in respect of interest
pursuant to clause (a) of this definition on such preceding Distribution Date,
plus interest on the amount of interest due but not paid on the Certificates
of such Class on such preceding Distribution Date, to the extent permitted by
law, at the Pass-Through Rate for such Class for the related Accrual Period.
Pass-Through Rates
The Pass-Through Rate for the Class A, the Class M and the Class B
Certificates for a particular Distribution Date is a per annum rate equal to
[the lesser of (a) the sum of (i) One-Month LIBOR on the related LIBOR
Determination Date (as defined herein) and (ii) the related Pass-Through
Margin and (b) the Available Funds Cap]. The Pass-Through Margins for the
Class A, the Class M-1 and Class B Certificates will be equal to [___]% ([__]
basis points), [___]% ([__] basis points) and [___]% ([___] basis points),
respectively, until the first Distribution Date following the Call Option
Date, and [____]% ([___] basis points), [___]% ([___] basis points) and [___]%
([___] basis points), respectively, on and after such Distribution Date]. [As
to any Distribution Date, the "Available Funds Cap" is a rate per annum equal
to the weighted average of the Loan Rates on the Mortgage Loans outstanding as
of the first day of the related Due Period, net of [___]% in fees.]
[If on any Distribution Date, the Pass-Through Rate for any Class of
Offered Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest such Class of Certificates would have been entitled to
receive on such Distribution Date had such Pass-Through Rate not been subject
to the Available Funds Cap, up to the Maximum Cap, over (ii) the amount of
interest such Class of Offered Certificates received on such Distribution Date
based on the Available Funds Cap, together with the unpaid portion of any such
excess from prior Distribution Dates (and interest accrued thereon at the then
applicable Pass-Through Rate on such Class of Offered Certificates, without
giving effect to the Available Funds Cap) is the "Basis Risk Shortfall Amount"
for such Class of Offered Certificates. Any Basis Risk Shortfall Amount on any
Class of Offered Certificates will be paid on future Distribution Dates from
and to the extent of funds available therefor in the Excess Reserve Fund
Account (as described herein). The ratings on the Offered Certificates do not
address the likelihood of the payment of any Basis Risk Shortfall Amount.]
The "Maximum Cap" for any Distribution Date is [___]% per annum.
Calculation of [One-Month LIBOR]
[On the second LIBOR Business Day (as defined below) preceding the
commencement of each Accrual Period following the initial Accrual Period (each
such date, a "LIBOR Determination Date"), the Trustee (except for the first
Accrual Period) will determine the London interbank offered rate for one-month
United States dollar deposits ("One-Month LIBOR") for such Accrual Period for
the Offered Certificates on the basis of the offered rates of the Reference
Banks for one-month United States dollar deposits, as such rates appear on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination
Date. As used in this section, "LIBOR Business Day" means a day on which banks
are open for dealing in foreign currency and exchange in London and New York
City; "Telerate Page 3750" means the display page currently so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices); and
"Reference Banks" means leading banks selected by the Trustee and engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, (ii) whose quotations
appear on the Telerate Page 3750 on the LIBOR Determination Date in question,
(iii) which have been designated as such by the Trustee and (iv) not
controlling, controlled by or under common control with, the Depositor, the
Master Servicer or any successor Master Servicer.
On each LIBOR Determination Date, One-Month LIBOR for the related
Accrual Period for the Offered Certificates will be established by the Trustee
as follows:
(a) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related Accrual
Period will be the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of 0.0625%).
(b) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the related
Accrual Period will be the higher of (x) One-Month LIBOR as determined on
the previous LIBOR Determination Date and (y) the Reserve Interest Rate.
The "Reserve Interest Rate" will be the rate per annum that the Trustee
determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 0.0625%) of the one-month
United States dollar lending rates which New York City banks selected by
the Trustee are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market
or (ii) in the event that the Trustee can determine no such arithmetic
mean, the lowest one-month United States dollar lending rate which New
York City banks selected by the Trustee are quoting on such LIBOR
Determination Date to leading European banks.
The establishment of One-Month LIBOR on each LIBOR Determination Date
by the Trustee and the Trustee's calculation of the rate of interest
applicable to the Offered Certificates for the related Accrual Period will (in
the absence of manifest error) be final and binding.]
Application of Allocable Loss Amounts
Following any reduction of the Overcollateralized Amount to zero, any
Allocable Loss Amounts will be applied, sequentially, in reduction of the
Certificate Principal Balances of the Class B Certificates and the Class M
Certificates, in that order, until their respective Certificate Principal
Balances have been reduced to zero. The Certificate Principal Balance of the
Class A Certificates will not be reduced by any application of Allocable Loss
Amounts. However, if the Subordinate and Mezzanine Certificates are reduced to
zero, such losses may ultimately reduce the amount of principal ultimately
paid to the holders of the Class A Certificates. The reduction of the
Certificate Principal Balance of any applicable Class of Offered Certificates
by the application of Allocable Loss Amounts entitles such Class to
reimbursement in an amount equal to the Loss Reimbursement Entitlement. Each
such Class of Offered Certificates will be entitled to receive its Loss
Reimbursement Entitlement, or any portion thereof, in accordance with the
payment priorities specified herein. Payment in respect of Loss Reimbursement
Entitlements will not reduce the Certificate Principal Balance of the related
Class or Classes.
[Excess Reserve Fund Account
The Pooling and Servicing Agreement establishes an account (the
"Excess Reserve Fund Account"), which is held in trust, as part of the Trust
Fund, by the Trustee on behalf of the Offered Certificateholders. The Excess
Reserve Fund Account will not be an asset of any REMIC. Certificateholders of
each Class of Offered Certificates in the order of their priority of payment
will be entitled to receive payments from the Excess Reserve Fund Account to
the extent of amounts on deposit therein in an amount equal to any Basis Risk
Shortfall Amount for such Class of Certificates. On the Closing Date, $[_____]
will be deposited into the Excess Reserve Fund Account. Thereafter, if the
Available Funds Cap does not exceed One-Month LIBOR by at least [____]%, the
amount to be held in the Excess Reserve Fund Account (the "Required Reserve
Amount") on any Distribution Date thereafter will equal the greater of (i)
[____]% of the outstanding Class Certificate Balance of the Offered
Certificates as of such Distribution Date and (ii) $[_____] and will be funded
from amounts otherwise to be paid to the Class OC Certificates. If the
Available Funds Cap does exceed One-Month LIBOR by [____]% or more, the
Required Reserve Amount will be $[_____]. Any distribution by the Trustee from
amounts in the Excess Reserve Fund Account shall be made on the applicable
Distribution Date.
Amounts on deposit in the Excess Reserve Fund Account in excess of
$[_____] will be released therefrom and distributed to the holders of the
Class OC Certificates on any Distribution Date on which the Available Funds
Cap exceeds One-Month LIBOR by [____]% or more.]
Reports to Certificateholders
On each Distribution Date, the Trustee will forward to each holder of
a Certificate and the Rating Agency a statement generally setting forth:
(i) the amount of the distributions, separately identified,
with respect to each Class of the Offered Certificates;
(ii) the amount of such distributions set forth in clause (i)
allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments or other unscheduled
recoveries of principal included therein;
(iii) the amount of such distributions set forth in clause (i)
allocable to interest and the calculation thereof;
(iv) the amount of any Unpaid Interest Shortfall Amount with
respect to each Class of Certificates, separately
identified;
(v) the Overcollateralization Target Amount and Overcollateralized
Amount as of such Distribution Date;
(vi) the Certificate Principal Balance of each Class of Offered
Certificates after giving effect to the distribution of
principal on such Distribution Date;
(vii) the Pool Principal Balance at the end of the related Due
Period;
(viii) the amount of the Servicing Fee paid to or retained by the
Master Servicer;
(ix) the amount of the Trustee Fee paid to the Trustee;
(x) the amount of Advances for the related Due Period;
(xi) the number and aggregate Principal Balance of Mortgage Loans
that were (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 to 59 days, (2) 60 to 89 days and (3) 90
or more days, (B) in foreclosure and delinquent (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days and (C) in
bankruptcy as of the close of business on the last day of
the calendar month preceding such Distribution Date;
(xii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan
number, the Principal Balance of such Mortgage Loan as of
the close of business on the last day of the related Due
Period and the date of acquisition thereof;
(xiii) the total number and principal balance of any REO Properties
as of the close of business on the last day of the preceding
Due Period;
(xiv) the aggregate amount of Realized Losses incurred during the
preceding calendar month;
(xv) the cumulative amount of Realized Losses;
(xvi) any Overcollateralization Deficiency Amount after giving
effect to the distribution of principal on such Distribution
Date;
(xvii) the Allocable Loss Amounts, if any, allocated to the
Mezzanine and Subordinate Certificates and the Loss
Reimbursement Entitlement owing to the Mezzanine and
Subordinate Certificates outstanding after giving effect to
distributions thereof on such Distribution Date;
(xviii) whether a Trigger Event or Overcollateralization Stepdown
Trigger Event has occurred and is continuing;
(xix) the amount of the Extra Principal Distribution Amount;
(xx) the Pass-Through Rate for the Class A, the Class M and Class
B Certificates for such Distribution Date; and
(xxi) the amount on deposit in the Excess Reserve Fund Account on
such Distribution Date and the Basis Risk Shortfall Amount
owing to each Class of Offered Certificates after giving
effect to distributions thereof on such Distribution Date.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will prepare and deliver to each holder of a
Certificate of record during the previous calendar year a statement containing
information necessary to enable holders of the Certificates to prepare their
tax returns. Such statements will not have been examined and reported upon by
an independent public accountant.
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
The yield to maturity of the Offered Certificates, and particularly
the Subordinate Certificates, will be sensitive to defaults on the Mortgage
Loans. If a purchaser of an Offered Certificate calculates its anticipated
yield based on an assumed rate of default and amount of losses that is lower
than the default rate and amount of losses actually incurred, its actual yield
to maturity will be lower than that so calculated. Certificateholders of the
Offered Certificates may not receive reimbursement for Realized Losses in the
month following the occurrence of such losses. In general, the earlier a loss
occurs, the greater is the effect on an investor's yield to maturity. There
can be no assurance as to the delinquency, foreclosure or loss experience with
respect to the Mortgage Loans. Because the Mortgage Loans were underwritten in
accordance with standards less stringent than those generally acceptable to
FNMA and FHLMC with regard to a borrower's credit standing and repayment
ability, the risk of delinquencies with respect to, and losses on, the
Mortgage Loans will be greater than that of mortgage loans underwritten in
accordance with FNMA and FHLMC standards.
The rate of principal payments on the Offered Certificates, the
aggregate amount of distributions on the Offered Certificates and the yields
to maturity of the Offered Certificates will be related to the rate and timing
of payments of principal on the Mortgage Loans. The rate of principal payments
on the Mortgage Loans will in turn be affected by the amortization schedules
of the Mortgage Loans and by the rate of principal prepayments (including for
this purpose prepayments resulting from refinancing, liquidations of the
Mortgage Loans due to defaults, casualties or condemnations and repurchases by
the Seller or Master Servicer). [Because certain of the Mortgage Loans contain
prepayment penalties, the rate of principal payments may be less than the rate
of principal payments for mortgage loans which did not have prepayment
penalties.] The Mortgage Loans are subject to the "due-on-sale" provisions
included therein. See "The Mortgage Pool" herein.
Prepayments, liquidations and purchases of the Mortgage Loans
(including any optional purchase) will result in distributions on the Offered
Certificates of principal amounts which would otherwise be distributed over
the remaining terms of the Mortgage Loans. Since the rate of payment of
principal on the Mortgage Loans will depend on future events and a variety of
other factors, no assurance can be given as to such rate or the rate of
principal prepayments. The extent to which the yield to maturity of a Class of
Offered Certificates may vary from the anticipated yield will depend upon the
degree to which such Offered Certificate is purchased at a discount or
premium, and the degree to which the timing of payments thereon is sensitive
to prepayments, liquidations and purchases of the Mortgage Loans. Further, an
investor should consider the risk that, in the case of any Offered Certificate
purchased at a discount, a slower than anticipated rate of principal payments
(including prepayments) on the Mortgage Loans could result in an actual yield
to such investor that is lower than the anticipated yield and, in the case of
any Offered Certificate purchased at a premium, a faster than anticipated rate
of principal payments on the Mortgage Loans could result in an actual yield to
such investor that is lower than the anticipated yield.
The rate of principal payments (including prepayments) on pools of
mortgage loans may vary significantly over time and may be influenced by a
variety of economic, geographic, social and other factors, including changes
in borrowers' housing needs, job transfers, unemployment, mortgagors' net
equity in the mortgaged properties and servicing decisions. In general, if
prevailing interest rates were to fall significantly below the Loan Rates on
the Fixed Rate Mortgage Loans, such Mortgage Loans could be subject to higher
prepayment rates than if prevailing interest rates were to remain at or above
the Loan Rates on such Mortgage Loans. Conversely, if prevailing interest
rates were to rise significantly, the rate of prepayments on such Mortgage
Loans would generally be expected to decrease. As is the case with the Fixed
Rate Mortgage Loans, the Adjustable Rate Mortgage Loans may be subject to a
greater rate of principal prepayments in a low interest rate environment. For
example, if prevailing interest rates were to fall, borrowers with Adjustable
Rate Mortgage Loans may be inclined to refinance their Adjustable Rate
Mortgage Loans with a fixed rate loan to "lock in" a lower interest rate. The
existence of the applicable Periodic Rate Cap and Maximum Rate also may affect
the likelihood of prepayments resulting from refinancings. No assurances can
be given as to the rate of prepayments on the Mortgage Loans in stable or
changing interest rate environments. In addition, the delinquency and loss
experience of the Adjustable Rate Mortgage Loans may differ from that on the
Fixed Rate Mortgage Loans because the amount of the monthly payments on the
Adjustable Rate Mortgage Loans are subject to adjustment on each Adjustment
Date. [In addition, many of the Adjustable Rate Mortgage Loans will not have
their initial Adjustment Date for [__________] after the origination thereof.
The prepayment experience of the Delayed First Adjustment Mortgage Loans may
differ from that of the other Adjustable Rate Mortgage Loans. The Delayed
First Adjustment Mortgage Loans may be subject to greater rates of prepayments
as they approach their initial Adjustment Dates even if market interest rates
are only slightly higher or lower than the Loan Rates on the Delayed First
Adjustment Mortgage Loans as borrowers seek to avoid changes in their monthly
payments.]
Overcollateralization Provisions
The operation of the overcollateralization provisions of the Pooling
and Servicing Agreement will affect the weighted average lives of the Offered
Certificates and consequently the yields to maturity of such Certificates.
Unless and until the Overcollateralized Amount equals the
Overcollateralization Target Amount, the General Excess Available Spread will
be applied as distributions of principal of the Class or Classes of
Certificates then entitled to distributions of principal, thereby reducing the
weighted average lives thereof. The actual Overcollateralized Amount may
change from Distribution Date to Distribution Date producing uneven
distributions of the General Excess Available Spread. There can be no
assurance as to when or whether the Overcollateralized Amount will equal the
Overcollateralization Target Amount.
The General Excess Available Spread generally is equal to the excess
of (x) interest collected or advanced on the Mortgage Loans over (y) the sum
of required interest on the Offered Certificates plus the Trustee Fee, the
Servicing Fee Rate and, if applicable, the Excess Servicing Fee. Mortgage
Loans with higher Loan Rates will contribute more interest to the General
Excess Available Spread. Mortgage Loans with higher Loan Rates may prepay
faster than Mortgage Loans with relatively lower Loan Rates in response to a
given change in market interest rates. Any such disproportionate prepayments
of Mortgage Loans with higher Loan Rates may adversely affect the amount of
the General Excess Available Spread available to make accelerated payments of
principal of the Offered Certificates.
As a result of the interaction of the foregoing factors, the effect
of the overcollateralization provisions on the weighted average lives of the
Offered Certificates may vary significantly over time and from Class to Class.
[Additional Information
The Depositor has filed certain yield tables and other computational
materials with respect to certain Classes of the Offered Certificates with the
Commission in a report on Form 8-K and may file certain additional yield
tables and other computational materials with respect to one or more Classes
of Offered Certificates with the Commission in a report on Form 8-K. Such
tables and materials were prepared by the Underwriter at the request of
certain prospective investors, based on assumptions provided by, and
satisfying the special requirements of, such prospective investors. Such
tables and assumptions may be based on assumptions that differ from the
Structuring Assumptions. Accordingly, such tables and other materials may not
be relevant to or appropriate for investors other than those specifically
requesting them.]
Weighted Average Lives
The timing of changes in the rate of Principal Prepayments on the
Mortgage Loans may significantly affect an investor's actual yield to
maturity, even if the average rate of Principal Prepayments is consistent with
such investor's expectation. In general, the earlier a Principal Prepayment on
the Mortgage Loans occurs, the greater the effect of such Principal Prepayment
on an investor's yield to maturity. The effect on an investor's yield of
Principal Prepayments occurring at a rate higher (or lower) than the rate
anticipated by the investor during the period immediately following the
issuance of the Offered Certificates may not be offset by a subsequent like
decrease (or increase) in the rate of Principal Prepayments.
The projected weighted average life of any Class of Offered
Certificates is the average amount of time that will elapse from __________
__, 199_ (the "Closing Date") until each dollar of principal is scheduled to
be repaid to the investors in such Class of Offered Certificates. Because it
is expected that there will be prepayments and defaults on the Mortgage Loans,
the actual weighted average lives of the Classes of Offered Certificates are
expected to vary substantially from the weighted average remaining terms to
stated maturity of the Mortgage Pool as set forth herein under "The Mortgage
Pool--Mortgage Loan Statistics".
The "Assumed Final Maturity Date" for each Class of Offered
Certificates is as set forth herein under "Description of the
Certificates--General". The Assumed Final Maturity Date for each Class of
Offered Certificates is the __th Distribution Date following the Due Period in
which the Principal Balances of all the Mortgage Loans have been reduced to
zero, assuming that the Mortgage Loans pay in accordance with their terms. The
weighted average life of each Class of Offered Certificates is likely to be
shorter than would be the case if payments actually made on the Mortgage Loans
conformed to the foregoing assumptions, and the final Distribution Date with
respect to the Offered Certificates could occur significantly earlier than the
related Assumed Final Maturity Date because (i) prepayments are likely to
occur, (ii) excess cashflow, if any, will be applied as principal of the
Offered Certificates as described herein, (iii) the Overcollateralization
Target Amount is as defined herein and (iv) the Majority Residual
Interestholder or the Master Servicer may cause a termination of the Trust
Fund as provided herein.
The model used in this Prospectus Supplement (the "Prepayment
Assumption") represents an assumed rate of prepayment each month relative to
the then outstanding principal balance of a pool of mortgage loans for the
life of such mortgage loans. The Prepayment Assumption 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.
Each of the Prepayment Scenarios in the table on page S-[ _____ ]
assumes the respective percentages of the applicable Prepayment Assumption
described thereunder.
The tables on pages S-[ _____ ] through S-[ _____ ] were prepared on
the basis of the assumptions in the following paragraph and the tables set
forth below. There are certain differences between the loan characteristics
included in such assumptions and the characteristics of the actual Mortgage
Loans. Any such discrepancy may have an effect upon the percentages of
Original Certificate Principal Balances outstanding and weighted average lives
of the Offered Certificates set forth in the tables on pages S-[ _____ ]
through S-[ _____ ]. In addition, since the actual Mortgage Loans in the Trust
Fund will have characteristics that differ from those assumed in preparing the
tables set forth below, the distributions of principal of the Offered
Certificates may be made earlier or later than indicated in the tables.
The percentages and weighted average lives in the tables on pages S-[
___ ] through S-[ ___ ] were determined on the basis of the following
structuring assumptions (the "Structuring Assumptions"):
[list of structuring assumptions]
Nothing contained in the foregoing assumptions should be construed as
a representation that the Mortgage Loans will not experience delinquencies or
losses.
Based on the foregoing assumptions, the following tables indicate the
projected weighted average lives of each Class of Offered Certificates, and
set forth the percentages of the Original Certificate Principal Balance of
each such Class that would be outstanding after each of the dates shown, at
various Prepayment Scenarios.
[TABULAR INFORMATION]
USE OF PROCEEDS
The Depositor will apply the net proceeds of the sale of the Offered
Certificates against the purchase price of the Mortgage Loans transferred to
the Trust Fund.
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The Pooling and Servicing Agreement provides that the Trust Fund[,
exclusive of the assets held in the Excess Reserve Fund Account, ]will
comprise [several Subsidiary REMICs and] a [Master] REMIC organized in a
[tiered] "real estate mortgage investment conduit" ("REMIC") structure. [Each
Subsidiary REMIC will issue uncertificated regular interests and those
interests will be held entirely by the REMIC immediately above it in the
tiered structure. Each of the Subsidiary REMICs and] the [Master] REMIC will
designate a single class of interests as the residual interest in that REMIC.
The Class R Certificates will represent ownership of the residual interests in
[each of] the REMIC[s]. Election[s] will be made to treat [each Subsidiary
REMIC and] the [Master] REMIC as a REMIC for federal income tax purposes.
Each Class of Offered Certificates will represent beneficial
ownership of regular interests issued by the [Master] REMIC. [In addition,
each of the Offered Certificates will represent a beneficial interest in the
right to receive payments from the Excess Reserve Fund Account.]
Upon the issuance of the Offered Certificates, Brown & Wood LLP ("Tax
Counsel"), will deliver its opinion concluding, assuming compliance with the
Pooling and Servicing Agreement, that for federal income tax purposes [each
Subsidiary REMIC and] the [Master] REMIC will qualify as a REMIC within the
meaning of section 860D of the Internal Revenue Code of 1986, as amended (the
"Code"). [In addition, Tax Counsel will deliver an opinion concluding that the
Excess Reserve Fund Account is an "outside reserve fund" that is beneficially
owned by the Certificateholders of the Class [__] Certificates]. [Moreover,
Tax Counsel will deliver an opinion concluding that the rights of the
Certificateholders of the Offered Certificates to receive payments from the
Excess Reserve Fund Account represent, for federal income tax purposes,
interests in an interest rate cap contract.]
Taxation of Regular Interests
A Certificateholder of a Class of Offered Certificates will be
treated for federal income tax purposes as owning an interest in regular
interests in the [Master] REMIC
Upon the sale, exchange, or other disposition of an Offered
Certificate, assuming that an Offered Certificate is held as a "capital asset"
within the meaning of section 1221 of the Code, gain or loss on the
disposition of an Offered Certificate should, subject to the limitation
described below, be capital gain or loss. However, gain attributable to an
Offered Certificate will be treated as ordinary income to the extent such gain
does not exceed the excess, if any, of (i) the amount that would have been
includible in the Certificateholder's gross income with respect to the regular
interest component had income thereon accrued at a rate equal to 110% of the
applicable federal rate as defined in section 1274(d) of the Code determined
as of the date of purchase of the Offered Certificate over (ii) the amount
actually included in such Certificateholder's income.
Interest on a REMIC regular interest must be included in income by a
Certificateholder under the accrual method of accounting, regardless of the
Certificateholder's regular method of accounting. In addition, a regular
interest could be considered to have been issued with original issue discount
("OID"). See "Certain Federal Income Tax Considerations --REMIC
Certificates--Regular Certificates--Original Issue Discount and Premium" in
the Prospectus. The prepayment assumption that will be used to in determining
the accrual of any OID, market discount, or bond premium, if any, will equal
the rate described above under "Yield, Prepayment and Maturity
Considerations--Weighted Average Lives" for Scenario [___]. No representation
is made that the Mortgage Loans will prepay at such a rate or at any other
rate. OID must be included in income as it accrues on a constant yield method,
regardless of whether the Certificateholder receives currently the cash
attributable to such OID.
Status of the Offered Certificates
The regular interest component of the Offered Certificates will be
treated as assets described in section 7701(a)(19)(C) of the Code, and as
"real estate assets" under section 856(c)(5)(B) of the Code, generally, in the
same proportion that the assets of the Trust Fund[, exclusive of the Excess
Reserve Fund Account,] would be so treated. In addition, to the extent a
regular interest represents real estate assets under section 856(c)(5)(B) of
the Code, the interest derived from that component would be interest on
obligations secured by interests in real property for purposes of section
856(c)(3) of the Code.
Non-U.S. Persons
Interest paid to or accrued by a Certificateholder who is a Non-U.S.
Person will be considered "portfolio interest", and will not be subject to
U.S. federal income tax and withholding tax, if the interest is not
effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Person and the Non-U.S. Person (i) is not
actually or constructively a "10 percent shareholder" of the Trust Fund or a
"controlled foreign corporation" with respect to which the Trust Fund is a
"related person" within the meaning of the Code and (ii) provides the Trust
Fund or other person who is otherwise required to withhold U.S. tax with
respect to the Offered Certificates with an appropriate statement (on Form W-8
or a similar form), signed under penalties of perjury, certifying that the
beneficial owner of the Offered Certificate is a Non-U.S. Person and providing
the Non-U.S. Person's name and address. If an Offered Certificate is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8 or substitute form provided by the
Non-U.S. Person that owns the Certificate.
Any capital gain realized on the sale, redemption, retirement or
other taxable disposition of an Offered Certificate by a Non-U.S. Person will
be exempt from United States federal income and withholding tax, provided that
(i) such gain is not effectively connected with the conduct of a trade or
business in the United States by the Non-U.S. Person and (ii) in the case of
an individual, the individual is not present in the United States for 183 days
or more in the taxable year.
For purposes of the foregoing discussion, the term "Non-U.S. Person"
means any person other than (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia; (iii) a partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia (unless provided otherwise by future Treasury regulations); (iv) an
estate whose income is includible in gross income for United States income tax
purposes regardless of its source; or (v) a trust, if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more U.S. Persons have authority to control all
substantial decisions of the trust. Notwithstanding the last clause of the
preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as U.S. Persons prior to
such date, may elect to continue to be U.S. Persons.
Prohibited Transactions Tax and Other Taxes
The Code imposes a tax on REMICs equal to 100% of the net income
derived from "prohibited transactions" (the "Prohibited Transactions Tax"). In
general, subject to certain specified exceptions, a prohibited transaction
means the disposition of a Mortgage Loan, the receipt of income from a source
other than a Mortgage Loan or certain other permitted investments, the receipt
of compensation for services, or gain from the disposition of an asset
purchased with the payments on the Mortgage Loans for temporary investment
pending distribution on the Certificates. It is not anticipated that the Trust
Fund will engage in any prohibited transactions in which it would recognize a
material amount of net income.
In addition, certain contributions to a trust fund that elects to be
treated as a REMIC made after the day on which such trust fund issues all of
its interests could result in the imposition of a tax on the trust fund equal
to 100% of the value of the contributed property (the "Contributions Tax").
The Trust Fund will not accept contributions that would subject it to such
tax.
In addition, a trust fund that elects to be treated as a REMIC may
also be subject to federal income tax at the highest corporate rate on "net
income from foreclosure property," determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property other
than qualifying rents and other qualifying income for a real estate investment
trust. It is not anticipated that the Trust Fund will recognize net income
from foreclosure property subject to federal income tax.
Backup Withholding
Certain Certificate Owners may be subject to backup withholding at
the rate of 31% with respect to interest paid on the Offered Certificates if
the Certificate Owners, upon issuance, fail to supply the Trustee or their
broker with their taxpayer identification number, furnish an incorrect
taxpayer identification number, fail to report interest, dividends, or other
"reportable payments" (as defined in the Code) properly, or, under certain
circumstances, fail to provide the Trustee or their broker with a certified
statement, under penalty of perjury, that they are not subject to backup
withholding.
The Trustee will be required to report annually to the Internal
Revenue Service (the "IRS"), and to each Certificateholder of record, the
amount of interest paid (and OID accrued, if any) on the Offered Certificates
(and the amount of interest withheld for federal income taxes, if any) for
each calendar year, except as to exempt holders (generally, holders that are
corporations, certain tax-exempt organizations or nonresident aliens who
provide certification as to their status as nonresidents). As long as the only
holder of record of a Class of Offered Certificates is Cede, as nominee of
DTC, the IRS and Certificate Owners of such Class will receive tax and other
information, including the amount of interest paid on such Certificates owned,
from Participants and Financial Intermediaries rather than from the Trustee.
(The Trustee, however, will respond to requests for necessary information to
enable Participants, Financial Intermediaries and certain other persons to
complete their reports.) Each non-exempt Certificate Owner will be required to
provide, under penalty of perjury, a certificate on IRS form W-9 containing
his or her name, address, correct federal taxpayer identification number and a
statement that he or she is not subject to backup withholding. Should a
nonexempt Certificate Owner fail to provide the required certification, the
Participants or Financial Intermediaries (or the Paying Agent) will be
required to withhold 31% of the interest (and principal) otherwise payable to
the holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
Such amounts will be deemed distributed to the affected Certificate
Owner for all purposes of the related Certificates and the Pooling and
Servicing Agreement.
STATE TAXES
The Depositor makes no representations regarding the tax consequences
of purchase, ownership or disposition of the Offered Certificates under the
tax laws of any state. Investors considering an investment in the Offered
Certificates should consult their own tax advisors regarding such tax
consequences.
All investors should consult their own tax advisors regarding the
federal, state, local or foreign income tax consequences of the purchase,
ownership and disposition of the Offered Certificates.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), prohibits "parties in interest" with respect to an
employee benefit plan subject to ERISA and/or a plan or other arrangement
subject to the excise tax provisions set forth under section 4975 of the Code
(each of the foregoing, a "Plan") from engaging in certain transactions
involving such Plan and its assets unless a statutory, regulatory or
administrative exemption applies to the transaction. section 4975 of the Code
imposes certain excise taxes on prohibited transactions involving plans
described under that section; ERISA authorizes the imposition of civil
penalties for prohibited transactions involving plans not covered under
section 4975 of the Code. Any Plan fiduciary which proposes to cause a Plan to
acquire any of the Offered Certificates should consult with its counsel with
respect to the potential consequences under ERISA and the Code of the Plan's
acquisition and ownership of such Certificates. See "ERISA Considerations" in
the Prospectus.
Certain employee benefit plans, including governmental plans and
certain church plans, are not subject to ERISA's requirements. Accordingly,
assets of such plans may be invested in the Offered Certificates without
regard to the ERISA considerations described herein and in the Prospectus,
subject to the provisions of other applicable federal and state law. Any such
plan which is qualified and exempt from taxation under sections 401(a) and
501(a) of the Code may nonetheless be subject to the prohibited transaction
rules set forth in section 503 of the Code.
Except as noted above, investments by Plans are subject to ERISA's
general fiduciary requirements, including the requirement of investment
prudence and diversification and the requirement that a Plan's investments be
made in accordance with the documents governing the Plan. A fiduciary which
decides to invest the assets of a Plan in the Offered Certificates should
consider, among other factors, the extreme sensitivity of the investments to
the rate of principal payments (including prepayments) on the Mortgage Loans.
The U.S. Department of Labor (the "DOL") has granted to Greenwich
Capital Markets, Inc. an administrative exemption (Prohibited Transaction
Exemption 90-59; Exemption Application No. D-8374) (the "Exemption") from
certain of the prohibited transaction rules of ERISA and the related excise
tax provisions of Section 4975 of the Code with respect to the initial
purchase, the holding and the subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements of the Exemption. The
Exemption applies to mortgage loans such as the Mortgage Loans in the Trust
Fund.
Among the conditions that must be satisfied for the Exemption to
apply are the following:
(1) the acquisition of the certificates by a Plan is on terms
(including the price for the certificates) that are at least as favorable to
the Plan as they would be in an arm's length transaction with an unrelated
party;
(2) the rights and interest evidenced by the certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust fund;
(3) the certificates acquired by the Plan have received a rating at
the time of such acquisition that is one of the three highest generic rating
categories from Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Credit Rating Co. ("DCR") or Fitch IBCA, Inc. ("Fitch" and, together with S&P,
Moody's and DCR, the "Exemption Rating Agencies");
(4) the trustee must not be an affiliate of any other member of the
Restricted Group (as defined below);
(5) the sum of all payments made to and retained by the underwriters
in connection with the distribution of the certificates represents not more
than reasonable compensation for underwriting the certificates; the sum of all
payments made to and retained by the seller pursuant to the assignment of the
loans to the trust fund represents not more than the fair market value of such
loans; the sum of all payments made to and retained by the servicer and any
other servicer represents not more than reasonable compensation for such
person's services under the agreement pursuant to which the loans are pooled
and reimbursements of such person's reasonable expenses in connection
therewith; and
(6) the Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Securities and
Exchange Commission under the Securities Act of 1933.
The trust fund must also meet the following requirements:
(i) the corpus of the trust fund must consist solely of assets of the
type that have been included in other investment pools;
(ii) certificates in such other investment pools must have been rated
in one of the three highest generic rating categories by an Exception
Rating Agency for at least one year prior to the Plan's acquisition of
certificates; and
(iii) certificates evidencing interests in such other investment
pools must have been purchased by investors other than Plans for at least
one year prior to any Plan's acquisition of certificates.
Moreover, the Exemption provides relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when
the Plan fiduciary causes a Plan to acquire certificates in a trust as to
which the fiduciary (or its affiliate) is an obligor on the receivables held
in the trust provided that, among other requirements, (i) in the case of an
acquisition in connection with the initial issuance of certificates, at least
fifty percent (50%) of each class of certificates in which Plans have invested
is acquired by persons independent of the Restricted Group; (ii) such
fiduciary (or its affiliate) is an obligor with respect to five percent (5%)
or less of the fair market value of the obligations contained in the trust;
(iii) the Plan's investment in certificates of any class does not exceed
twenty-five percent (25%) of all of the certificates of that class outstanding
at the time of the acquisition; and (iv) immediately after the acquisition, no
more than twenty-five percent (25%) of the assets of any Plan with respect to
which such person is a fiduciary are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the same
entity. The Exemption does not apply to Plans sponsored by the Underwriter,
the Trustee, the Master Servicer, any obligor with respect to Mortgage Loans
included in the Trust Fund constituting more than five percent of the
aggregate unamortized principal balance of the assets in the Trust Fund, or
any affiliate of such parties (the "Restricted Group").
It is expected that the Exemption will apply to the acquisition and
holding by Plans of the Senior Certificates and that all conditions of the
Exemption other than those within the control of the investors will be met.
Because the characteristics of the Class M and the Class B
Certificates may not meet the requirements of PTCE 83-1, the Exemption or any
other issued exemption under ERISA, the purchase and holding of Class M and
Class B Certificates by a Plan or by individual retirement accounts or other
plans subject to section 4975 of the Code may result in prohibited
transactions or the imposition of excise taxes or civil penalties.
Consequently, initial acquisitions and transfers of the Class M and Class B
Certificates will not be registered by the Trustee unless the Trustee
receives: (i) a representation from the acquiror or transferee of such
Certificate, to the effect that such transferee is not an employee benefit
plan subject to section 406 of ERISA or a plan or arrangement subject to
section 4975 of the Code, nor a person acting on behalf of any such plan or
arrangement nor using the assets of any such plan or arrangement to effect
such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
such Certificates are covered under PTCE 95-60. Such representation as
described above shall be deemed to have been made to the Trustee by the
acquiror or transferee's acceptance of a Class M or Class B Certificate. In
the event that such representation is violated, such attempted transfer or
acquisition shall be void and of no effect.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of PTCE 83-1
described in the Prospectus and the Exemption, and the potential consequences
in their specific circumstances, prior to making an investment in the Offered
Certificates. Moreover, each Plan fiduciary should determine whether under the
general fiduciary standards of investment prudence and diversification, an
investment in the Offered Certificates is appropriate for the Plan, taking
into account the overall investment policy of the Plan and the composition of
the Plan's investment portfolio.
LEGAL INVESTMENT CONSIDERATIONS
The Class A Certificates and the Class M Certificates will constitute
"mortgage related securities" for the purposes of the Secondary Mortgage
Market Enhancement Act of 1984 ("SMMEA") so long as they are rated in one of
the two highest rating categories by at least one nationally recognized
statistical rating organization and, as such, are legal investments for
certain entities to the extent provided for in SMMEA. The Class B Certificates
will not constitute "mortgage related securities" under SMMEA. Accordingly,
many institutions with legal authority to invest in "mortgage related
securities" may not be legally authorized to invest in the Class B
Certificates.
There may be restrictions on the ability of certain investors,
including depository institutions, either to purchase the Certificates or to
purchase Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors. See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, between the Depositor and the Underwriter (an affiliate of the
Depositor), the Depositor has agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase from the Depositor, the Offered
Certificates.
Distribution of the Offered Certificates will be made by the
Underwriter from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. The Underwriter may
effect such transactions by selling Offered Certificates to or through dealers
and such dealers may receive from the Underwriter, for which they act as
agent, compensation in the form of underwriting discounts, concessions or
commissions. The Underwriter and any dealers that participate with the
Underwriter in the distribution of such Offered Certificates may be deemed to
be underwriters, and any discounts, commissions or concessions received by
them, and any profits on resale of the Certificates purchased by them, may be
deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended (the "Act").
The Depositor has been advised by the Underwriter that it intends to
make a market in the Offered Certificates but has no obligation to do so.
There can be no assurance that a secondary market for the Offered Certificates
will develop or, if it does develop, that it will continue.
The Depositor has agreed to indemnify the Underwriter against, or
make contributions to the Underwriter with respect to, certain liabilities,
including liabilities under the Act.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Offered
Certificates will be passed upon for the Depositor and for the Underwriter by
Brown & Wood LLP, New York, New York.
RATINGS
It is a condition to the issuance of the Offered Certificates that
(i) the Class A Certificates be rated "___" by __________ and ______ (each, a
"Rating Agency"" and, together, the "Rating Agencies"), (ii) the M
Certificates be rated "__" by ___ and "___" by _______, and the Class B
Certificates be rated "___" by ___ .
The ratings assigned by the Rating Agencies to mortgage pass-through
certificates address the likelihood of the receipt of all distributions on the
mortgage loans by the related certificateholders under the agreements pursuant
to which such certificates are issued. The Rating Agencies' ratings take into
consideration the credit quality of the related mortgage pool, including any
credit support providers, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on the mortgage pool
is adequate to make the payments required by such certificates. The Rating
Agencies' ratings on such certificates do not, however, constitute a statement
regarding frequency of prepayments of the mortgage loans.
The ratings on the Offered Certificates address the likelihood of the
receipt by the holders of the Offered Certificates of all distributions on the
Mortgage Loans to which they are entitled. The ratings on the Offered
Certificates also address the structural, legal and issuer-related aspects of
the Offered Certificates, including the nature of the Mortgage Loans. In
general, the ratings on the Offered Certificates address credit risk and not
prepayment risk. The ratings on the Offered Certificates do not represent any
assessment of the likelihood that principal prepayments of the Mortgage Loans
will be made by borrowers or the degree to which the rate of such prepayments
might differ from that originally anticipated. [The ratings on the Offered
Certificates do not address the likelihood of the payment of any Basis Risk
Shortfall Amount.] As a result, the initial ratings assigned to the Offered
Certificates do not address the possibility that holders of the Offered
Certificates might suffer a lower than anticipated yield in the event of
principal payments on the Offered Certificates resulting from rapid
prepayments of the Mortgage Loans or the application of the General Excess
Available Amount as described herein, or in the event that the Trust Fund is
terminated prior to the Assumed Final Maturity Date of the Classes of Offered
Certificates.
The Depositor has not engaged any rating agency other than the Rating
Agencies to provide ratings on the Offered Certificates. However, there can be
no assurance as to whether any other rating agency will rate the Offered
Certificates, or, if it does, what rating would be assigned by any such other
rating agency. Any rating on the Certificates by another rating agency, if
assigned at all, may be lower than the ratings assigned to the Offered
Certificates by the Rating Agencies.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating. In the event that the ratings
initially assigned to any of the Offered Certificates by the Rating Agencies
are subsequently lowered for any reason, no person or entity is obligated to
provide any additional support or credit enhancement with respect to such
Offered Certificates.
INDEX OF DEFINED TERMS
Accrual Period...........................................................49
Act......................................................................70
Adjustable Rate Mortgage Loans...........................................16
Adjustment Date..........................................................24
Advance..................................................................36
Allocable Loss Amount....................................................49
Assumed Final Maturity Date..............................................61
Available Funds..........................................................47
Available Funds Cap......................................................54
Balloon Loan.............................................................17
Balloon Payment..........................................................17
Basic Principal Distribution Amount......................................49
Basis Risk Shortfall Amount..............................................54
Beneficial Owner.........................................................42
Book-Entry Certificates..................................................41
Call Option Date.........................................................49
Cede.....................................................................41
Cedel....................................................................41
Cedel Participants.......................................................44
Certificate Owners.......................................................41
Certificate Principal Balance............................................49
Certificateholder........................................................42
Certificates.............................................................41
Class A Principal Distribution Amount....................................49
Class B Principal Distribution Amount....................................50
Class M Principal Distribution Amount....................................50
Closing Date.............................................................61
Code.....................................................................63
Collection Account.......................................................35
Compensating Interest....................................................38
Contributions Tax........................................................65
Cooperative..............................................................44
Cumulative Loss Trigger..................................................53
Cut-off Date.............................................................16
Cut-off Date Principal Balance...........................................16
DCR......................................................................67
Defective Mortgage Loans.................................................35
Definitive Certificate...................................................42
Delayed First Adjustment Mortgage Loan...................................17
Delinquency Percentage...................................................50
Delinquent...............................................................51
Depositor................................................................16
Determination Date.......................................................38
Distribution Account.....................................................35
Distribution Date........................................................41
DOL......................................................................67
DTC...................................................................41, 1
Due Date.................................................................17
Due Period...............................................................51
Eligible Account.........................................................36
Eligible Substitute Mortgage Loan........................................34
ERISA....................................................................66
Euroclear Operator.......................................................44
Euroclear Participants...................................................44
European Depositaries....................................................42
Excess Reserve Fund Account..............................................56
Excess Servicing Fee.....................................................38
Exemption................................................................67
Exemption Rating Agencies................................................67
Extra Principal Distribution Amount......................................51
FICO.....................................................................30
Financial Intermediary...................................................42
Fitch....................................................................67
Fixed Rate Mortgage Loans................................................16
Foreclosure Ratio........................................................32
General Excess Available Amount..........................................51
Global Securities.........................................................1
Gross Margin.............................................................24
Index....................................................................16
Interest Distributable Amount............................................51
IRS......................................................................65
LIBOR Business Day.......................................................55
LIBOR Determination Date.................................................55
Liquidated Mortgage Loan.................................................53
Loss Reimbursement Entitlement...........................................51
Maximum Cap..............................................................55
Maximum Loan Rate........................................................24
Mezzanine Certificates...................................................41
Minimum Loan Rate........................................................24
Monthly Interest Distributable Amount....................................51
Moody's..................................................................67
Mortgage.................................................................17
Mortgage Loan Schedule...................................................33
Mortgage Loans...........................................................16
Mortgage Pool............................................................16
Mortgage Rates...........................................................16
Mortgaged Property.......................................................16
Net Gains/(Losses).......................................................32
Net income from foreclosure property.....................................65
Net Liquidation Proceeds.................................................53
Non-U.S. Person..........................................................64
Offered Certificates.....................................................41
OID......................................................................63
One-Month LIBOR..........................................................55
Original Certificate Principal Balance...................................49
Overcollateralization Deficiency Amount..................................51
Overcollateralization Release Amount.....................................52
Overcollateralization Stepdown Trigger Event.............................53
Overcollateralization Target Amount......................................52
Overcollateralized Amount................................................52
Pass-Through Margin......................................................54
Pass-Through Rate........................................................54
Periodic Rate Cap........................................................24
Plan.....................................................................66
Pooling and Servicing Agreement..........................................33
Prepayment Assumption....................................................61
Prepayment Interest Shortfall............................................38
Prepayment Period........................................................47
Principal Distribution Amount............................................52
Principal Prepayment.....................................................52
Principal Remittance Amount..............................................52
Prohibited Transactions Tax..............................................65
PTCE 95-60...............................................................69
Purchase Price...........................................................34
Rating Agencies..........................................................70
Rating Agency............................................................70
Realized Loss............................................................53
Record Date..............................................................41
Reference Banks..........................................................55
Related Documents........................................................33
Relevant Depositary......................................................42
Relief Act...............................................................37
REMIC....................................................................62
Required Reserve Amount..................................................56
Reserve Interest Rate....................................................55
Residual Certificates....................................................41
Restricted Group.........................................................68
Rolling Delinquency Percentage...........................................53
Rules....................................................................42
S&P......................................................................67
Seller...................................................................30
Senior Certificates......................................................41
Senior Credit Enhancement Percentage.....................................53
Senior Specified Enhancement Percentage..................................53
Servicing Advance........................................................37
Servicing Fee............................................................38
Servicing Fee Rate.......................................................38
SMMEA....................................................................69
Stepdown Date............................................................53
Structuring Assumptions..................................................62
Subordinate Certificates.................................................41
Substitution Adjustment..................................................34
Tax Counsel..............................................................63
Telerate Page 3750.......................................................55
Terms and Conditions.....................................................45
the......................................................................16
Total Portfolio..........................................................32
Trigger Event............................................................53
Trust Fund...............................................................16
Trustee..................................................................37
Trustee Fee..............................................................37
U.S. Person...............................................................5
Unpaid Interest Shortfall Amount.........................................54
Voting Rights............................................................38
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
[____________________] Certificates (the "Global Securities") will be
available only in book-entry form. Investors in the Global Securities may hold
such Global Securities through [any] of The Depository Trust Company ("DTC"),
[Cedel or Euroclear]. The Global Securities will be tradable as home market
instruments in [both] the [European and] U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
[Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).]
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
[Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedel
and Euroclear (in such capacity) and as DTC Participants.]
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. [As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.]
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to conventional eurobonds, except
that there will be no temporary global security and no "lock-up" or restricted
period. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
[Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no `lock-up' or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.]
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to prior
mortgage loan asset backed certificates issues in same-day funds.
[Trading between Cedel and/or Euroclear Participants. Secondary
market trading between Cedel Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a Cedel Participant or a Euroclear Participant, the
purchaser will send instructions to Cedel or Euroclear through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. Cedel or Euroclear will instruct the respective Depositary, as the
case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date, on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following
month. Payment will then be made by the respective Depositary of the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be system and by the
clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade
fails), the Cedel or Euroclear cash debt will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of
credit to them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited
to their accounts. However, interest on the Global Securities would accrue
from the value date. Therefore, in many cases the investment income on the
Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will
depend on each Cedel Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Securities to the respective European Depositary for the benefit of Cedel
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two
DTC Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the Global Securities to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment to and excluding the settlement date on
the basis of the actual number of days in such accrual period and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The payment will then be reflected in the account of the
Cedel Participant or Euroclear Participant the following day, and receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Cedel Participant or
Euroclear Participant have a line of credit with its respective clearing
system and elect to be in debt in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft incurred over
that one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would instead be valued as of
the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day
(until the purchase side of the day trade is reflected in their Cedel
or Euroclear accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the Global Securities in the U.S. from
a DTC Participant no later than one day prior to settlement, which
would give the Global Securities sufficient time to be reflected in
their Cedel or Euroclear account in order to settle the sale side of
the trade; or
(c) staggering the value dates for the buy and sell
sides of the trade so that the value date for the purchase from the
DTC Participant is at least one day prior to the value date for the
sale to the Cedel Participant or Euroclear Participant.]
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities [through
Cedel or Euroclear] (or through DTC if the holder has an address outside the
U.S.[)] will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank with
a U.S. branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing
in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty
provides only for a reduced rate, withholding tax will be imposed at that rate
unless the filer alternatively files Form W-8. Form 1001 may be filed by the
Certificate Owners or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a
corporation or partnership for United States federal income tax purposes
organized in or under the laws of the United States or any state thereof or
the District of Columbia or (iii) an estate the income of which is includible
in gross income for United States tax purposes, regardless of its source, or
(iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trust. This
summary does not deal with all aspects of U.S. Federal income tax withholding
that may be relevant to foreign holders of the Global Securities. Investors
are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
<TABLE>
<CAPTION>
<S> <C>
================================================================================ ===================================================
You should rely only on the information contained or incorporated
by reference in this prospectus supplement and the accompanying $[ ]
prospectus. We have not authorized anyone to provide you with --------------------
different information. We are not offering the certificates in (Approximate)
any state where the offer is not permitted.
Dealers will deliver a prospectus supplement and prospectus when Mortgage Backed Certificates
acting as underwriters of the certificates and with respect to Series 199 -
their unsold allotments or subscriptions. In addition, all - -
dealers selling the certificates will be required to deliver a
prospectus supplement and prospectus until [________ __, 199__.
------------------------- $____ Class A
[Variable Pass-Through Rate]
[$____ Class M
TABLE OF CONTENTS [Variable Pass-Through Rate]
PAGE
PROSPECTUS SUPPLEMENT [$_____Class B
[Variable Pass-Through Rate]
Table of Contents...........................................S-2
Summary of Terms............................................S-3
Risk Factors................................................S-8
The Mortgage Pool...........................................S-15 GREENWICH CAPITAL ACCEPTANCE, INC.
Underwriting Standards......................................S-28 (Depositor)
The Master Servicer.........................................S-29
The Pooling and Servicing Agreement.........................S-31 [ ]
Description of the Certificates.............................S-38 --------------------------
Yield, Prepayment and Maturity Considerations...............S-55 Seller and Master Servicer
Use of Proceeds.............................................S-68
Certain Material Federal Income Tax Consequences............S-59
State Taxes.................................................S-62
ERISA Considerations........................................S-62 GREENWICH CAPITAL
Legal Investment Considerations.............................S-65 MARKETS, INC.
Method of Distribution......................................S-65
Legal Matters...............................................S-66
Ratings.....................................................S-66
Index of Defined Terms......................................S-68
Annex I.....................................................A-1
PROSPECTUS SUPPLEMENT
PROSPECTUS [ , 199_]
Table of Contents............................................2
Important Notice about Information in this Prospectus
and Each Accompanying Prospectus Supplement................4
Risk Factors.................................................5
The Trust Fund..............................................12
Use of Proceeds.............................................22
The Depositor...............................................22
Mortgage Loan Program.......................................23
Description of the Certificates.............................25
Credit Enhancement..........................................31
Yield and Prepayment Considerations.........................38
Pooling and Servicing Agreement.............................39
Certain Legal Aspects of the Loans..........................50
Certain Federal Income Tax Consequences.....................86
State Tax Considerations....................................84
ERISA Considerations........................................84
Legal Investment............................................87
Method of Distribution......................................88
Legal Matters...............................................88
Financial Information.......................................89
Available Information.......................................89
Rating......................................................89
Index of Defined Terms......................................90
================================================================================ ===================================================
</TABLE>
The information in this prospectus supplment is not complete and may be
changed. We may not sell these certificates until the registration statement
filed with the Securities and Exchange commission (SEC) is effective. This
prospectus supplement is not an offer to sell these certificates and it is not
soliciting an offer to buy these certificates in any state where the offer or
sale is not permitted.
Consider carefully the risk factors beginning on page S-8 of this prospectus
supplement and on page 14 of the prospectus.
The certificates represent obligations of the trust only and do not represent
an interest in or obligation of Greenwich Capital Acceptance, Inc., [_______]
or any of their affiliates.
This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.
SUBJECT TO COMPLETION, DATED _________ ___, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199__)
GREENWICH CAPITAL ACCEPTANCE, INC.
Depositor
$________ (approximate) Class A, [ %] [Variable Pass-Through Rate]
$________ (approximate) Class M, [ %] [Variable Pass-Through Rate]
$________ (approximate) Class B, [ %] [Variable Pass-Through Rate]
Mortgage Backed Certificates, Series 199_-__
The trust will issue [___] classes of certificates. Only the three classes of
certificates identified above are being offered by this prospectus supplement
and the accompanying prospectus.
The Certificates
o The Class A certificates will be senior certificates.
o The Class M certificates will be mezzanine certificates.
o The Class B certificates will be subordinate certificates.
o Each class of certificates will accrue interest at a rate equal to
[one-month LIBOR plus a fixed margin, subject to certain limitations
described in this prospectus supplement.
Credit Enhancement
o Overcollateralization - Certain excess interest received from the mortgage
loans in the trust will be applied as payments of principal on the offered
certificates to establish and maintain a required level of
overcollateralization.
o Subordination - The mezzanine certificates and the subordinate certificates
are subordinate in right of certain payments to the senior certificates.
The Class B Certificates are subordinate to the mezzanine certificates.
o Allocation of Losses - Certain losses may be allocated among the mezzanine
and subordinate certificates in reverse order of seniority, which would
reduce the principal balances of the certificates affected. Although the
outstanding principal balance of the Class A Certificates will not be
reduced as a result of realized losses, in some circumstances such losses
may reduce the amount of principal ultimately paid to the holders of the
Class A Certificates.
Neither the Securities and Exchange Commission (SEC) nor any state securities
commission has approved these securities or determined that this prospectus
supplement or the prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The offered certificates are being offered by Greenwich Capital Markets, Inc.
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. Proceeds to the depositor with respect to
the offered certificates are expected to be approximately $_____________,
before deducting issuance expenses payable by the depositor, estimated to be
$___________. See "Method of Distribution" in this prospectus supplement.
Delivery of the offered certificates will be made in book-entry form through
the facilities of The Depository Trust Company, [Cedel Bank, societe anonyme,
and the Euroclear System,] on or about __________________, 199__.
-------------------
GREENWICH CAPITAL MARKETS, INC.
____________ __, 199__
TABLE OF CONTENTS
SUMMARY OF TERMS...........................................................S-3
RISK FACTORS...............................................................S-8
THE MORTGAGE POOL..........................................................S-15
GENERAL.................................................................S-15
MORTGAGE LOAN STATISTICS................................................S-15
ADJUSTABLE RATE MORTGAGE LOANS..........................................S-22
THE INDEX...............................................................S-28
UNDERWRITING STANDARDS.....................................................S-28
THE MASTER SERVICER........................................................S-29
THE POOLING AND SERVICING AGREEMENT........................................S-31
GENERAL.................................................................S-31
ASSIGNMENT OF THE MORTGAGE LOANS........................................S-31
PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO COLLECTION ACCOUNT AND
DISTRIBUTION ACCOUNT..................................................S-33
ADVANCES................................................................S-34
THE TRUSTEE.............................................................S-35
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES................S-36
VOTING RIGHTS...........................................................S-36
AMENDMENT...............................................................S-36
TERMINATION.............................................................S-37
[OPTIONAL PURCHASE OF DEFAULTED LOANS]..................................S-37
EVENTS OF DEFAULT.......................................................S-37
RIGHTS UPON EVENT OF DEFAULT............................................S-38
DESCRIPTION OF THE CERTIFICATES............................................S-38
GENERAL.................................................................S-38
BOOK-ENTRY CERTIFICATES.................................................S-39
PRIORITY OF DISTRIBUTIONS AMONG CERTIFICATES............................S-45
ALLOCATION OF AVAILABLE FUNDS...........................................S-45
DEFINITIONS.............................................................S-46
PASS-THROUGH RATES......................................................S-51
CALCULATION OF [ONE-MONTH LIBOR]........................................S-51
APPLICATION OF ALLOCABLE LOSS AMOUNTS...................................S-52
[EXCESS RESERVE FUND ACCOUNT]...........................................S-53
REPORTS TO CERTIFICATEHOLDERS...........................................S-53
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS..............................S-55
OVERCOLLATERALIZATION PROVISIONS........................................S-56
[ADDITIONAL INFORMATION]................................................S-57
WEIGHTED AVERAGE LIVES..................................................S-57
USE OF PROCEEDS............................................................S-58
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES...........................S-59
TAXATION OF REGULAR INTERESTS...........................................S-59
STATUS OF THE OFFERED CERTIFICATES......................................S-60
NON-U.S. PERSONS........................................................S-60
PROHIBITED TRANSACTIONS TAX AND OTHER TAXES.............................S-61
BACKUP WITHHOLDING......................................................S-61
STATE TAXES................................................................S-62
ERISA CONSIDERATIONS.......................................................S-62
LEGAL INVESTMENT CONSIDERATIONS............................................S-65
METHOD OF DISTRIBUTION.....................................................S-65
LEGAL MATTERS..............................................................S-66
RATINGS....................................................................S-66
INDEX OF DEFINED TERMS.....................................................S-68
ANNEX I....................................................................A-1
SUMMARY OF TERMS
o This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
certificates, read carefully this entire document and the accompanying
prospectus.
o This summary provides an overview of certain calculations, cash flow
priorities and other information to aid your understanding and is qualified
by the full description of these calculations, cash flow priorities and
other information in this prospectus supplement and the accompanying
prospectus. Some of the information consists of forward-looking statements
relating to future economic performance or projections and other financial
items. Forward-looking statements are subject to a variety of risks and
uncertainties that could cause actual results to differ from the projected
results. Those risks and uncertainties include, among others, general
economic and business conditions, regulatory initiatives and compliance
with governmental regulations, and various other matters, all of which are
beyond our control. Accordingly, what actually happens may be very
different from what we predict in our forward-looking statements.
Offered Certificates
On the closing date, [_____________Trust] will issue [___] classes of
certificates, three of which are being offered pursuant to this prospectus
supplement and the accompanying prospectus. The assets of the trust that will
support the certificates will consist of a pool of [fixed-rate] mortgage loans
with a principal balance of approximately $ and [adjustable-rate] mortgage
loans with a principal balance of approximately $ as of , 199 . [All of the
adjustable rate mortgage loans are indexed to [six-month LIBOR], of which [ ]%
have initial fixed rate periods. The mortgage loans will have original terms
to maturity ranging from [ ] years to 30 years and will be secured by first
liens on one- to four-family residential properties.
Each class of certificates that is being offered will be book-entry securities
clearing through DTC [(in the United States) or Cedel or Euroclear (in
Europe)] in minimum denominations of $50,000.
Other Certificates
The trust will issue [two] additional classes of certificates. These
certificates will be designated the [Class OC and] Class R Certificates and are
not being offered to the public pursuant to this prospectus supplement and the
prospectus. [The Class OC Certificates will not have an original principal
certificate balance.] The Class R Certificates will have an original
certificate principal balance of [$100].
See "The Mortgage Pool" and "Dn of the Certificates-- General" and
"--Book-Entry Certificates" in this prospectus supplementTrust Fund--The
Mortgage Loans--General" in the prospectus.
Cut-off Date
__________ __, 199_
Closing Date
On or about __________ __, 199_
The Depositor
Greenwich Capital Acceptance, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2700
Seller
[--------------------]
Master Servicer
[--------------------]
Trustee
[--------------------]
Designations
Each class of certificates will have different characteristics, some of which
are reflected in the following general designations.
o Offered Certificates
Class A, Class M and Class B Certificates
o Senior Certificates
Class A Certificates
o Mezzanine Certificates
Class M Certificates
o Subordinate Certificates
Class B Certificates
o Residual Certificates
Class R Certificates
o Book-Entry Certificates
Class A, Class M and Class B Certificates
o [Excess Reserve Fund Support Certificates
Class OC Certificates]
o Physical Certificates
[Class OC and] Class R Certificates
Distribution Dates
The trustee will make distributions on the certificates on the __th day of
each calendar month beginning on ___________ __, 199_ to the holder of record
of the certificates as of the business day preceding such date of
distribution. If the __th day of a month is not a business day, then the
distribution will be made on the next business day.
Payments on the Certificates
Interest Payments
The pass-through rate for each class of offered certificates will be
calculated at the rates specified below, subject to the limitations described
under "Description of the Certificates -- Pass-Through Rates" in this
prospectus supplement:
Class A [Index] + __ basis points
Class M [Index] + __ basis points
Class B [Index] + __ basis points
Interest payable on the certificates on a distribution date will accrue during
the period commencing on the prior distribution date and ending on the day
before the current distribution date. The first accrual period will begin on
the Closing Date and end on _________ __, 199_. Interest will be calculated on
the basis of the actual number of days included in the interest accrual
period, based on a 360-day year.
See "Description of the Certificates" in this prospectus supplement.
Payment Priorities
On each distribution date, available funds in the trust will be paid in the
following order of priority and subject to the limitations described under
"Description of the Certificates--Allocation of Available Funds" in this
prospectus supplement:
(i) to the Class A Certificates, as current interest and any previously
unpaid interest;
(ii) as current interest sequentially to the Class M and Class B
Certificates;
(iii) as principal of the Class A, Class M and Class B Certificates, in that
order, to the extent such classes are entitled to receive distributions
of principal, up to the aggregate amount received on account of
principal of the mortgage loans;
(iv) as principal of the Class A, Class M and Class B Certificates, in that
order, to the extent such classes are entitled to receive distributions
of principal, up to the amount necessary to achieve the required levels
of overcollateralization;
(v) as unpaid interest and reimbursement of certain previously allocated
losses, if any, to the Class M and Class B Certificates;
[(vi) to the Class OC Certificates for deposit into a reserve account to cover
shortfalls or required reserves, before being released to the Class OC
Certificates;] and
(vi) any remaining amounts to the Class R Certificates.
See "Description of the Certificates" in this prospectus supplement.
Advances
The Master Servicer will make cash advances with respect to delinquent
payments of principal and interest to the extent the Master Servicer
reasonably believes that the cash advances are recoverable from future
payments on the related mortgage loans. Advances are intended to maintain a
regular flow of scheduled interest and principal payments on the certificates
and are not intended to guarantee or insure against losses.
See "The Pooling and-Advances" in this prospectus supplement.
Optional Termination
The holder of the majority interest in the residual certificates may purchase
all of the remaining assets of the trust after the principal balance of the
mortgage loans and any real estate owned by the trust declines below 10% of
the principal balance of the mortgage loans on [the Cut-off Date].
If the holder of the majority interest in the residual certificates does not
exercise this option, then the Master Servicer will have the right to exercise
this option. [If the option is not exercised, the offered certificates still
outstanding will accrue interest at a higher rate.]
See "The Pooling and ination" and "Description of the Certificates --
Pass-Through Rates" in this prospectus supplement.
Credit Enhancement
The credit enhancements include overcollateralization, subordination and
allocation of losses. These credit enhancements are designed to increase the
likelihood that certificateholders with a higher payment priority will receive
regular payments of interest and principal.
Overcollateralization
The mortgage loans owned by the trust pay interest each month that in the
aggregate is expected to exceed the amount needed to pay monthly interest on
the offered certificates and certain fees and expenses of the trust. A portion
of this excess interest applied to pay principal on the offered certificates,
which reduces the principal balance of the certificates at a faster rate than
the principal balance on the mortgage loans is being reduced. As a result, the
aggregate principal balance of the mortgage loans is expected to exceed the
aggregate principal balance of the offered certificates. This feature is
referred to as "overcollateralization." The required level of
overcollateralization may increase or decrease over time. We cannot assure you
that sufficient interest will be generated by the mortgage loans to maintain
the required level of overcollateralization.
See "Description of the Certificates" in this prospectus supplement.
Subordination and Allocation of Losses
The Class A Certificates will have a payment priority over the mezzanine
certificates and the subordinate certificates. The Class M Certificates will
have a payment priority over the Class B Certificates.
Subordination is designed to provide the holders of certificates with a higher
payment priority protection against losses up to a certain level that are
realized when the unpaid principal balance on a mortgage loan exceeds the
proceeds recovered upon the liquidation of that mortgage loan. Losses will
first be applied to reduce the overcollateralization amount. Thereafter, loss
protection is accomplished by allocating the realized losses first to the
subordinate certificates, until the principal amount of the subordinate
certificates is reduced to zero. Realized losses would then be allocated to
the next most junior class of certificates, the Class M Certificates, until
the principal amount of the Class M Certificates is reduced to zero. Although
the outstanding principal balance of the Class A Certificates will not be
reduced as a result of realized losses, in some circumstances such losses may
reduce the amount of principal ultimately paid to the holders of the Class A
Certificates.
See "Description of the Certificates" in this prospectus supplement.
Ratings
It is a condition of the issuance of the offered certificates that they be
assigned the following ratings by _____________ and _____________.
Rating Rating
Agency Agency
Class Rating Rating
----- ------ ------
A
M
B
A rating is not a recommendation to buy, sell or hold securities. These
ratings may be lowered or withdrawn at any time by either of the rating
agencies.
See "Ratings" in this prospectus supplement.
Tax Status
In the opinion of Brown & Wood LLP, for federal income tax purposes the trust
will include [multiple segregated asset pools]. An election will be made to
treat [each] pool as a [separate] "real estate mortgage investment conduit"
("REMIC"). Certain classes of certificates that are designated as the regular
certificates will constitute "regular interests" in the [Master] REMIC. The
Class R Certificates will represent the sole class of "residual interests" in
the [Master] REMIC. [The class of certificates designated as the residual
certificates will represent the sole class of residual interests in each
subsidiary REMIC.]
[The offered certificates will also represent the right to receive payments
from the excess reserve fund account. The excess reserve fund account will be
treated as an "outside reserve fund" and the right to receive payments from
such account will be treated as an interest rate cap agreement for federal
income tax purposes. Beneficial owners of the offered certificates will be
treated for federal income tax purposes as having purchased an undivided
beneficial interest in a regular interest in the [Master] REMIC and as having
acquired rights under an interest rate cap agreement, both to the extent of
the owner's proportionate interest in the offered certificates. A
certificateholder generally will recognize ordinary income equal to such
certificateholder's proportionate share of interest and original issue
discount, if any, accrued on the offered certificates and will take into
account a proportionate share of any payments received under the interest rate
cap agreement. A certificateholder's income derived from payments received
under the interest rate cap agreement generally must be accounted for under
the notional principal contract regulations.]
See "Certain Material Federal Income Tax Consequences" in this prospectus
supplement and "Certain Federal Income Tax Consequences" in the prospectus.
ERISA Considerations
It is expected that the Class A Certificates may be purchased by a pension or
other employee benefit plan subject to the Employee Retirement Income Security
Act of 1974 or section 4975 of the Internal Revenue Code of 1986, so long as
certain conditions are met. A fiduciary of an employee benefit plan must
determine that the purchase of a certificate is consistent with its fiduciary
duties under applicable law and does not result in a non-exempt prohibited
transaction under applicable law.
See "ERISA Considerations" in this prospectus supplement and in the
prospectus.
Legal Investment
The Class A Certificates and Class M Certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 as long as they are rated in one of the two highest rating categories by
at least one nationally recognized statistical rating organization. The Class
B Certificates will not be rated in one of the two highest rating categories
by a nationally recognized statistical rating organization and, therefore,
will not be "mortgage related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984.
See "Legal Investment Considerations" in this prospectus supplement and "Legal
Investment" in the prospectus.
RISK FACTORS
The following information, which you should carefully consider,
identifies certain significant sources of risk associated with an investment
in the certificates. You should also carefully consider the information set
forth under "Risk Factors" in the prospectus.
Unpredictability
of Prepayments and
Effect on Yields.............Borrowers may prepay their mortgage loans in whole
or in part at any time. We cannot predict the
rate at which borrowers will repay their mortgage
loans. A prepayment of a mortgage loan generally
will result in a prepayment on the certificates.
o If you purchase your certificates at a
discount and principal is repaid slower than
you anticipate, then your yield may be lower
than you anticipate.
o If you purchase your certificates at a premium
and principal is repaid faster than you
anticipate, then your yield may be lower than
you anticipate.
o The rate of prepayments on the mortgage loans
will be sensitive to prevailing interest
rates. Generally, if prevailing interest rates
decline significantly below the interest rates
on the fixed-rate mortgage loans, those
mortgage loans are more likely to prepay than
if prevailing rates remain above the interest
rates on such mortgage loans. In addition, if
interest rates decline, adjustable-rate
mortgage loan prepayments may increase due to
the availability of fixed-rate mortgage loans
at lower interest rates. Conversely, if
prevailing interest rates rise significantly,
the prepayments on fixed-rate and
adjustable-rate mortgage loans are likely to
decrease.
o [____% of the principal balance of the
mortgage loans on [the Cut-off Date] are
"balloon loans." Balloon loans generally
provide for scheduled monthly payments of
principal up to the ___th month with a final
lump sum payment in the ___th month. This lump
sum payment is substantially larger than the
previous scheduled payments. Having balloon
loans in the trust may cause the prepayment
rate to vary more than if there were no
balloon loans, because the borrower generally
must refinance the mortgage loan or sell the
mortgaged property prior to payment of the
lump sum on the maturity date.]
o [Some of the mortgage loans require the
mortgagor to pay a penalty if the mortgagor
prepays the mortgage loan during periods
ranging from [six months] to [five years]
after the mortgage loan was originated. A
prepayment penalty may discourage a borrower
from prepaying the mortgage loan during the
applicable period.]
o The Seller may be required to purchase
mortgage loans from the trust due to certain
breaches of representations and warranties
that have not been cured. These purchases will
have the same effect on the holders of the
offered certificates as a prepayment of the
mortgage loans.
o So long as the overcollateralization level
remains greater than zero, liquidations of
defaulted mortgage loans will have the same
effect on holders of the Offered Certificates
as a prepayment of the related mortgage loans.
o If the rate of default and the amount of
losses on the mortgage loans is higher than
you expect, then your yield may be lower than
you expect.
See "Yield, Prepayment and Maturity
Considerations" in this prospectus supplement
for a description of factors that may influence
the rate and timing of prepayments on the mortgage
loans.
Potential Inadequacy
of Credit Enhancement........The certificates are not insured by any financial
guaranty insurance policy. The
overcollateralization, subordination and
allocation of loss features described in the
summary are intended to enhance the likelihood
that holders of the Class A Certificates will
receive regular payments of interest and
principal.
If delinquencies or defaults occur on the
mortgage loans, neither the Master Servicer nor
any other entity will advance scheduled monthly
payments of interest and principal on delinquent
or defaulted mortgage loans if such advances are
not likely to be recovered. We cannot assure you
that the applicable credit enhancement will
adequately cover any shortfalls in cash available
to pay your certificates as a result of such
delinquencies or defaults.
If substantial losses occur as a result of
defaults and delinquent payments on the mortgage
loans, investors, particularly investors in the
subordinate certificates, may lose their initial
investment.
Overcollateralization........Because the weighted average of the interest rates
on the mortgage loans is expected to be higher
than the weighted average of the interest rates
on the certificates, the mortgage loans are
expected to generate more interest than is needed
to pay interest owed on the certificates as well
as certain fees and expenses of the trust. Any
remaining interest will then be used to
compensate for losses that occur on the mortgage
loans. After these financial obligations of the
trust are covered, the available excess interest
will be used to create and maintain
overcollateralization. We cannot assure you,
however, that enough excess interest will be
generated to maintain the overcollateralization
level required by the rating agencies. The
factors described below will affect the amount of
excess interest that the mortgage loans will
generate.
o Every time a mortgage loan is prepaid, excess
interest may be reduced because the mortgage
loan will no longer be outstanding and
generating interest or, in the case of a
partial prepayment, will be generating less
interest.
o Every time a mortgage loan is liquidated or
written off, excess interest will be reduced
because such mortgage loans will no longer be
outstanding and generating interest.
o........If the rates of delinquencies, defaults
or losses on the mortgage loans turn out to be
higher than expected, excess interest will be
reduced by the amount necessary to compensate
for any shortfalls in cash available on such
date to pay certificateholders.
o The mortgage loans have rates that are fixed
or that adjust based on an index that is
different from the index used to determine
rates on the certificates. As a result,
interest rates on the certificates may
increase relative to interest rates on the
mortgage loans, requiring that more of the
interest generated by the mortgage loans be
applied to cover interest on the certificates.
Subordination................When certain classes of certificates provide
credit enhancement for other classes of
certificates, this form of credit enhancement is
referred to as "subordination." For any
particular class, "related junior class" means
the class that is subordinate to such class. The
order of seniority, beginning with the most
senior class, is Class A, Class M and Class B.
Credit enhancement is provided for the
certificates first by the right of the holders of
certain classes of certificates to receive
certain payments of interest prior to the related
junior classes and certain payments of principal
prior to the related junior classes. This form of
credit enhancement is provided solely from
collections on the mortgage loans otherwise
payable to the holders of the related junior
classes. Credit enhancement also is provided by
the allocation of realized losses first to the
related junior classes. Accordingly, if the
aggregate principal balance of the related junior
classes were to be reduced to zero, delinquencies
and defaults on the mortgage loans would reduce
the amount of funds available for monthly
payments to holders of the remaining
certificates.
See "Description of the Certificates" in this
prospectus supplement and "Credit Enhancement --
Subordination" in the prospectus.
[Risk of Limitations
to Adjustments of
the Loan Rates...............The offered certificates accrue interest at
pass-through rates based on the [one-month LIBOR]
index plus a specified margin, but are subject to
certain caps. The caps on interest paid on the
certificates are based on the weighted average of
the interest rates on the mortgage loans in the
trust net of certain trust expenses. The trust
includes [fixed-rate] and [adjustable-rate
mortgage loans with rates that are based on the
[six-month LIBOR] index]. The adjustable-rate
mortgage loans have periodic and maximum
limitations on adjustments to the mortgage loan
rate. As a result, the offered certificates may
accrue less interest than they would accrue if
their rates were based solely on the one-month
LIBOR index plus the specified margin. If this
circumstance occurred, the value of the offered
certificates may be temporarily or permanently
reduced.
A variety of factors could limit the
pass-through rates on the offered certificates in
a rising interest rate environment. Some of these
factors are described below.
o The trust includes fixed-rate mortgage loans
on which the rate of interest does not adjust.
o The [one-month LIBOR] index used to calculate
the pass-through rates on the offered
certificates is different from the index used
to calculate the loan rates on the
adjustable-rate mortgage loans in the trust.
o The pass-through rates adjust monthly while
the loan rates on the adjustable-rate mortgage
loans adjust less frequently, [and some
adjustable-rate mortgage loans have initial
fixed rate periods of [ ] to [ ] years
following the date of origination.]
o It is possible that interest rates on the
adjustable-rate mortgage loans may decline
while interest rates on the certificates are
stable or rising. It is also possible that
interest rates on both the adjustable-rate
mortgage loans and the certificates may
decline or increase during the same period,
but that the interest rates on the
certificates may decline more slowly or
increase more rapidly.
These factors may adversely affect the yields
to maturity on the offered certificates.]
Prepayment Interest
Shortfalls...................When a mortgage loan is prepaid in full, the
borrower is charged interest only up to the date
on which payment is made, rather than for an
entire month. This may result in a shortfall in
interest collections available for payment on the
next distribution date. [The Master Servicer is
required to cover a portion of the shortfall in
interest collections that are attributable to
prepayments, but only up to the Master Servicer's
servicing fee for the related one-month accrual
period.]
Underwriting Standards and
Default Risks................The mortgage loans were originated by [various
originators], [none of which is affiliated with
the Depositor]. [Discussion of originators'
underwriting standards]
Risks of Early Default.......Defaults on mortgage loans are generally expected
to occur more frequently in the early years of
the terms of mortgage loans. [Many of] the
mortgage loans in the trust were originated
[within twelve months prior to ________ __,
199_.]
Geographic Concentration.....The following chart reflects the [_____] states
with highest concentrations of mortgage loans in
the trust based on the initial pool principal
balance.
[Table]
In addition, the conditions below will have
a disproportionate impact on the mortgage loans in
general.
o Economic conditions in [___________] (which
may or may not affect real property values)
may affect the ability of borrowers to repay
their loans on time.
o Declines in the [_______, ________, and
_________] residential real estate markets may
reduce the values of properties located in
those states, which would result in an
increase in the loan-to-value ratios.
o Any increase in the market value of properties
located in [_______, ________, and _________]
would reduce the loan-to-value ratios and
could, therefore, make alternative sources of
financing available to the borrowers at lower
interest rates, which could result in an
increased rate of prepayment of the mortgage
loans.
Certificates May Not Be
Appropriate for Certain
Investors....................The offered certificates may not be an
appropriate investment for investors who do not
have sufficient resources or expertise to
evaluate the particular characteristics of the
applicable class of offered certificates. This
may be the case because, among other things:
o The yield to maturity of offered certificates
purchased at a price other than par will be
sensitive to the uncertain rate and timing of
principal prepayments on the mortgage loans.
o The rate of principal distributions on and the
weighted average lives of the offered
certificates will be sensitive to the
uncertain rate and timing of principal
prepayments on the mortgage loans and the
priority of principal payments among the
classes of certificates. Therefore, the
offered certificates may be an inappropriate
investment if you are an investor that
requires a payment of a particular amount of
principal on a specific date or an otherwise
predictable stream of payments.
o You may be unable to reinvest amounts received
as principal on an offered certificate at a
rate comparable to the pass-through rate
applicable to the certificate. In general,
principal prepayments are expected to be
greater during periods of relatively low
interest rates.
o A market for resale of the offered
certificates may not develop or provide
certificateholders with liquidity of
investment.
You should also carefully consider the
further matters discussed under the heading
"Yield, Prepayment and Maturity Considerations"
in this prospectus supplement and under the
heading "Risk Factors" in the prospectus.
Year 2000 Systems Risk.......In the event that the computer systems of the
Trustee and the Master Servicer fail to be year
2000 compliant, the resulting potential
disruptions in the collection or distribution of
funds could adversely affect your investment.
Liquidity....................Greenwich Capital Markets, Inc. intends to make a
secondary market in the classes of certificates
actually purchased by it, but it has no
obligation to do so. There is no assurance that
such a secondary market will develop or, if it
develops, that it will continue. Consequently,
you may not be able to sell your certificates
readily or at prices that will enable you to
realize your desired yield. The market values of
the certificates are likely to fluctuate; these
fluctuations may be significant and could result
in significant losses to you.
The secondary markets for mortgage backed
securities have experienced periods of
illiquidity and can be expected to do so in the
future. Illiquidity can have a severely adverse
effect on the prices of securities that are
especially sensitive to prepayment, credit, or
interest rate risk, or that have been structured
to meet the investment requirements of limited
categories of investors.
THE MORTGAGE POOL
General
[____________] (the "Trust Fund") will consist of a pool of closed-end,
[fixed-rate and adjustable-rate] mortgage loans (the "Mortgage Pool") secured
by conventional, one- to four-family, first lien mortgage loans having
original terms to maturity ranging from [_] to 30 years (the "Mortgage
Loans"). All Mortgage Loan statistics set forth herein are based on principal
balances, interest rates, terms to maturity, mortgage loan counts and similar
statistics as of __________ ___, 199_ (the "Cut-off Date"), unless indicated
to the contrary herein. All weighted averages specified herein are weighted
based on the principal balances of the Mortgage Loans as of the Cut-Off Date
(the "Cut-off Date Principal Balance"). References to percentages of the
Mortgage Loans mean percentages based on the aggregate of the principal
balances of the Mortgage Loans (the "Pool Principal Balance") as of the
Cut-off Date, unless otherwise specified.
The description in this Prospectus Supplement of the Mortgage Pool and
the Mortgaged Properties (as defined herein) is based upon the Mortgage Pool
as constituted at the close of business on the Cut-off Date, as adjusted for
the principal payments received on or before such date. Prior to the issuance
of the Certificates by the Trust, Mortgage Loans may be removed from the
Mortgage Pool as a result of incomplete documentation or otherwise, if
Financial Asset Securities Corp. (the "Depositor") deems such removal
necessary or desirable, and may be prepaid at any time. A limited number of
other mortgage loans may be included in the Mortgage Pool prior to the
issuance of the Certificates unless including such mortgage loans would
materially alter the characteristics of the Mortgage Pool as described herein.
The Depositor believes that the information set forth herein will be
representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Certificates are issued, although the range of the
interest rates on the individual Mortgage Loans (the "Mortgage Rates") and
maturities and certain other characteristics of the Mortgage Loans may vary.
Mortgage Loan Statistics
The Mortgage Pool will consist of approximately [________] conventional,
[fixed-rate and adjustable-rate] Mortgage Loans secured by first liens on
residential real property (the "Mortgaged Property"). The Mortgage Loans have
original terms to maturity ranging from [___] years to 30 years. The Mortgage
Pool consists of [fixed-rate Mortgage Loans (the "Fixed Rate Mortgage
Loans")], which will consist of approximately [________] Mortgage Loans having
an aggregate principal balance as of the Cut-off Date of approximately
$[__________] and [adjustable-rate Mortgage Loans (the "Adjustable Rate
Mortgage Loans")], which will consist of approximately [_______] Mortgage
Loans having an aggregate principal balance as of the Cut-off Date of
approximately $[___________], in each case after application of payments of
principal due on or before the Cut-off Date whether or not received, and in
each case subject to a permitted variance of plus or minus [5]%. [Each
Adjustable Rate Mortgage Loan provides for [semi-annual] adjustment to the
mortgage rate thereon based on [six-month London interbank offered rates for
United States dollar deposits] (the "Index") and for corresponding adjustments
to the monthly payment amount due thereon, in each case subject to the
limitations described under "--Adjustable Rate Mortgage Loans" herein;
provided that in the case of [_____]% of the Adjustable Rate Mortgage Loans,
the first adjustment for such Mortgage Loan will occur after an initial period
of [___] years, by aggregate principal balance of the Adjustable Rate Mortgage
Loans as of the Cut-off Date (each such Mortgage Loan described in this
proviso, a "Delayed First Adjustment Mortgage Loan").]
The Mortgage Loans are secured by first mortgages or deeds of trust or
other similar security instruments (each, a "Mortgage") creating first liens on
one- to four-family residential properties consisting of detached or
semi-detached one- to four-family dwelling units and individual condominium
units. [Approximately [______]% of the Mortgage Loans had a Loan-to-Value Ratio
at origination in excess of 80%.] There can be no assurance that the
Loan-to-Value Ratio of any Mortgage Loan determined at any time after
origination is less than or equal to its original Loan-to-Value Ratio. The
Mortgage Loans have scheduled monthly payments due on [the first day of the
month] (with respect to each Mortgage Loan, a "Due Date"), [except for
approximately [____]% of the Mortgage Loans which have Due Dates on other dates
during the month.] [Each Mortgage Loan will contain a customary "due-on-sale"
clause.]
[Approximately [_____]% of the Mortgage Loans provide for payment by the
mortgagor of a prepayment charge in limited circumstances on certain
prepayments. Generally, each such Mortgage Loan provides for payment of a
prepayment charge on certain partial prepayments and all prepayments in full
made within [______] from the date of origination of such Mortgage Loan. The
amount of the prepayment charge is provided in the related Mortgage Note and
is generally equal to [______].
[___] Fixed Rate Mortgage Loans comprising approximately [____]% of the
Pool Principal Balance as of the Cut-off Date are balloon payment mortgage
loans (each, a "Balloon Loan"). Each Balloon Loan amortizes over [360] months,
but the final payment (the "Balloon Payment") on each Balloon Loan is due and
payable on the Due Date of the [___]th month. The amount of the Balloon
Payment on each Balloon Loan is substantially in excess of the amount of the
scheduled monthly payment on the Mortgage Loan for the period prior to the Due
Date of such Balloon Payment.
Each Mortgage Loan had a Loan Rate of not less than [___]% per annum and
not more than [_____]% per annum and as of the Cut-off Date the weighted
average Loan Rate was approximately [____]% per annum.
The weighted average remaining term to maturity of the Mortgage Loans
will be approximately [___] months as of the Cut-off Date. [None of the
Mortgage Loans will have a first Due Date prior to __________ __, 19__ or
after ___________ __, 199_ or will have a remaining term to maturity of less
than [___] months or greater than 30 years as of the Cut-off Date.] The month
of the latest maturity date of any Mortgage Loan is ___________ 20__].
The average principal balance of the Mortgage Loans at origination was
approximately $[________]. The average principal balance of the Mortgage Loans
as of the Cut-off Date was approximately $[_________].
No Mortgage Loan had a principal balance as of the Cut-off Date of
greater than approximately $[____________] or less than approximately
$[_______]. The Mortgage Loans are expected to have the following
characteristics as of the Cut-off Date (the sum in any column may not equal
the total indicated due to rounding):
<TABLE>
<CAPTION>
Principal Balances of the Mortgage Loans as of the Cut-off Date(1)
% of Aggregate
Number of Principal Balance Principal Balance
Mortgage Outstanding as of Outstanding as of
Principal Balance ($) Loans the Cut-off Date the Cut-off Date
----------------------------------------- -------------- --------------------- ------------------------
<S> <C> <C> <C>
$ %
-------------- --------------------- ------------------------
Total............................... $ 100.00%
============== ===================== ========================
- ----------------------
(1) The average principal balance of the Mortgage Loans as of the Cut-off Date was $[______].
</TABLE>
<TABLE>
<CAPTION>
Original Terms to Maturity of the Mortgage Loans(1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Original Term (months) of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ -----------------------
Total................... $ 100.00%
=================== ======================== =======================
- --------------------
(1) The weighted average original term to maturity of the Mortgage Loans was [___] months.
</TABLE>
<TABLE>
<CAPTION>
Property Types of the Mortgage Loans
% of Aggregate
Number Principal Balance Principal Balance
of Mortgage Outstanding as of Outstanding as of
Property Type Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
%
2-4 Units.................... $
Condominium..................
Manufactured Housing.........
PUD..........................
Single Family Detached.......
Unknown.....................
------------------- ------------------------ -----------------------
Total................... $ 100.00%
=================== ======================== =======================
</TABLE>
<TABLE>
<CAPTION>
Occupancy Status of the Mortgage Loans
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Occupancy Status of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------- -----------------------
<S> <C> <C> <C>
Investor..................... $ %
Primary......................
Second Home..................
------------------- ------------------------- -----------------------
Total................... $ 100.00%
=================== ========================= =======================
</TABLE>
<TABLE>
<CAPTION>
Purpose of the Mortgage Loans
% of Aggregate
Number Principal Balance Principal Balance
of Mortgage Outstanding as of Outstanding as of
Purpose Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
Equity Refinance............. $ %
Purchase.....................
Rate/Term Refinance..........
------------------- ------------------------ -----------------------
Total................... $ 100.00%
=================== ======================== =======================
</TABLE>
<TABLE>
<CAPTION>
Loan Rates of the Mortgage Loans (1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Loan Rate (%) of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------- ------------------- ------------------------ -----------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ -----------------------
Total....................... $ 100.00%
=================== ======================== =======================
- ------------------
(1) The weighted average Loan Rate of the Mortgage Loans as of the Cut-off Date was [____]%.
</TABLE>
<TABLE>
<CAPTION>
Original Loan-to-Value Ratios of the Mortgage Loans(1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Original Loan-to-Value Ratio(%) of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C>
$ %
------------------ ---------------------- --------------------
Total....................... $ 100.00%
================== ====================== ====================
- ------------------
(1) The weighted average original Loan-to-Value Ratio of the Mortgage Loans was [_____]%.
</TABLE>
<TABLE>
<CAPTION>
Geographic Distribution of the Mortgaged Properties
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Location of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C>
$ %
------------------ ---------------------- --------------------
Total................................... $ 100.00%
================== ====================== ====================
- -------------------
</TABLE>
<TABLE>
<CAPTION>
Prepayment Charges(1)
% of Aggregate
Principal Balance Principal Balance
Number Outstanding as of Outstanding as of
Months of Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------------------- ------------------ ---------------------- --------------------
<S> <C> <C> <C>
$ %
------------------ ---------------------- --------------------
Total............................... $ 100.00%
================== ====================== ====================
- --------------------
(1) Prepayment charges are assessed on any Mortgage Loans prepaid in full or in part within the specified
number of months.
</TABLE>
<TABLE>
<CAPTION>
Loan Rates of the Fixed Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Fixed Rate
Number Principal Balance Mortgage Loans
of Mortgage Outstanding as of Outstanding as of
Loan Rate (%) Loans the Cut-off Date the Cut-off Date
- --------------------------------- ----------------- --------------------------- -------------------------
<S> <C> <C> <C>
$ %
----------------- --------------------------- -------------------------
Total............. $ 100.00%
================= =========================== =========================
- --------------------
(1)The weighted average Loan Rate of the Fixed Rate Mortgage Loans as of the Cut-off Date was [_______]% per
annum.
</TABLE>
Adjustable Rate Mortgage Loans
Each Adjustable Rate Mortgage Loan provides for [semi-annual] adjustment
to the Loan Rate thereon and for corresponding adjustments to the monthly
payment amount due thereon, in each case on each adjustment date applicable
thereto (each such date, an "Adjustment Date"); provided that the first
adjustment for such Mortgage Loan will occur after an initial period of
[__________] in the case of [____]% of the Adjustable Rate Mortgage Loans, by
aggregate principal balance of the Adjustable Rate Mortgage Loans as of the
Cut-off Date. On each Adjustment Date for each Adjustable Rate Mortgage Loan,
the Loan Rate thereon will be adjusted to equal the sum, [rounded to the
nearest multiple of 0.125%,] of the Index (as described below) and a fixed
percentage amount (the "Gross Margin"); [provided, however, that the Loan Rate
on each such Mortgage Loan generally will not increase or decrease by more
than 1.50% per annum on any related Adjustment Date (the "Periodic Rate Cap"),
except that each such Mortgage Loan may increase or decrease by a higher
percentage per annum on the initial Adjustment Date.] Each Loan Rate on each
such Mortgage Loan will not exceed a specified maximum Loan Rate over the life
of such Mortgage Loan (the "Maximum Loan Rate") or be less than a specified
minimum Loan Rate over the life of such Mortgage Loan (the "Minimum Loan
Rate"). The Delayed First Adjustment Mortgage Loans have a weighted average
Periodic Rate Cap of approximately [___]% per annum. Effective with the first
monthly payment due on each Adjustable Rate Mortgage Loan after each related
Adjustment Date, the monthly payment amount will be adjusted to an amount that
will amortize fully the outstanding principal balance of the related Mortgage
Loan over its remaining term, and pay interest at the Loan Rate as so
adjusted. Due to the application of the Periodic Rate Caps and the Maximum
Loan Rates, the Loan Rate on each such Mortgage Loan, as adjusted on any
related Adjustment Date, may be less than the sum of the Index and the related
Gross Margin, rounded as described herein. See "--The Index" below. None of
the Adjustable Rate Mortgage Loans permits the related mortgagor to convert
the adjustable Loan Rate thereon to a fixed Loan Rate.
The Adjustable Rate Mortgage Loans had Loan Rates as of the Cut-off Date
of not less than [______]% per annum and not more than [_____]% per annum and
the weighted average Loan Rate was approximately [_____]% per annum. As of the
Cut-off Date, the Adjustable Rate Mortgage Loans had Gross Margins ranging
from [_______]% to [______]%, Minimum Loan Rates ranging from [_____]% per
annum to [_____]% per annum and Maximum Loan Rates ranging from [_____]% per
annum to [_____]% per annum. As of the Cut-off Date, the weighted average
Gross Margin was approximately [_____]%, the weighted average Minimum Loan
Rate was approximately [_____]% per annum [(exclusive of the Mortgage Loans
that do not have a Minimum Loan Rate)] and the weighted average Maximum Loan
Rate was approximately [_____]% per annum. The latest next Adjustment Date
following the Cut-off Date on any Adjustable Rate Mortgage Loan occurs in
[_______ 199_] and the weighted average next Adjustment Date for all of the
Adjustable Rate Mortgage Loans following the Cut-off Date is [_______ 200_].
The Adjustable Rate Mortgage Loans are expected to have the following
characteristics as of the Cut-off Date (the sum in any column may not equal
the total indicated due to rounding) and the percentages set forth in the
tables are percentages of the Adjustable Rate Mortgage Loans as of the Cut-off
Date.
<TABLE>
<CAPTION>
Loan Rates of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Loan Rate (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------ ------------------- ------------------------ --------------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ --------------------------
Total..................................... $ 100.00%
=================== ======================== ==========================
- -------------------
(1)The weighted average Loan Rate of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
[_______]% per annum.
</TABLE>
<TABLE>
<CAPTION>
Maximum Loan Rates of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Maximum Loan Rate (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ------------------------------ ------------------- ------------------------ ----------------------
<S> <C> <C> <C>
$ %
------------------- ------------------------ ----------------------
$ 100.00%
=================== ======================== ======================
- ------------------
(1)The weighted average Maximum Loan Rate of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
approximately [____]% per annum.
</TABLE>
<TABLE>
<CAPTION>
Minimum Loan Rates of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Minimum Loan Rate (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ----------------------------------- ----------------- ------------------------- ----------------------
<S> <C> <C> <C>
$ %
----------------- ------------------------- ----------------------
Total.......................... $ 100.00%
================= ========================= ======================
- --------------------
(1)The weighted average Minimum Loan Rate of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
approximately [___]% per annum.
</TABLE>
<TABLE>
<CAPTION>
Gross Margins of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Number Principal Balance Mortgage Loans
of Mortgage Outstanding as of Outstanding as of
Gross Margins (%) Loans the Cut-off Date the Cut-off Date
- ---------------------------- ----------------- ------------------------ ------------------------
<S> <C> <C> <C>
$ %
================= ======================== ========================
Total.................. $ 100.00%
================= ======================== ========================
- ------------------
(1)The weighted average Gross Margin of the Adjustable Rate Mortgage Loans as of the Cut-off Date was
approximately [_____]%.
</TABLE>
<TABLE>
<CAPTION>
Next Adjustment Date for the Adjustable Rate Mortgage Loans
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Next Adjustment Date Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------- ----------------- ----------------------- ------------------------
<S> <C> <C> <C>
$ %
----------------- ----------------------- ------------------------
Total.................. $ 100.00%
================= ======================= ========================
</TABLE>
<TABLE>
<CAPTION>
Initial Fixed Term/Subsequent Adjustable Rate Term of the Adjustable Rate Mortgage Loans
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Initial Fixed Term/Subsequent Number of Outstanding as of Outstanding as of
Adjustable Rate Term Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------------------- ----------------- ----------------------- -------------------------
<S> <C> <C> <C>
$ %
----------------- ----------------------- -------------------------
Total................................... $ 100.00%
================= ======================= =========================
</TABLE>
<TABLE>
<CAPTION>
Initial Adjustment Rate Caps of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Initial Periodic Rate Cap (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------------------- ----------------- ----------------------- -------------------------
<S> <C> <C> <C>
$ %
--------------- ------------------------- -------------------------
Total............................... $ 100.00%
=============== ========================= =========================
- ------------------
(1)Relates solely to initial rate adjustments.
</TABLE>
<TABLE>
<CAPTION>
Subsequent Periodic Rate Caps of the Adjustable Rate Mortgage Loans(1)
% of Aggregate
Principal Balance
of Adjustable Rate
Principal Balance Mortgage Loans
Number of Outstanding as of Outstanding as of
Periodic Rate Cap (%) Mortgage Loans the Cut-off Date the Cut-off Date
- ---------------------------------------- --------------- ------------------------- -------------------------
<S> <C> <C> <C>
$ %
=============== ========================= =========================
Total............................. $ 100.00%
=============== ========================= =========================
- ------------------
(1)Relates to all rate adjustments subsequent to initial rate adjustments.
</TABLE>
The Index
As of any Adjustment Date, the Index applicable to the determination of
the Loan Rate on each Adjustable Rate Mortgage Loan will be
[________________].
In the event that the Index becomes unavailable or otherwise unpublished,
the Master Servicer will select a comparable alternative index over which it
has no direct control and which is readily verifiable.
UNDERWRITING STANDARDS
All of the Mortgage Loans have been [originated by, or purchased in the
secondary market by], [__________] (the "Seller") in the ordinary course of
its business. The Mortgage Loans were purchased from [___________],
representing [___]% of the Pool Principal Balance as of the Cut-Off Date. Each
entity from which the Seller purchased the Mortgage Loans has represented and
warranted that each of the Mortgage Loans sold by it was underwritten in
accordance with standards utilized by it or the applicable originator in
originating mortgage loans generally comparable to such Mortgage Loans during
the period of origination. As described herein under "The Pooling and
Servicing Agreement--Assignment of the Mortgage Loans," the Seller, as Seller,
will make certain representations and warranties to the Trustee regarding the
Mortgage Loans. In the event of a breach that materially and adversely affects
the Certificateholders, the Seller will be obligated either to cure such
breach or repurchase or replace each affected Mortgage Loan.
Underwriting standards are applied by or on behalf of a lender to
evaluate a borrower's credit standing and repayment ability, and the value and
adequacy of the related mortgaged property as collateral. In general, a
prospective borrower applying for a loan is required to fill out a detailed
application designed to provide the underwriting officer pertinent credit
information. As part of the description of the borrower's financial condition,
the borrower generally is required to provide a current list of assets and
liabilities and a statement of income and expense, as well as an authorization
to apply for a credit report which summarizes the borrower's credit history
with local merchants and lenders and any record of bankruptcy.
When the Seller [originates or acquires] a mortgage loan, the
borrower's credit report is reviewed. [Generally, each credit report provides a
credit score] for the borrower. The credit score is based upon the credit
evaluation methodology developed by [_______] (the "SCORING COMPANY") a
consulting firm specializing in creating evaluation predictive models through a
high number of variables components. Scoring Company scores generally range
from [___] to [___] and are available from three major credit bureaus: Experian
(formerly TRW), Equifax and Trans Union. These scores estimate, on a relative
basis, which loans are most likely to default in the future. Lower scores imply
higher default risk relative to a higher score. Scoring Company scores are
empirically derived from historical credit bureau data and represent a
numerical weighing of a borrower's credit characteristics over a two-year
period. A Scoring Company score is generated through the statistical analysis
of a number of credit-related characteristics or variables. Common
characteristics include number of credit lines (trade lines), payment history,
past delinquencies, severity of delinquencies, current levels of indebtedness,
types of credit and length of credit history. Attributes are specific values of
each characteristic. A scorecard (the model) is created with weights or points
assigned to each attribute. An individual loan applicant's credit score is
derived by adding together the attribute weights for the applicant. With
respect to the Mortgage Loans, [_____]% have credit scores for the borrowers
and their weighted average Scoring Company score was [____] at the time of
scoring.]
THE MASTER SERVICER
The information set forth in the following paragraphs has been provided
by [_________________]. None of the Depositor, the Trustee, the Underwriter or
any of their respective affiliates has made or will make any representation as
to the accuracy or completeness of such information.
The following table sets forth, for the servicing portfolio serviced by
the Master Servicer as of [December 31, 1996, as of December 31, 1997 and as
of September 30, 1998], certain information relating to the delinquency
experience (including loans in foreclosure included in the Master Servicer's
servicing portfolio (which portfolio does not include mortgage loans that are
subserviced by others)) at the end of the indicated periods. The indicated
periods of delinquency are based on the number of days past due on a
contractual basis. No mortgage loan is considered delinquent for these
purposes until it is one month past due on a contractual basis. The
information contained in the monthly remittance reports which will be sent to
investors will be compiled using the same methodology as that used to compile
the information contained in the table below.
<TABLE>
<CAPTION>
As of As of As of
December 31, 1996 December 31, 1997 September 30, 1998
--------------------------------- ---------------------------------- -----------------------------------
Percent Percent Percent Percent
By No. By Percent By By No. By No. By By No. Percent By
of Dollar By No. Dollar of By Dollar of Dollar of By Dollar By No. Dollar
Loans Amount of Loans Amount Loans Amount Loans Amount Loans Amount of Loans Amount
----- ------ -------- ------- ----- --------- ------- ------- ----- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Portfolio... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Period of
Delinquency:
30-59 Days....
60-89 Days....
90 Days or
more..............
Total Delinquent
Loans...........
Loans in
Foreclosure(1)..
- ---------------
(1) Loans in foreclosure are also included under the heading "Total Delinquent Loans."
</TABLE>
The following tables set forth, [December 31, 1996, as of December 31,
1997 and as of September 30, 1998], certain information relating to the
foreclosure, REO and loan loss experience of mortgage loans included in the
Master Servicer's servicing portfolio [(which portfolio does not include
mortgage loans that are subserviced by others)] at the end of the indicated
periods.
<TABLE>
<CAPTION>
Real Estate Owned
(Dollars in Thousands)
-----------------------------------------------------------------------------
As of
As of As of September 30,
December 31, 1996 December 31, 1997 1998
-----------------------------------------------------------------------------
By No. By By No. By By No. By
of Dollar of Dollar of Dollar
Loans Amount Loans Amount Loans Amount
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio...........
Foreclosed Loans(1).......
Foreclosed Ratio(2).......
(1) For the purposes of these tables, Foreclosed Loans means the principal balance of mortgage loans secured by
mortgaged properties the title to which has been acquired by the Master Servicer.
(2) The Foreclosure Ratio is equal to the aggregate principal balance or number of Foreclosed Loans divided by
the aggregate principal balance, or number, as applicable, or mortgage loans in the total portfolio at the
end of the indicated period.
</TABLE>
<TABLE>
<CAPTION>
Loan Gain/(Loss) Experience
(Dollars in Thousands)
----------------------------------------------------------------------
As of As of As of
December 31, 1996 December 31, 1997 September 30, 1998
----------------------- ----------------------- --------------------
<S> <C> <C> <C>
Total Portfolio (1)....................
Net Gains/(Losses) (2).................
Net Gains/(Losses) as a Percentage of
Total Portfolio.........................
- ----------------
(1)"Total Portfolio" on the date stated above is the principal balance of the mortgage loans outstanding on the
last day of the period.
(2)"Net Gains/(Losses)" are actual gains or losses incurred on liquidated properties and shortfall payoffs for
each respective period. Gains or losses on liquidated properties are calculated as net sales proceeds less
book value (exclusive of loan purchase premium or discount). Shortfall payoffs are calculated as the
difference between principal payoff amount and unpaid principal at the time of payoff.
</TABLE>
It is unlikely that the delinquency experience of the Mortgage Loans
comprising the Mortgage Pool will correspond to the delinquency experience of
the Master Servicer's mortgage portfolio set forth in the foregoing tables.
The statistics shown above represent the delinquency experience for the Master
Servicer's mortgage servicing portfolio only for the periods presented,
whereas the aggregate delinquency experience on the Mortgage Loans comprising
the Mortgage Pool will depend on the results obtained over the life of the
Mortgage Pool. There can be no assurance that the Mortgage Loans comprising
the Mortgage Pool will perform consistent with the delinquency or foreclosure
experience described herein. It should be noted that if the residential real
estate market should experience an overall decline in property values, the
actual rates of delinquencies and foreclosures could be higher than those
previously experienced by the Master Servicer. In addition, adverse economic
conditions may affect the timely payment by borrowers of scheduled payments of
principal and interest on the Mortgage Loans and, accordingly, the actual
rates of delinquencies and foreclosures with respect to the Mortgage Pool.
[The Master Servicer is in the process of completing its compliance goals
in connection with the year 2000 issue. The year 2000 issue is the result of
prior computer programs being written using two digits, rather than four
digits, to define the applicable year. Any of the Master Servicer's computer
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. Any such occurrence could result in
major computer system failure or miscalculations. The Master Servicer is
presently engaged in various procedures to ensure that their computer systems
and software will be year 2000 compliant.
However, in the event that the Master Servicer, or any of its suppliers,
customers, brokers or agents do not successfully and timely achieve year 2000
compliance, the performance of obligations of the Master Servicer under the
Pooling and Servicing Agreement could be materially adversely affected.]
THE POOLING AND SERVICING AGREEMENT
General
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement, dated as of ____________ __, 199__ (the "Pooling and Servicing
Agreement"), among the Depositor, the Seller, the Master Servicer and the
Trustee. The Trust Fund created under the Pooling and Servicing Agreement will
consist of (i) all of the Depositor's right, title and interest in the
Mortgage Loans, the related mortgage notes, Mortgages and other related
documents, (ii) all payments on or collections in respect of the Mortgage
Loans due after the Cut-off Date, together with any proceeds thereof, (iii)
any Mortgaged Properties acquired on behalf of Certificateholders by
foreclosure or by deed in lieu of foreclosure, and any revenues received
thereon, (iv) the rights of the Trustee under all insurance policies required
to be maintained pursuant to the Pooling and Servicing Agreement and (v) the
rights of the Depositor under the Mortgage Loan Purchase Agreement between the
Depositor and the Seller. The Offered Certificates will be transferable and
exchangeable at the corporate trust offices of the Trustee.
Assignment of the Mortgage Loans
On the Closing Date the Depositor will transfer to the Trust Fund all of
its right, title and interest in and to each Mortgage Loan, the related
mortgage notes, mortgages and other related documents (collectively, the
"Related Documents"), including all scheduled payments with respect to each
such Mortgage Loan due after the applicable Cut-off Date. The Trustee,
concurrently with such transfer, will deliver the Certificates to the
Depositor. Each Mortgage Loan transferred to the Trust Fund will be identified
on a schedule (the "Mortgage Loan Schedule") delivered to the Trustee pursuant
to the Pooling and Servicing Agreement. Such schedule will include information
such as the Principal Balance of each Mortgage Loan as of the Cut-off Date,
its Loan Rate as well as other information.
The Pooling and Servicing Agreement will require that, within the time
period specified therein, the Seller will deliver or cause to be delivered to
the Trustee (or a custodian, as the Trustee's agent for such purpose) the
Mortgage Loans endorsed to the Trustee on behalf of the Certificateholders and
the Related Documents. In lieu of delivery of original Mortgages, if such
original is not available, the Seller may deliver or cause to be delivered
true and correct copies thereof, together with a lost note affidavit executed
by the Seller.
Within [___] days of the Closing Date, the Trustee will review the
Mortgage Loans and the Related Documents pursuant to the Pooling and Servicing
Agreement and if any Mortgage Loan or Related Document is found to be
defective in any material respect and such defect is not cured within [___]days
following notification thereof to the Seller by the Trustee, the Seller will
be obligated to either (i) substitute for such Mortgage Loan an Eligible
Substitute Mortgage Loan; however, such substitution is permitted only within
two years of the Closing Date and may not be made unless an opinion of counsel
is provided to the effect that such substitution will not [disqualify the
Trust Fund as a REMIC or] result in a prohibited transaction tax under the
Code or (ii) purchase such Mortgage Loan at a price (the "Purchase Price")
equal to the outstanding Principal Balance of such Mortgage Loan as of the
date of purchase, plus all accrued and unpaid interest thereon, computed at
the Loan Rate (net of the Servicing Fee Rate and the Trustee Fee) through the
end of the calendar month in which the purchase is effected, plus the amount
of any unreimbursed Advances and Servicing Advances made by the Master
Servicer. The Purchase Price will be deposited in the Collection Account on or
prior to the next succeeding Determination Date after such obligation arises.
The obligation of the Seller to repurchase or substitute for a Defective
Mortgage Loan is the sole remedy regarding any defects in the Mortgage Loans
and Related Documents available to the Trustee or the Certificateholders.
In connection with the substitution of an Eligible Substitute
Mortgage Loan, the Seller will be required to deposit in the Collection
Account on or prior to the next succeeding Determination Date after such
obligation arises an amount (the "Substitution Adjustment") equal to the
excess of the Principal Balance of the related Defective Mortgage Loan over
the Principal Balance of such Eligible Substitute Mortgage Loan.
An "Eligible Substitute Mortgage Loan" is a mortgage loan substituted
by the Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i) have an outstanding Principal Balance (or in the case of a
substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of, and not more than 5% less
than, the Principal Balance of the Defective Mortgage Loan; (ii) have a Loan
Rate, with respect to a Fixed Rate Mortgage Loan, not less than the Loan Rate
of the Defective Mortgage Loan and not more than 1% in excess of the Loan Rate
of such Defective Mortgage Loan or, with respect to an Adjustable Rate
Mortgage Loan, have a Maximum Loan Rate and Minimum Loan Rate not less than
the respective rate for the Defective Mortgage Loan and have a Gross Margin
equal to or greater than the Defective Mortgage Loan; (iii) have the same Due
Date as the Defective Mortgage Loan; (iv) have a remaining term to maturity
not more than one year earlier and not later than the remaining term to
maturity of the Defective Mortgage Loan; (v) comply with each representation
and warranty as to the Mortgage Loans set forth in the Pooling and Servicing
Agreement (deemed to be made as of the date of substitution); and (vi) satisfy
certain other conditions specified in the Pooling and Servicing Agreement.
The Seller will make certain representations and warranties as to the
accuracy in all material respects of certain information furnished to the
Trustee with respect to each Mortgage Loan (e.g., Cut-off Date Principal
Balance and the Loan Rate). In addition, the Seller will represent and
warrant, on the Closing Date, that, among other things: (i) at the time of
transfer to the Depositor, the Seller has transferred or assigned all of its
right, title and interest in each Mortgage Loan and the Related Documents,
free of any lien; and (ii) each Mortgage Loan complied, at the time of
origination, in all material respects with applicable state and federal laws.
Upon discovery of a breach of any such representation and warranty which
materially and adversely affects the interests of the Certificateholders in
the related Mortgage Loan and Related Documents, the Seller will have a period
of [__] days after discovery or notice of the breach to effect a cure. If the
breach cannot be cured within the [__]-day period, the Seller will be obligated
to (i) substitute for such Defective Mortgage Loan an Eligible Substitute
Mortgage Loan or (ii) purchase such Defective Mortgage Loan from the Trust
Fund. The same procedure and limitations that are set forth above for the
substitution or purchase of Defective Mortgage Loans as a result of deficient
documentation relating thereto will apply to the substitution or purchase of a
Defective Mortgage Loan as a result of a breach of a representation or
warranty in the Pooling and Servicing Agreement that materially and adversely
affects the interests of the Certificateholders.
Mortgage Loans required to be transferred to the Seller as described
in the preceding paragraphs are referred to as "Defective Mortgage Loans."
Pursuant to the Pooling and Servicing Agreement, the Master Servicer
will service and administer the Mortgage Loans as more fully set forth herein.
Payments on Mortgage Loans; Deposits to Collection Account and Distribution
Account
The Master Servicer shall establish and maintain or cause to be
maintained a separate trust account (the "Collection Account") for the benefit
of the holders of the Certificates. The Collection Account will be an Eligible
Account (as defined herein). Upon receipt by the Master Servicer of amounts in
respect of the Mortgage Loans (excluding amounts representing the Servicing
Fee, the Trustee Fee, reimbursement for Advances and Servicing Advances and
insurance proceeds to be applied to the restoration or repair of a Mortgaged
Property or similar items), the Master Servicer will deposit such amounts in
the Collection Account. Amounts so deposited may be invested in Eligible
Investments (as described in the Pooling and Servicing Agreement) maturing no
later than one Business Day prior to the date on which the amount on deposit
therein is required to be deposited in the Distribution Account or on such
Distribution Date if approved by the Rating Agencies. The Trustee will
establish an account (the "Distribution Account") into which will be deposited
amounts withdrawn from the Collection Account for distribution to
Certificateholders on a Distribution Date. The Distribution Account will be an
Eligible Account. Amounts on deposit therein may be invested in Eligible
Investments maturing on or before the Business Day prior to the related
Distribution Date unless such Eligible Investments are invested in investments
managed or advised by the Trustee or an affiliate thereof, in which case such
Eligible Investments may mature on the related Distribution Date.
An "Eligible Account" is a segregated account that is (i) an account
or accounts maintained with a federal or state chartered depository
institution or trust company the short-term unsecured debt obligations of
which (or, in the case of a depository institution or trust company that is
the principal subsidiary of a holding company, the short-term unsecured debt
obligations of such holding company) are rated P-1 by Moody's and A-1 by
Standard & Poor's (or comparable ratings if Moody's and Standard & Poor's are
not the Rating Agencies) at the time any amounts are held on deposit therein,
(ii) an account or accounts the deposits in which are fully insured by the
Federal Deposit Insurance Corporation (to the limits established by such
corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an opinion of counsel delivered to the Trustee and
to each Rating Agency, the Certificateholders will have a claim with respect
to the funds in such account or a perfected first priority security interest
against such collateral (which shall be limited to Eligible Investments)
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution with which such account is maintained,
(iii) a trust account or accounts maintained with the trust department of a
federal or state chartered depository institution, national banking
association or trust company acting in its fiduciary capacity or (iv)
otherwise acceptable to each Rating Agency without reduction or withdrawal of
their then current ratings of the Certificates as evidenced by a letter from
each Rating Agency to the Trustee. Eligible Investments are specified in the
Pooling and Servicing Agreement and are limited to investments which meet the
criteria of the Rating Agencies from time to time as being consistent with
their then current ratings of the Certificates.
Advances
Subject to the following limitations, the Master Servicer will be
obligated to advance or cause to be advanced on or before each Distribution
Date its own funds, or funds in the Collection Account that are not included
in the Available Funds for such Distribution Date, in an amount equal to the
aggregate of all payments of principal and interest, net of the Servicing Fee,
and the Trustee Fee, that were due during the related Due Period on the
Mortgage Loans, other than Balloon Payments, and that were delinquent on the
related Determination Date, plus certain amounts representing assumed payments
not covered by any current net income on the Mortgaged Properties acquired by
foreclosure or deed in lieu of foreclosure, and, with respect to Balloon
Loans, with respect to which the Balloon Payment is not made when due, an
assumed monthly payment that would have been due on the related Due Date based
on the original principal amortization schedule for such Balloon Loan (any
such advance, an "Advance").
Advances are required to be made only to the extent they are deemed
by the Master Servicer to be recoverable from related late collections,
insurance proceeds or liquidation proceeds. The purpose of making such
Advances is to maintain a regular cash flow to the Certificateholders, rather
than to guarantee or insure against losses. The Master Servicer will not be
required to make any Advances with respect to reductions in the amount of the
monthly payments on the Mortgage Loans due to bankruptcy proceedings or the
application of the Relief Act.
All Advances will be reimbursable to the Master Servicer from late
collections, insurance proceeds and liquidation proceeds from the Mortgage
Loan as to which such unreimbursed Advance was made. In addition, any Advances
previously made in respect of any Mortgage Loan that are deemed by the Master
Servicer to be nonrecoverable from related late collections, insurance
proceeds or liquidation proceeds may be reimbursed to the Master Servicer out
of any funds in the Collection Account prior to the distributions on the
Certificates. In the event the Master Servicer fails in its obligation to make
any such advance, the Trustee, in its capacity as successor Master Servicer,
will be obligated to make any such advance, to the extent required in the
Pooling and Servicing Agreement.
In the course of performing its servicing obligations, the Master
Servicer will pay all reasonable and customary "out-of-pocket" costs and
expenses incurred in the performance of its servicing obligations, including,
but not limited to, the cost of (i) the preservation, restoration and
protection of the Mortgaged Properties, (ii) any enforcement or judicial
proceedings, including foreclosures, and (iii) the management and liquidation
of Mortgaged Properties acquired in satisfaction of the related mortgage. Each
such expenditure will constitute a "Servicing Advance."
The Master Servicer's right to reimbursement for Servicing Advances
is limited to late collections on the related Mortgage Loan, including
liquidation proceeds, released mortgaged property proceeds, insurance proceeds
and such other amounts as may be collected by the Master Servicer from the
related Mortgagor or otherwise relating to the Mortgage Loan in respect of
which such unreimbursed amounts are owed, unless such amounts are deemed to be
nonrecoverable by the Master Servicer, in which event reimbursement will be
made to the Master Servicer from general funds in the Collection Account.
The Trustee
[__________], a [________], will be named trustee (the "Trustee")
pursuant to the Pooling and Servicing Agreement. The Trustee will initially
serve as custodian of the Mortgage Loans.
The principal compensation (the "Trustee Fee") to be paid to the
Trustee in respect of its obligations under the Pooling and Servicing
Agreement will be equal to [____________]. The Pooling and Servicing Agreement
will provide that the Trustee and any director, officer, employee or agent of
the Trustee will be indemnified by the Trust Fund and will be held harmless
against any loss, liability or expense (not including expenses, disbursements
and advances incurred or made by the Trustee, including the compensation and
the expenses and disbursements of its agents and counsel, in the ordinary
course of the Trustee's performance in accordance with the provisions of the
Pooling and Servicing Agreement) incurred by the Trustee arising out of or in
connection with the acceptance or administration of its obligations and duties
under the Pooling and Servicing Agreement, other than any loss, liability or
expense (i) that constitutes a specific liability of the Trustee under the
Pooling and Servicing Agreement or (ii) incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's
duties under the Pooling and Servicing Agreement or as a result of a breach,
or by reason of reckless disregard, of the Trustee's obligations and duties
under the Pooling and Servicing Agreement.
Servicing and Other Compensation and Payment of Expenses
The principal compensation (the "Servicing Fee") to be paid to the
Master Servicer in respect of its servicing activities for the Certificates
will be at the "Servicing Fee Rate" of up to [____]% per annum on the Principal
Balance of each Mortgage Loan. The amount resulting from the difference, if
any, between the Servicing Fee Rate for any Mortgage Loan and [____]% per annum
(the "Excess Servicing Fee") will be [retained by the Seller]. As additional
servicing compensation, the Master Servicer is entitled to retain all
service-related fees (other than prepayment penalties), including assumption
fees, modification fees, extension fees and late payment charges, to the extent
collected from mortgagors, together with any interest or other income earned on
funds held in the Collection Account and any escrow accounts. [The Master
Servicer is obligated to offset any Prepayment Interest Shortfall on any
Distribution Date (payments made by the Master Servicer in satisfaction of such
obligation, "Compensating Interest") by an amount not in excess of its
Servicing Fee for such Distribution Date.] The Master Servicer is obligated to
pay certain insurance premiums and certain ongoing expenses associated with the
Mortgage Pool and incurred by the Master Servicer in connection with its
responsibilities under the Pooling and Servicing Agreement and is entitled to
reimbursement therefor as provided in the Pooling and Servicing Agreement.
The "Determination Date" with respect to any Distribution Date will
be the [__]th day of the calendar month in which such Distribution Date occurs
or, if such [___]th day is not a Business Day, the Business Day immediately
following such [___]th day. [With respect to any Determination Date and each
Mortgage Loan as to which a principal prepayment in full or in part was
applied during the related Due Period, the "Prepayment Interest Shortfall" is
an amount equal to the interest at the applicable Loan Rate (net of the
Servicing Fee) on the amount of such principal prepayment for the number of
days commencing on the date on which the principal prepayment is applied and
ending on the last day of the related Due Period.]
Voting Rights
With respect to any date of determination, the percentage of all the
voting rights ("Voting Rights") allocated among holders of the Offered
Certificates shall be the fraction, expressed as a percentage, the numerator
of which is the aggregate Certificate Principal Balance of all the
Certificates of such Class then outstanding and the denominator of which is
the aggregate Certificate Principal Balance of all the Certificates then
outstanding. The Voting Rights allocated to each Class of Offered Certificates
shall be allocated among all holders of each such Class in proportion to the
outstanding Certificate Principal Balance of such Certificates.
<PAGE>
Amendment
The Pooling and Servicing Agreement may be amended by the Seller, the
Depositor, the Master Servicer and the Trustee, without the consent of the
holders of the Certificates, for any of the purposes set forth under "The
Pooling and Servicing Agreement--Amendment" in the Prospectus. In addition,
the Pooling and Servicing Agreement may be amended by the Seller, the
Depositor, the Master Servicer and the Trustee and the holders of a majority
in interest of any Class of Offered Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Pooling and Servicing Agreement or of modifying
in any manner the rights of the holders of Offered Certificates; provided,
however, that no such amendment may (i) reduce in any manner the amount of, or
delay the timing of, distributions required to be made on any Offered
Certificate without the consent of the holder of such Certificate; (ii)
adversely affect in any material respect the interests of the holders of any
Class of the Offered Certificates in a manner other than as described in
clause (i) above, without the consent of the holders of Offered Certificates
of such Class evidencing percentage interests aggregating at least 66%; or
(iii) reduce the aforesaid percentage of aggregate outstanding principal
amounts of Offered Certificates, the holders of which are required to consent
to any such amendment, without the consent of the holders of all such
Certificates.
Termination
The holder of the majority interest in the Residual Certificate (or
if such holder does not exercise such option, the Master Servicer) will have
the right to repurchase all remaining Mortgage Loans and REO Properties and
thereby effect the early retirement of the Certificates, on any Distribution
Date following the Due Period during which the aggregate principal balance of
the Mortgage Loans and any real estate owned by the Trust is less than or
equal to 10% of the Pool Principal Balance as of the Cut-off Date. In the
event that the option is exercised, the repurchase will be made at a price
generally equal to par plus accrued interest for each Mortgage Loan at the
related Loan Rate to but not including the first day of the month in which
such repurchase price is distributed plus the amount of any unreimbursed
Advances and Servicing Advances made by the Master Servicer. Proceeds from
such repurchase will be included in Available Funds and will be distributed to
the holders of the Certificates in accordance with the Pooling and Servicing
Agreement. Any such repurchase of the Mortgage Loans and REO Properties will
result in the early retirement of the Certificates.
[Optional Purchase of Defaulted Loans
As to any Mortgage Loan which is delinquent in payment by [__] days
or more, the Master Servicer may, at its option, purchase such Mortgage Loan
from the Trust Fund at the Purchase Price for such Mortgage Loan.]
Events of Default
Events of Default will consist, among other things, of: (i) (a) any
failure by the Master Servicer to make an Advance and (b) any other failure by
the Master Servicer to deposit in the Collection Account or Distribution
Account the required amounts or remit to the Trustee any payment which
continues unremedied for one Business Day following written notice to the
Master Servicer; (ii) any failure of the Master Servicer to make any Advance
or to cover any Prepayment Interest Shortfalls, as described herein, which
failure continues unremedied for one Business Day; (iii) any failure by the
Master Servicer to observe or perform in any material respect any other of its
covenants or agreements in the Pooling and Servicing Agreement, which
continues unremedied for 30 days after the first date on which (x) the Master
Servicer has knowledge of such failure or (y) written notice of such failure
is given to the Master Servicer; (iv) insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, and certain
actions by or on behalf of the Master Servicer indicating its insolvency or
inability to pay its obligations or (v) cumulative Realized Losses as of any
Distribution Date exceed the amount specified in the Pooling and Servicing
Agreement.
Rights upon Event of Default
So long as an Event of Default under the Pooling and Servicing
Agreement remains unremedied, the Trustee at the direction of the holders of
Offered Certificates evidencing not less than 51% of the Voting Rights may
terminate all of the rights and obligations of the Master Servicer in its
capacity as servicer with respect to the Mortgage Loans, as provided in the
Pooling and Servicing Agreement, whereupon the Trustee will succeed to all of
the responsibilities and duties of the Master Servicer under the Pooling and
Servicing Agreement, including the obligation to make Advances. No assurance
can be given that termination of the rights and obligations of the Master
Servicer under the Pooling and Servicing Agreement would not adversely affect
the servicing of the related Mortgage Loans, including the delinquency
experience of such Mortgage Loans.
No holder of an Offered Certificate, solely by virtue of such
holder's status as a holder of an Offered Certificate, will have any right
under the Pooling and Servicing Agreement to institute any proceeding with
respect thereto, unless such holder previously has given to the Trustee
written notice of default and unless the holders of Offered Certificates
having not less than 51% of the Voting Rights evidenced by the Offered
Certificates so agree and have offered reasonable indemnity to the Trustee.
DESCRIPTION OF THE CERTIFICATES
General
The Offered Certificates will be issued pursuant to a Pooling and
Servicing Agreement. Set forth below are summaries of the specific terms and
provisions pursuant to which the Offered Certificates will be issued. The
following summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the provisions of the Pooling and
Servicing Agreement. When particular provisions or terms used in the Pooling
and Servicing Agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference.
[_______________________] will issue the Class A Certificates (the
"Senior Certificates"), (ii) the Class M Certificates (the "Mezzanine
Certificates"), (iii) the Class B Certificates (the "Subordinate
Certificates") and (iv) the Class R Certificates (the "Residual
Certificates"). The Senior Certificates, the Mezzanine Certificates and the
Subordinate Certificates (collectively, the "Offered Certificates") and the
Residual Certificates are collectively referred to herein as the
"Certificates." Only the Offered Certificates are offered hereby.
The Class A, the Class M and the Class B Certificates will have the
respective Original Certificate Principal Balances specified on the cover
hereof. The aggregate of the Original Certificate Principal Balances of the
Offered Certificates is approximately $[_____________].
The Class R Certificates will have an Original Certificate Principal
Balance of $[___] and will [not] bear interest.
The Offered Certificates will be issued in book-entry form as
described below. The Offered Certificates will be issued in minimum dollar
denominations of $[______] and integral multiples of $[_______] in excess
thereof (except that one Certificate of each Class may be issued in a
denomination which is not an integral multiple thereof). The assumed final
maturity date for each Class of Offered Certificates is the Distribution Date
occurring in [___________ 20__].
Distributions on the Offered Certificates will be made by the Trustee
on the [__]th day of each month, or if such day is not a Business Day, on the
first Business Day thereafter, commencing on _________ __, 199_ (each, a
"Distribution Date"), to the persons in whose names such Certificates are
registered at the close of business on the Business Day immediately preceding
such Distribution Date (each, a "Record Date").
Book-Entry Certificates
The Offered Certificates will be book-entry Certificates (the
"Book-Entry Certificates"). Persons acquiring beneficial ownership interests
in the Offered Certificates ("Certificate Owners") will hold their Offered
Certificates through The Depository Trust Company ("DTC") [in the United
States, or Cedel Bank, societe anonyme ("Cedel"), or Euroclear (in Europe)] if
they are participants of such system[s], or indirectly through organizations
which are participants in such system[s]. The Book-Entry Certificates will be
issued in one or more certificates which equal the aggregate principal balance
of the Offered Certificates and will initially be registered in the name of
Cede & Co., ("Cede"), the nominee of DTC. [Cedel and Euroclear will hold
omnibus positions on behalf of their participants through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries which in turn will hold such positions in customers'
securities accounts in the depositaries' names on the books of DTC. Citibank
will act as depositary for Cedel and The Chase Manhattan Bank will act as
depositary for Euroclear (in such capacities, individually the "Relevant
Depositary" and collectively the "European Depositaries").] Investors may hold
such beneficial interests in the Book-Entry Certificates in minimum
denominations of $50,000. Except as described below, no person acquiring a
Book-Entry Certificate (each, a "beneficial owner") will be entitled to
receive a physical certificate representing such Certificate (a "Definitive
Certificate"). Unless and until Definitive Certificates are issued, it is
anticipated that the only "Certificateholder" of the Offered Certificates will
be Cede, as nominee of DTC. Certificate Owners will not be Certificateholders
as that term is used in the Pooling and Servicing Agreement. Certificate
Owners are only permitted to exercise their rights indirectly through
Participants and DTC.
The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or
other financial intermediary (each, a "Financial Intermediary") that maintains
the beneficial owner's account for such purpose. In turn, the Financial
Intermediary's ownership of such Book-Entry Certificate will be recorded on
the records of DTC (or of a participating firm that acts as agent for the
Financial Intermediary, whose interest will in turn be recorded on the records
of DTC if the beneficial owner's Financial Intermediary is not a DTC
participant [and on the records of Cedel or Euroclear, as appropriate]).
Certificate Owners will receive all distributions of principal of and
interest on the Offered Certificates from the Trustee through DTC and DTC
participants. While the Offered Certificates are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required
to make book-entry transfers among participants on whose behalf it acts with
respect to the Offered Certificates and is required to receive and transmit
distributions of principal of, and interest on, the Offered Certificates.
Participants and indirect participants with which Certificate Owners have
accounts with respect to Offered Certificates are similarly required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates representing their respective interests in the
Offered Certificates, the Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interest.
Certificateholders will not receive or be entitled to receive
certificates representing their respective interests in the Offered
Certificates, except under the limited circumstances described below. Unless
and until Definitive Certificates are issued, Certificateholders which are not
DTC participants may transfer ownership of Offered Certificates only through
participants and indirect participants by instructing such participants and
indirect participants to transfer Offered Certificates, by book-entry
transfer, through DTC for the account of the purchasers of such Offered
Certificates, which account is maintained with their respective participants.
Under the Rules and in accordance with DTC's normal procedures, transfers of
ownership of Offered Certificates will be executed through DTC and the
accounts of the respective participants at DTC will be debited and credited.
Similarly, the participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Certificateholders.
[Because of time zone differences, credits of securities received in
Cedel or Euroclear as a result of a transaction with a DTC participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. Such credits or any transactions in
such securities settled during such processing will be reported to the
relevant Euroclear or Cedel Participants on such business day. Cash received
in Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant (as defined below) or Euroclear Participant (as defined below) to
a DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Cedel or Euroclear cash account only as of
the business day following settlement in DTC. For information with respect to
tax documentation procedures relating to the Certificates, see "Certain
Federal Income Tax Consequences--REMIC Certificates --Regular Certif.S.
Persons" and "--Information Reporting and Backup Withholding" in the
Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures--Certain U.S. Federal Income Tax Documentation Requirements" in
Annex I hereto.]
Transfers between DTC participants will occur in accordance with the
Rules. [Transfers between Cedel Participants and Euroclear Participants will
occur in accordance with their respective rules and operating procedures.]
[Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly through
Cedel Participants or Euroclear Participants, on the other, will be effected
in DTC in accordance with the Rules on behalf of the relevant European
international clearing system by the Relevant Depositary; however, such cross
market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to the
Relevant Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the European Depositaries.]
DTC which is a New York-chartered limited purpose trust company,
performs services for its participants, some of which (and/or their
representatives) own DTC. In accordance with its normal procedures, DTC is
expected to record the positions held by each DTC participant in the
Book-Entry Certificates, whether held for its own account or as a nominee for
another person. In general, beneficial ownership of Book-Entry Certificates
will be subject to the Rules, as in effect from time to time.
[Cedel Bank, societe anonyme, 67 Bd Grande-Duchesse Charlotte, L-1331
Luxembourg, was incorporated in 1970 as a limited company under Luxembourg
law. Cedel is owned by banks, securities dealers and financial institutions,
and currently has about 100 shareholders, including U.S. financial
institutions or their subsidiaries. No single entity may own more than five
percent of Cedel's stock.]
[Cedel is registered as a bank in Luxembourg, and as such is subject
to regulation by the Institut Monetaire Luxembourgeois (i.e., the Luxembourg
Monetary Authority), which supervises Luxembourg banks.]
[Cedel holds securities for its customers ("Cedel Participants") and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
also deals with domestic securities markets in several countries through
established depository and custodial relationships. Cedel has established an
electronic bridge with Morgan Guaranty Trust as the Euroclear Operator in
Brussels to facilitate settlement of trades between systems. Cedel currently
accepts over 70,000 securities issues on its books.]
[Cedel's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's United States customers are limited to
securities brokers and dealers and banks. Currently, Cedel has approximately
3,000 customers located in over 60 countries, including all major European
countries, Canada, and the United States. Indirect access to Cedel is
available to other institutions which clear through or maintain a custodial
relationship with an account holder of Cedel.]
[Euroclear was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement
of certificates and any risk from lack of simultaneous transfers of securities
and cash. Transactions may be settled in any of 29 currencies, including
United States dollars. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. Euroclear is operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York (the "Euroclear
Operator"), under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of
Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.]
[The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.]
[Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.]
Distributions on the Book-Entry Certificates will be made on each
Remittance Date by the Trustee to DTC. DTC will be responsible for crediting
the amount of such payments to the accounts of the applicable DTC participants
in accordance with DTC's normal procedures. Each DTC participant will be
responsible for disbursing such payments to the beneficial owners of the
Book-Entry Certificates that it represents and to each Financial Intermediary
for which it acts as agent. Each such Financial Intermediary will be
responsible for disbursing funds to the beneficial owners of the Book-Entry
Certificates that it represents.
Under a book-entry format, beneficial owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since
such payments will be forwarded by the Trustee to Cede. [Distributions with
respect to Certificates held through Cedel or Euroclear will be credited to
the cash accounts of Cedel Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Certain Federal Income Tax Consequences--REMIC Certificates--Regular
Certificates--Non-U.S. Persons" and "--Information Reporting and Backup
Withholding" in the Prospectus.] Because DTC can only act on behalf of
Financial Intermediaries, the ability of a beneficial owner to pledge
Book-Entry Certificates to persons or entities that do not participate in DTC,
or otherwise take actions in respect of such Book-Entry Certificates, may be
limited due to the lack of physical certificates for such Book-Entry
Certificates. In addition, issuance of the Book-Entry Certificates in
book-entry form may reduce the liquidity of such Certificates in the secondary
market since certain potential investors may be unwilling to purchase
Certificates for which they cannot obtain physical certificates.
Monthly and annual reports on the Trust will be provided to Cede, as
nominee of DTC, and may be made available by Cede to beneficial owners upon
request, in accordance with the rules, regulations and procedures creating and
affecting the Depository, and to the Financial Intermediaries to whose DTC
accounts the Book-Entry Certificates of such beneficial owners are credited.
DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Certificates under the Agreement only at the
direction of one or more Financial Intermediaries to whose DTC accounts the
Book-Entry Certificates are credited, to the extent that such actions are
taken on behalf of Financial Intermediaries whose holdings include such
Book-Entry Certificates. [Cedel or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Certificateholder under
the Agreement on behalf of a Cedel Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to the
ability of the Relevant Depositary to effect such actions on its behalf
through DTC.] DTC may take actions, at the direction of the related
participants, with respect to some Offered Certificates which conflict with
actions taken with respect to other Offered Certificates.
Definitive Certificates will be issued to beneficial owners of the
Book-Entry Certificates, or their nominees, rather than to DTC, only if (a)
DTC or [______________] advises the Trustee in writing that DTC is no longer
willing, qualified or able to discharge properly its responsibilities as
nominee and depository with respect to the Book-Entry Certificates and
[________________] or the Trustee is unable to locate a qualified successor,
(b) [_________________], at its sole option, with the consent of the Trustee,
elects to terminate a book-entry system through DTC or (c) after the
occurrence of an Event of Default, beneficial owners having Percentage
Interests aggregating not less than 51% of the Book-Entry Certificates advise
the Trustee and DTC through the Financial Intermediaries and the DTC
participants in writing that the continuation of a book-entry system through
DTC (or a successor thereto) is no longer in the best interests of beneficial
owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all beneficial
owners of the occurrence of such event and the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and
thereafter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Agreement.
Although DTC [, Cedel and Euroclear] have agreed to the foregoing
procedures in order to facilitate transfers of Offered Certificates among
participants of DTC, [Cedel and Euroclear,] they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
None of [_________], the Master Servicer or the Trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Certificates held
by Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Priority of Distributions Among Certificates
As more fully described herein, distributions on the Certificates
will be made on each Distribution Date from Available Funds and will be made
to the Classes of Certificates (subject to the prior payment of principal
distributions to the Class R Certificates on the first Distribution Date as
described herein) in the following order of priority: (i) to interest on each
Class of Offered Certificates in the priority and subject to the limitations
described under "--Allocations of Available Funds" below; (ii) to current
principal of the Classes of Certificates then entitled to receive
distributions of principal, in the order and subject to the priorities set
forth herein under "--Allocation of Available Funds"; (iii) to principal of
the Classes of Certificates then entitled to receive distributions of
principal in order to maintain the Overcollateralization Target Amount; (iv)
to unpaid interest and the Loss Reimbursement Entitlement in the order and
subject to the priorities described herein under "--Allocation of Available
Funds"; (v) to the Class OC Certificates for deposit into the Excess Reserve
Fund Account first to cover any Basis Risk Shortfall Amount and then to cover
any Required Reserve Amount, and then to be released to the Class OC
Certificates, in each case subject to certain limitations set forth herein
under "--Allocation of Available Funds"; and (vi) any remaining amounts to the
holders of the Class R Certificates.
Allocation of Available Funds
Distributions to holders of each Class of Offered Certificates will
be made on each Distribution Date from Available Funds. "Available Funds" for
any Distribution Date is equal to the sum, net of amounts reimbursable
therefrom to the Master Servicer, of (i) the aggregate amount of monthly
payments on the related Mortgage Loans due on the related Due Date and
received by the Trustee on or prior to the related Determination Date, after
deduction of the Servicing Fee, the Excess Servicing Fee and the Trustee Fee,
(ii) certain unscheduled payments in respect of the Mortgage Loans, including
prepayments, insurance proceeds, Net Liquidation Proceeds and proceeds from
repurchases of and substitutions for such Mortgage Loans occurring during the
related Prepayment Period [,excluding prepayment penalties] and (iii) all
Advances with respect to the related Mortgage Loans received by the Trustee
for such Distribution Date.
The "Prepayment Period" with respect to any Distribution Date is the
period commencing on the Determination Date in the month preceding the month
in which such Distribution Date occurs (or, in the case of the first
Distribution Date, the day following the Cut-off Date) and ending on the
Determination Date relating to such Distribution Date.
On each Distribution Date, the Trustee will withdraw from the
Distribution Account all Available Funds then on deposit therein and will
distribute the same in the following order of priority (provided, however, on
the first Distribution Date, the Trustee will first distribute all principal
due to the Class R Certificates):
(i) on account of interest to the holders of each Class of Offered
Certificates in the following order of priority:
(a) to the Class A Certificates, the Interest Distributable
Amount for such Class for such Distribution Date; and
(b) sequentially, to the Class M and Class B Certificates, in
that order, the related Monthly Interest Distributable Amount for such
Distribution Date;
(ii) from the Principal Distribution Amount (giving effect
first to the component of the Principal Distribution Amount equal to the Basic
Principal Distribution Amount and then to the component of the Principal
Distribution Amount equal to the Extra Principal Distribution Amount pursuant
to clause (iii)(a) below):
(a) on each Distribution Date (1) before the Stepdown Date or (2)
with respect to which a Trigger Event is in effect,
sequentially to the holders of the Class A, Class M and Class
B Certificates, in that order, the respective Class Principal
Distribution Amount; or
(b) on each Distribution Date (1) on or after the Stepdown Date
and (2) as long as a Trigger Event is not in effect, to the
holders of the Class or Classes of Offered Certificates then
entitled to distribution of principal, in an amount equal to
in the aggregate the Principal Distribution Amount in the
following amounts and order of priority:
(1) the lesser of (x) the Principal Distribution Amount
and (y) the Class A Principal Distribution Amount to the Class
A Certificateholders, until the Certificate Principal Balance
thereof is reduced to zero;
(2) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the amount distributed to the
Class A Certificateholders in clause (ii)(b)(1) above and (y)
the Class M Principal Distribution Amount, to the Class M
Certificateholders, until the Certificate Principal Balance
thereof is reduced to zero;
(3) the lesser of (x) the excess of (i) the Principal
Distribution Amount over (ii) the sum of the amounts
distributed to the Class A Certificateholders in clause
(ii)(b)(1) above and the amount distributed to the Class M
Certificateholders in clause (ii)(b)(2) above and (y) the
Class B Principal Distribution Amount, to the Class B
Certificateholders, until the Certificate Principal Balance
thereof is reduced to zero;
(iii) any amounts remaining after the distributions in clauses (i)
through (ii) above shall be distributed in the following order of priority:
(a) to fund the Extra Principal Distribution Amount for such
Distribution Date to be paid as a component of the Principal Distribution
Amount in the same order of priority described in clause (ii) above;
(b) to the Class M Certificateholders, the related Unpaid Interest
Shortfall Amount for such Distribution Date and then the related Loss
Reimbursement Entitlement, if any, for such Distribution Date;
(c) to the Class B Certificateholders, the related Unpaid Interest
Shortfall Amount for such Distribution Date and then the related Loss
Reimbursement Entitlement, if any, for such Distribution Date; and
(d) to the holders of the Class OC Certificates for deposit into the
Excess Reserve Fund Account first to cover any Basis Risk Shortfall
Amount and then to cover any Required Reserve Amount, and then to be
released to the holders of the Class OC Certificates, such amounts, if
any, as described in the Pooling and Servicing Agreement; and
(iv) to the holders of the Class R Certificates, the remaining
amount.
On each Distribution Date, all amounts representing prepayment
penalties received during the related Due Period will be distributed to the
holders of the Class OC Certificates.
Definitions
The "Accrual Period" for the Offered Certificates for a given
Distribution Date will be the actual number of days (based on a 360-day year)
included in the period commencing on the immediately preceding Distribution
Date and ending on the day immediately preceding the current Distribution
Date; provided, however, that the initial Accrual Period for the Offered
Certificates will be the actual number of days included in the period
commencing on the Closing Date and ending on ________ __, 199__.
The "Allocable Loss Amount" with respect to each Distribution Date
means the excess, if any, of (a) the aggregate of the Certificate Principal
Balances of all Classes of Offered Certificates (after giving effect to all
distributions on such Distribution Date) over (b) the Pool Principal Balance
as of the end of the preceding Due Period.
The "Basic Principal Distribution Amount" means with respect to any
Distribution Date the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the Overcollateralization Release Amount, if any,
for such Distribution Date.
The "Call Option Date" is the first Distribution Date on which the
Pool Principal Balance is less than or equal to 10% of the Pool Principal
Balance as of the Cut-off Date.
The "Certificate Principal Balance" of any Class of Offered
Certificates, as of any Distribution Date, will be equal to the Certificate
Principal Balance thereof on the Closing Date (the "Original Certificate
Principal Balance") reduced by the sum of (i) all amounts actually distributed
in respect of principal of such Class on all prior Distribution Dates and (ii)
with respect to any Mezzanine Certificates and the Class B Certificates, all
related Allocable Loss Amounts applied in reduction of principal of such
Certificates on all prior Distribution Dates.
"Class A Principal Distribution Amount" means as of any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
is in effect, the lesser of (i) 100% of the Principal Distribution Amount and
(ii) the aggregate Certificate Principal Balance of the Class A Certificates
and (b) on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the aggregate
Certificate Principal Balance of the Class A Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately [____]% and (ii) the aggregate Principal Balance of the Mortgage
Loans as of the last day of the related Due Period and (B) the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period minus approximately $[--------].
"Class M Principal Distribution Amount" means as of any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
is in effect, the lesser of (i) 100% of the Principal Distribution Amount and
(ii) the aggregate Certificate Principal Balance of the Class M Certificates
and (b) on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount
on such Distribution Date) and (ii) the Certificate Principal Balance of the
Class M Certificates immediately prior to such Distribution Date over (y) the
lesser of (A) the product of (i) approximately [____]% and (ii) the aggregate
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period and (B) the aggregate Principal Balance of the Mortgage Loans as of the
last day of the related Due Period minus approximately $[__________].
"Class B Principal Distribution Amount" means as of any Distribution
Date (a) prior to the Stepdown Date or with respect to which a Trigger Event
is in effect, the lesser of (i) 100% of the Principal Distribution Amount and
(ii) the aggregate Certificate Principal Balance of the Class B Certificates
and (b) on or after the Stepdown Date and as long as a Trigger Event is not in
effect, the positive difference, if any, of the excess of (x) the sum of (i)
the aggregate Certificate Principal Balance of the Class A Certificates (after
taking into account the payment of the Class A Principal Distribution Amount
on such Distribution Date), (ii) the Certificate Principal Balance of the
Class M Certificates (after taking into account the payment of the Class M
Principal Distribution Amount on such Distribution Date) and (iii) the
Certificate Principal Balance of the Class B Certificates immediately prior to
such Distribution Date over (y) the lesser of (A) the product of (i)
approximately [_____]% and (ii) the aggregate Principal Balance of the
Mortgage Loans as of the last day of the related Due Period and (B) the
aggregate Principal Balance of the Mortgage Loans as of the last day of the
related Due Period minus approximately $[________].
The "Delinquency Percentage," with respect to any Distribution Date
and the related Due Period, is the fraction, expressed as a percentage, the
numerator of which is the aggregate of the Principal Balances of all Mortgage
Loans that are 60 or more days Delinquent, in foreclosure or relating to REO
Properties as of the close of business on the last day of the related Due
Period and the denominator of which is the Pool Principal Balance as of the
close of business on the last day of such Due Period.
A Mortgage Loan is "Delinquent" if any monthly payment due thereon is
not made by the close of business on the day such monthly payment is scheduled
to be due. A Mortgage Loan is "30 days Delinquent" if such monthly payment has
not been received by the close of business on the corresponding day of the
month immediately succeeding the month in which such monthly payment was due
or, if there was no such corresponding day (e.g., as when a 30-day month
follows a 31-day month in which a payment was due on the 31st day of such
month), then on the last day of such immediately succeeding month; and
similarly for "60 days Delinquent", etc.
A "Due Period" with respect to the any Distribution Date is the
period commencing on the [second] day of the month preceding the month in
which such Distribution Date occurs and ending on the [first] day of the month
in which such Distribution Date occurs.
The "Extra Principal Distribution Amount" for any Distribution Date,
is the lesser of (x) the General Excess Available Amount for such Distribution
Date and (y) Overcollateralization Deficiency Amount for such Distribution
Date.
The "General Excess Available Amount" means with respect to each
Distribution Date is the amount, if any, by which the Available Funds for such
Distribution Date exceeds the aggregate amount distributed on such
Distribution Date pursuant to clauses (i) and (ii) under "--Allocation of
Available Funds" above (other than the Extra Principal Distribution Amount).
The "Interest Distributable Amount" for any Distribution Date and
each Class of Offered Certificates equals the sum of (i) the Monthly Interest
Distributable Amount for such Class for such Distribution Date and (ii) the
Unpaid Interest Shortfall Amount for such Class for such Distribution Date.
"Loss Reimbursement Entitlement" means, with respect to any
Distribution Date and the Class M Certificates or Class B Certificates, the
amount of Allocable Loss Amounts applied to the reduction of the Certificate
Principal Balance of such Class and not reimbursed pursuant to "--Allocation
of Available Funds" above as of such Distribution Date.
The "Monthly Interest Distributable Amount" for any Distribution Date
and each Class of Offered Certificates equals the amount of interest accrued
during the related Accrual Period at the related Pass-Through Rate on the
Certificate Principal Balance of such Class immediately prior to such
Distribution Date (or, in the case of the first Distribution Date, from the
Closing Date).
An "Overcollateralization Deficiency Amount" with respect to any
Distribution Date equals the amount, if any, by which the
Overcollateralization Target Amount exceeds the related Overcollateralized
Amount on such Distribution Date (after giving effect to distributions in
respect of the Basic Principal Distribution Amount but without giving effect
to any Allocable Loss Amounts on such Distribution Date).
"Overcollateralization Release Amount" means, with respect to any
Distribution Date on or after the Stepdown Date on which an
Overcollateralization Stepdown Trigger Event is not in effect, the lesser of
(x) the Principal Remittance Amount for such Distribution Date and (y) the
excess, if any, of (i) the Overcollateralized Amount for such Distribution
Date, assuming that 100% of the Principal Remittance Amount is applied to as a
principal payment on the Offered Certificates on such Distribution Date over
(ii) the Overcollateralization Target Amount for such Distribution Date.
The "Overcollateralization Target Amount" means with respect to (a)
any Distribution Date occurring prior to the Stepdown Date, an amount equal to
[____]% of the Pool Principal Balance as of the Cut-off Date; and (b) with
respect to any Distribution Date on or after the Stepdown Date and (A) as long
as an Overcollateralization Stepdown Trigger Event is not in effect, an amount
equal to the greater of (x) [____]% of the Pool Principal Balance as of the
end of the related Due Period and (y) approximately $[_________] or (B) for so
long as an Overcollateralization Stepdown Trigger Event is in effect, the
Overcollateralization Target Amount for the preceding Distribution Date.
The "Overcollateralized Amount" for any Distribution Date is the
amount, if any, by which (i) the Pool Principal Balance on the last day of the
immediately preceding Due Period exceeds (ii) the aggregate Certificate
Principal Balance of the Offered Certificates as of such Distribution Date
after giving effect to distributions to be made on such Certificates on such
Distribution Date.
The "Principal Distribution Amount" for any Distribution Date will
equal the sum of (i) the Basic Principal Distribution Amount and (ii) the
Extra Principal Distribution Amount for such Distribution Date.
A "Principal Prepayment" with respect to any Distribution Date is any
mortgagor payment or other recovery of principal on a Mortgage Loan that is
received in advance of its scheduled Due Date and is not accompanied by an
amount representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
The "Principal Remittance Amount" means with respect to any
Distribution Date, the sum of (i) each scheduled payment of principal
collected on the Mortgage Loans by the Master Servicer in the related Due
Period, (ii) the principal portion of all partial and full principal
prepayments of such Mortgage Loans applied by the Master Servicer during such
Due Period, (iii) the principal portion of all Net Liquidation Proceeds and
Insurance Proceeds received during such Due Period, (iv) that portion of the
Purchase Price, representing principal of any repurchased Mortgage Loan,
required to be deposited to the Collection Account during such Due Period, (v)
the principal portion of any Substitution Adjustments required to be deposited
in the Collection Account during such Due Period, and (vi) on the Distribution
Date on which the Trust Fund is to be terminated in accordance with the
Pooling and Servicing Agreement, that portion of the Termination Price, in
respect of principal.
A "Realized Loss" with respect to any defaulted Mortgage Loan that is
finally liquidated (a "Liquidated Mortgage Loan") is (i) the amount of loss
realized equal to the portion of the Principal Balance remaining unpaid after
application of all liquidation proceeds net of amounts reimbursable to the
Master Servicer for related Advances, Servicing Advances and Servicing Fees
(such amount, the "Net Liquidation Proceeds") in respect of such Mortgage Loan
and (ii) with respect to certain Mortgage Loans the principal balances or the
scheduled payments of principal and interest of which have been reduced in
connection with bankruptcy proceedings, (a) in the case of a reduction of the
principal balance of a Mortgage Loan, the amount of such principal reduction,
and (b) in the case of a reduction in the scheduled payments of principal and
interest of a Mortgage Loan, the net present value (using as the discount rate
the higher of the Loan Rate on such Mortgage Loan or the rate of interest, if
any, specified by the court in such order) of the scheduled payments as so
modified or restructured.
The "Rolling Delinquency Percentage" means, with respect to any
Distribution Date, the average of the Delinquency Percentages with respect to
the last day of each of the three immediately preceding Due Periods.
The "Senior Credit Enhancement Percentage," with respect to any
Distribution Date, is the percentage obtained by dividing (i) the sum of (a)
the aggregate of the Certificate Principal Balances of the Mezzanine
Certificates and the Class B Certificates and (b) the Overcollateralized
Amount, in each case after giving effect to the distributions of principal on
such Distribution Date, by (ii) the Pool Principal Balance as of the end of
the related Due Period.
The "Senior Specified Enhancement Percentage" on any date of
determination thereof means [_____]%.
The "Stepdown Date" means the earlier of (A) the Distribution Date on
which the Certificate Principal Balance of the Senior Certificates equals zero
and (B) the later to occur of (x) the Distribution Date in ______________ 200_
and (y) the first Distribution Date on which the Senior Credit Enhancement
Percentage (calculated for this purpose only using the Pool Principal Balance
as of the end of the related Due Period but prior to any application of
Principal Distribution Amount to the Certificates) is greater than or equal to
the Senior Specified Enhancement Percentage.
A "Trigger Event" has occurred on any Distribution Date, if the
Rolling Delinquency Percentage exceeds [__]% of the Senior Credit Enhancement
Percentage for such Distribution Date.
An "Overcollateralization Stepdown Trigger Event" means the
occurrence on any Distribution Date of either of the following: (i) the
Cumulative Loss Trigger has occurred or (ii) the Trigger Event has occurred.
The "Cumulative Loss Trigger" has occurred on a Distribution Date if
cumulative Realized Losses as of such Distribution Date exceed the percentages
of the Pool Principal Balance as of the Cut-off Date set forth below with
respect to such Distribution Date.
Percentage of
the Pool Principal
Balance as of the
Distribution Date Cut-off Date
----------------- --------------------
The "Unpaid Interest Shortfall Amount" means (i) for each Class of
Offered Certificates and the first Distribution Date, zero, and (ii) with
respect to each Class of Offered Certificates and any Distribution Date after
the first Distribution Date, the amount, if any, by which (a) the sum of (1)
the Monthly Interest Distributable Amount for such Class for the immediately
preceding Distribution Date and (2) the outstanding Unpaid Interest Shortfall
Amount, if any, for such Class for such preceding Distribution Date exceeds
(b) the aggregate amount distributed on such Class in respect of interest
pursuant to clause (a) of this definition on such preceding Distribution Date,
plus interest on the amount of interest due but not paid on the Certificates
of such Class on such preceding Distribution Date, to the extent permitted by
law, at the Pass-Through Rate for such Class for the related Accrual Period.
Pass-Through Rates
The Pass-Through Rate for the Class A, the Class M and the Class B
Certificates for a particular Distribution Date is a per annum rate equal to
[the lesser of (a) the sum of (i) One-Month LIBOR on the related LIBOR
Determination Date (as defined herein) and (ii) the related Pass-Through
Margin and (b) the Available Funds Cap]. The Pass-Through Margins for the
Class A, the Class M-1 and Class B Certificates will be equal to [___]% ([__]
basis points), [___]% ([__] basis points) and [___]% ([___] basis points),
respectively, until the first Distribution Date following the Call Option
Date, and [____]% ([___] basis points), [___]% ([___] basis points) and [___]%
([___] basis points), respectively, on and after such Distribution Date]. [As
to any Distribution Date, the "Available Funds Cap" is a rate per annum equal
to the weighted average of the Loan Rates on the Mortgage Loans outstanding as
of the first day of the related Due Period, net of [___]% in fees.]
[If on any Distribution Date, the Pass-Through Rate for any Class of
Offered Certificates is based upon the Available Funds Cap, the excess of (i)
the amount of interest such Class of Certificates would have been entitled to
receive on such Distribution Date had such Pass-Through Rate not been subject
to the Available Funds Cap, up to the Maximum Cap, over (ii) the amount of
interest such Class of Offered Certificates received on such Distribution Date
based on the Available Funds Cap, together with the unpaid portion of any such
excess from prior Distribution Dates (and interest accrued thereon at the then
applicable Pass-Through Rate on such Class of Offered Certificates, without
giving effect to the Available Funds Cap) is the "Basis Risk Shortfall Amount"
for such Class of Offered Certificates. Any Basis Risk Shortfall Amount on any
Class of Offered Certificates will be paid on future Distribution Dates from
and to the extent of funds available therefor in the Excess Reserve Fund
Account (as described herein). The ratings on the Offered Certificates do not
address the likelihood of the payment of any Basis Risk Shortfall Amount.]
The "Maximum Cap" for any Distribution Date is [___]% per annum.
Calculation of [One-Month LIBOR]
[On the second LIBOR Business Day (as defined below) preceding the
commencement of each Accrual Period following the initial Accrual Period (each
such date, a "LIBOR Determination Date"), the Trustee (except for the first
Accrual Period) will determine the London interbank offered rate for one-month
United States dollar deposits ("One-Month LIBOR") for such Accrual Period for
the Offered Certificates on the basis of the offered rates of the Reference
Banks for one-month United States dollar deposits, as such rates appear on the
Telerate Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination
Date. As used in this section, "LIBOR Business Day" means a day on which banks
are open for dealing in foreign currency and exchange in London and New York
City; "Telerate Page 3750" means the display page currently so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices); and
"Reference Banks" means leading banks selected by the Trustee and engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London, (ii) whose quotations
appear on the Telerate Page 3750 on the LIBOR Determination Date in question,
(iii) which have been designated as such by the Trustee and (iv) not
controlling, controlled by or under common control with, the Depositor, the
Master Servicer or any successor Master Servicer.
On each LIBOR Determination Date, One-Month LIBOR for the related
Accrual Period for the Offered Certificates will be established by the Trustee
as follows:
(a) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related Accrual
Period will be the arithmetic mean of such offered quotations (rounded
upwards if necessary to the nearest whole multiple of 0.0625%).
(b) If on such LIBOR Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the related
Accrual Period will be the higher of (x) One-Month LIBOR as determined on
the previous LIBOR Determination Date and (y) the Reserve Interest Rate.
The "Reserve Interest Rate" will be the rate per annum that the Trustee
determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 0.0625%) of the one-month
United States dollar lending rates which New York City banks selected by
the Trustee are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market
or (ii) in the event that the Trustee can determine no such arithmetic
mean, the lowest one-month United States dollar lending rate which New
York City banks selected by the Trustee are quoting on such LIBOR
Determination Date to leading European banks.
The establishment of One-Month LIBOR on each LIBOR Determination Date
by the Trustee and the Trustee's calculation of the rate of interest
applicable to the Offered Certificates for the related Accrual Period will (in
the absence of manifest error) be final and binding.]
Application of Allocable Loss Amounts
Following any reduction of the Overcollateralized Amount to zero, any
Allocable Loss Amounts will be applied, sequentially, in reduction of the
Certificate Principal Balances of the Class B Certificates and the Class M
Certificates, in that order, until their respective Certificate Principal
Balances have been reduced to zero. The Certificate Principal Balance of the
Class A Certificates will not be reduced by any application of Allocable Loss
Amounts. However, if the Subordinate and Mezzanine Certificates are reduced to
zero, such losses may ultimately reduce the amount of principal ultimately
paid to the holders of the Class A Certificates. The reduction of the
Certificate Principal Balance of any applicable Class of Offered Certificates
by the application of Allocable Loss Amounts entitles such Class to
reimbursement in an amount equal to the Loss Reimbursement Entitlement. Each
such Class of Offered Certificates will be entitled to receive its Loss
Reimbursement Entitlement, or any portion thereof, in accordance with the
payment priorities specified herein. Payment in respect of Loss Reimbursement
Entitlements will not reduce the Certificate Principal Balance of the related
Class or Classes.
[Excess Reserve Fund Account
The Pooling and Servicing Agreement establishes an account (the
"Excess Reserve Fund Account"), which is held in trust, as part of the Trust
Fund, by the Trustee on behalf of the Offered Certificateholders. The Excess
Reserve Fund Account will not be an asset of any REMIC. Certificateholders of
each Class of Offered Certificates in the order of their priority of payment
will be entitled to receive payments from the Excess Reserve Fund Account to
the extent of amounts on deposit therein in an amount equal to any Basis Risk
Shortfall Amount for such Class of Certificates. On the Closing Date, $[_____]
will be deposited into the Excess Reserve Fund Account. Thereafter, if the
Available Funds Cap does not exceed One-Month LIBOR by at least [____]%, the
amount to be held in the Excess Reserve Fund Account (the "Required Reserve
Amount") on any Distribution Date thereafter will equal the greater of (i)
[____]% of the outstanding Class Certificate Balance of the Offered
Certificates as of such Distribution Date and (ii) $[_____] and will be funded
from amounts otherwise to be paid to the Class OC Certificates. If the
Available Funds Cap does exceed One-Month LIBOR by [____]% or more, the
Required Reserve Amount will be $[_____]. Any distribution by the Trustee from
amounts in the Excess Reserve Fund Account shall be made on the applicable
Distribution Date.
Amounts on deposit in the Excess Reserve Fund Account in excess of
$[_____] will be released therefrom and distributed to the holders of the
Class OC Certificates on any Distribution Date on which the Available Funds
Cap exceeds One-Month LIBOR by [____]% or more.]
Reports to Certificateholders
On each Distribution Date, the Trustee will forward to each holder of
a Certificate and the Rating Agency a statement generally setting forth:
(i) the amount of the distributions, separately identified,
with respect to each Class of the Offered Certificates;
(ii) the amount of such distributions set forth in clause (i)
allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments or other unscheduled
recoveries of principal included therein;
(iii) the amount of such distributions set forth in clause (i)
allocable to interest and the calculation thereof;
(iv) the amount of any Unpaid Interest Shortfall Amount with
respect to each Class of Certificates, separately
identified;
(v) the Overcollateralization Target Amount and Overcollateralized
Amount as of such Distribution Date;
(vi) the Certificate Principal Balance of each Class of Offered
Certificates after giving effect to the distribution of
principal on such Distribution Date;
(vii) the Pool Principal Balance at the end of the related Due
Period;
(viii) the amount of the Servicing Fee paid to or retained by the
Master Servicer;
(ix) the amount of the Trustee Fee paid to the Trustee;
(x) the amount of Advances for the related Due Period;
(xi) the number and aggregate Principal Balance of Mortgage Loans
that were (A) delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 30 to 59 days, (2) 60 to 89 days and (3) 90
or more days, (B) in foreclosure and delinquent (1) 30 to 59
days, (2) 60 to 89 days and (3) 90 or more days and (C) in
bankruptcy as of the close of business on the last day of
the calendar month preceding such Distribution Date;
(xii) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan
number, the Principal Balance of such Mortgage Loan as of
the close of business on the last day of the related Due
Period and the date of acquisition thereof;
(xiii) the total number and principal balance of any REO Properties
as of the close of business on the last day of the preceding
Due Period;
(xiv) the aggregate amount of Realized Losses incurred during the
preceding calendar month;
(xv) the cumulative amount of Realized Losses;
(xvi) any Overcollateralization Deficiency Amount after giving
effect to the distribution of principal on such Distribution
Date;
(xvii) the Allocable Loss Amounts, if any, allocated to the
Mezzanine and Subordinate Certificates and the Loss
Reimbursement Entitlement owing to the Mezzanine and
Subordinate Certificates outstanding after giving effect to
distributions thereof on such Distribution Date;
(xviii) whether a Trigger Event or Overcollateralization Stepdown
Trigger Event has occurred and is continuing;
(xix) the amount of the Extra Principal Distribution Amount;
(xx) the Pass-Through Rate for the Class A, the Class M and Class
B Certificates for such Distribution Date; and
(xxi) the amount on deposit in the Excess Reserve Fund Account on
such Distribution Date and the Basis Risk Shortfall Amount
owing to each Class of Offered Certificates after giving
effect to distributions thereof on such Distribution Date.
In addition, within a reasonable period of time after the end of each
calendar year, the Trustee will prepare and deliver to each holder of a
Certificate of record during the previous calendar year a statement containing
information necessary to enable holders of the Certificates to prepare their
tax returns. Such statements will not have been examined and reported upon by
an independent public accountant.
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
The yield to maturity of the Offered Certificates, and particularly
the Subordinate Certificates, will be sensitive to defaults on the Mortgage
Loans. If a purchaser of an Offered Certificate calculates its anticipated
yield based on an assumed rate of default and amount of losses that is lower
than the default rate and amount of losses actually incurred, its actual yield
to maturity will be lower than that so calculated. Certificateholders of the
Offered Certificates may not receive reimbursement for Realized Losses in the
month following the occurrence of such losses. In general, the earlier a loss
occurs, the greater is the effect on an investor's yield to maturity. There
can be no assurance as to the delinquency, foreclosure or loss experience with
respect to the Mortgage Loans. Because the Mortgage Loans were underwritten in
accordance with standards less stringent than those generally acceptable to
FNMA and FHLMC with regard to a borrower's credit standing and repayment
ability, the risk of delinquencies with respect to, and losses on, the
Mortgage Loans will be greater than that of mortgage loans underwritten in
accordance with FNMA and FHLMC standards.
The rate of principal payments on the Offered Certificates, the
aggregate amount of distributions on the Offered Certificates and the yields
to maturity of the Offered Certificates will be related to the rate and timing
of payments of principal on the Mortgage Loans. The rate of principal payments
on the Mortgage Loans will in turn be affected by the amortization schedules
of the Mortgage Loans and by the rate of principal prepayments (including for
this purpose prepayments resulting from refinancing, liquidations of the
Mortgage Loans due to defaults, casualties or condemnations and repurchases by
the Seller or Master Servicer). [Because certain of the Mortgage Loans contain
prepayment penalties, the rate of principal payments may be less than the rate
of principal payments for mortgage loans which did not have prepayment
penalties.] The Mortgage Loans are subject to the "due-on-sale" provisions
included therein. See "The Mortgage Pool" herein.
Prepayments, liquidations and purchases of the Mortgage Loans
(including any optional purchase) will result in distributions on the Offered
Certificates of principal amounts which would otherwise be distributed over
the remaining terms of the Mortgage Loans. Since the rate of payment of
principal on the Mortgage Loans will depend on future events and a variety of
other factors, no assurance can be given as to such rate or the rate of
principal prepayments. The extent to which the yield to maturity of a Class of
Offered Certificates may vary from the anticipated yield will depend upon the
degree to which such Offered Certificate is purchased at a discount or
premium, and the degree to which the timing of payments thereon is sensitive
to prepayments, liquidations and purchases of the Mortgage Loans. Further, an
investor should consider the risk that, in the case of any Offered Certificate
purchased at a discount, a slower than anticipated rate of principal payments
(including prepayments) on the Mortgage Loans could result in an actual yield
to such investor that is lower than the anticipated yield and, in the case of
any Offered Certificate purchased at a premium, a faster than anticipated rate
of principal payments on the Mortgage Loans could result in an actual yield to
such investor that is lower than the anticipated yield.
The rate of principal payments (including prepayments) on pools of
mortgage loans may vary significantly over time and may be influenced by a
variety of economic, geographic, social and other factors, including changes
in borrowers' housing needs, job transfers, unemployment, mortgagors' net
equity in the mortgaged properties and servicing decisions. In general, if
prevailing interest rates were to fall significantly below the Loan Rates on
the Fixed Rate Mortgage Loans, such Mortgage Loans could be subject to higher
prepayment rates than if prevailing interest rates were to remain at or above
the Loan Rates on such Mortgage Loans. Conversely, if prevailing interest
rates were to rise significantly, the rate of prepayments on such Mortgage
Loans would generally be expected to decrease. As is the case with the Fixed
Rate Mortgage Loans, the Adjustable Rate Mortgage Loans may be subject to a
greater rate of principal prepayments in a low interest rate environment. For
example, if prevailing interest rates were to fall, borrowers with Adjustable
Rate Mortgage Loans may be inclined to refinance their Adjustable Rate
Mortgage Loans with a fixed rate loan to "lock in" a lower interest rate. The
existence of the applicable Periodic Rate Cap and Maximum Rate also may affect
the likelihood of prepayments resulting from refinancings. No assurances can
be given as to the rate of prepayments on the Mortgage Loans in stable or
changing interest rate environments. In addition, the delinquency and loss
experience of the Adjustable Rate Mortgage Loans may differ from that on the
Fixed Rate Mortgage Loans because the amount of the monthly payments on the
Adjustable Rate Mortgage Loans are subject to adjustment on each Adjustment
Date. [In addition, many of the Adjustable Rate Mortgage Loans will not have
their initial Adjustment Date for [__________] after the origination thereof.
The prepayment experience of the Delayed First Adjustment Mortgage Loans may
differ from that of the other Adjustable Rate Mortgage Loans. The Delayed
First Adjustment Mortgage Loans may be subject to greater rates of prepayments
as they approach their initial Adjustment Dates even if market interest rates
are only slightly higher or lower than the Loan Rates on the Delayed First
Adjustment Mortgage Loans as borrowers seek to avoid changes in their monthly
payments.]
Overcollateralization Provisions
The operation of the overcollateralization provisions of the Pooling
and Servicing Agreement will affect the weighted average lives of the Offered
Certificates and consequently the yields to maturity of such Certificates.
Unless and until the Overcollateralized Amount equals the
Overcollateralization Target Amount, the General Excess Available Spread will
be applied as distributions of principal of the Class or Classes of
Certificates then entitled to distributions of principal, thereby reducing the
weighted average lives thereof. The actual Overcollateralized Amount may
change from Distribution Date to Distribution Date producing uneven
distributions of the General Excess Available Spread. There can be no
assurance as to when or whether the Overcollateralized Amount will equal the
Overcollateralization Target Amount.
The General Excess Available Spread generally is equal to the excess
of (x) interest collected or advanced on the Mortgage Loans over (y) the sum
of required interest on the Offered Certificates plus the Trustee Fee, the
Servicing Fee Rate and, if applicable, the Excess Servicing Fee. Mortgage
Loans with higher Loan Rates will contribute more interest to the General
Excess Available Spread. Mortgage Loans with higher Loan Rates may prepay
faster than Mortgage Loans with relatively lower Loan Rates in response to a
given change in market interest rates. Any such disproportionate prepayments
of Mortgage Loans with higher Loan Rates may adversely affect the amount of
the General Excess Available Spread available to make accelerated payments of
principal of the Offered Certificates.
As a result of the interaction of the foregoing factors, the effect
of the overcollateralization provisions on the weighted average lives of the
Offered Certificates may vary significantly over time and from Class to Class.
[Additional Information
The Depositor has filed certain yield tables and other computational
materials with respect to certain Classes of the Offered Certificates with the
Commission in a report on Form 8-K and may file certain additional yield
tables and other computational materials with respect to one or more Classes
of Offered Certificates with the Commission in a report on Form 8-K. Such
tables and materials were prepared by the Underwriter at the request of
certain prospective investors, based on assumptions provided by, and
satisfying the special requirements of, such prospective investors. Such
tables and assumptions may be based on assumptions that differ from the
Structuring Assumptions. Accordingly, such tables and other materials may not
be relevant to or appropriate for investors other than those specifically
requesting them.]
Weighted Average Lives
The timing of changes in the rate of Principal Prepayments on the
Mortgage Loans may significantly affect an investor's actual yield to
maturity, even if the average rate of Principal Prepayments is consistent with
such investor's expectation. In general, the earlier a Principal Prepayment on
the Mortgage Loans occurs, the greater the effect of such Principal Prepayment
on an investor's yield to maturity. The effect on an investor's yield of
Principal Prepayments occurring at a rate higher (or lower) than the rate
anticipated by the investor during the period immediately following the
issuance of the Offered Certificates may not be offset by a subsequent like
decrease (or increase) in the rate of Principal Prepayments.
The projected weighted average life of any Class of Offered
Certificates is the average amount of time that will elapse from __________
__, 199_ (the "Closing Date") until each dollar of principal is scheduled to
be repaid to the investors in such Class of Offered Certificates. Because it
is expected that there will be prepayments and defaults on the Mortgage Loans,
the actual weighted average lives of the Classes of Offered Certificates are
expected to vary substantially from the weighted average remaining terms to
stated maturity of the Mortgage Pool as set forth herein under "The Mortgage
Pool--Mortgage Loan Statistics".
The "Assumed Final Maturity Date" for each Class of Offered
Certificates is as set forth herein under "Description of the
Certificates--General". The Assumed Final Maturity Date for each Class of
Offered Certificates is the __th Distribution Date following the Due Period in
which the Principal Balances of all the Mortgage Loans have been reduced to
zero, assuming that the Mortgage Loans pay in accordance with their terms. The
weighted average life of each Class of Offered Certificates is likely to be
shorter than would be the case if payments actually made on the Mortgage Loans
conformed to the foregoing assumptions, and the final Distribution Date with
respect to the Offered Certificates could occur significantly earlier than the
related Assumed Final Maturity Date because (i) prepayments are likely to
occur, (ii) excess cashflow, if any, will be applied as principal of the
Offered Certificates as described herein, (iii) the Overcollateralization
Target Amount is as defined herein and (iv) the Majority Residual
Interestholder or the Master Servicer may cause a termination of the Trust
Fund as provided herein.
The model used in this Prospectus Supplement (the "Prepayment
Assumption") represents an assumed rate of prepayment each month relative to
the then outstanding principal balance of a pool of mortgage loans for the
life of such mortgage loans. The Prepayment Assumption 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.
Each of the Prepayment Scenarios in the table on page S-[ _____ ]
assumes the respective percentages of the applicable Prepayment Assumption
described thereunder.
The tables on pages S-[ _____ ] through S-[ _____ ] were prepared on
the basis of the assumptions in the following paragraph and the tables set
forth below. There are certain differences between the loan characteristics
included in such assumptions and the characteristics of the actual Mortgage
Loans. Any such discrepancy may have an effect upon the percentages of
Original Certificate Principal Balances outstanding and weighted average lives
of the Offered Certificates set forth in the tables on pages S-[ _____ ]
through S-[ _____ ]. In addition, since the actual Mortgage Loans in the Trust
Fund will have characteristics that differ from those assumed in preparing the
tables set forth below, the distributions of principal of the Offered
Certificates may be made earlier or later than indicated in the tables.
The percentages and weighted average lives in the tables on pages S-[
___ ] through S-[ ___ ] were determined on the basis of the following
structuring assumptions (the "Structuring Assumptions"):
[list of structuring assumptions]
Nothing contained in the foregoing assumptions should be construed as
a representation that the Mortgage Loans will not experience delinquencies or
losses.
Based on the foregoing assumptions, the following tables indicate the
projected weighted average lives of each Class of Offered Certificates, and
set forth the percentages of the Original Certificate Principal Balance of
each such Class that would be outstanding after each of the dates shown, at
various Prepayment Scenarios.
[TABULAR INFORMATION]
USE OF PROCEEDS
The Depositor will apply the net proceeds of the sale of the Offered
Certificates against the purchase price of the Mortgage Loans transferred to
the Trust Fund.
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The Pooling and Servicing Agreement provides that the Trust Fund[,
exclusive of the assets held in the Excess Reserve Fund Account, ]will
comprise [several Subsidiary REMICs and] a [Master] REMIC organized in a
[tiered] "real estate mortgage investment conduit" ("REMIC") structure. [Each
Subsidiary REMIC will issue uncertificated regular interests and those
interests will be held entirely by the REMIC immediately above it in the
tiered structure. Each of the Subsidiary REMICs and] the [Master] REMIC will
designate a single class of interests as the residual interest in that REMIC.
The Class R Certificates will represent ownership of the residual interests in
[each of] the REMIC[s]. Election[s] will be made to treat [each Subsidiary
REMIC and] the [Master] REMIC as a REMIC for federal income tax purposes.
Each Class of Offered Certificates will represent beneficial
ownership of regular interests issued by the [Master] REMIC. [In addition,
each of the Offered Certificates will represent a beneficial interest in the
right to receive payments from the Excess Reserve Fund Account.]
Upon the issuance of the Offered Certificates, Brown & Wood LLP ("Tax
Counsel"), will deliver its opinion concluding, assuming compliance with the
Pooling and Servicing Agreement, that for federal income tax purposes [each
Subsidiary REMIC and] the [Master] REMIC will qualify as a REMIC within the
meaning of section 860D of the Internal Revenue Code of 1986, as amended (the
"Code"). [In addition, Tax Counsel will deliver an opinion concluding that the
Excess Reserve Fund Account is an "outside reserve fund" that is beneficially
owned by the Certificateholders of the Class [__] Certificates]. [Moreover,
Tax Counsel will deliver an opinion concluding that the rights of the
Certificateholders of the Offered Certificates to receive payments from the
Excess Reserve Fund Account represent, for federal income tax purposes,
interests in an interest rate cap contract.]
Taxation of Regular Interests
A Certificateholder of a Class of Offered Certificates will be
treated for federal income tax purposes as owning an interest in regular
interests in the [Master] REMIC
Upon the sale, exchange, or other disposition of an Offered
Certificate, assuming that an Offered Certificate is held as a "capital asset"
within the meaning of section 1221 of the Code, gain or loss on the
disposition of an Offered Certificate should, subject to the limitation
described below, be capital gain or loss. However, gain attributable to an
Offered Certificate will be treated as ordinary income to the extent such gain
does not exceed the excess, if any, of (i) the amount that would have been
includible in the Certificateholder's gross income with respect to the regular
interest component had income thereon accrued at a rate equal to 110% of the
applicable federal rate as defined in section 1274(d) of the Code determined
as of the date of purchase of the Offered Certificate over (ii) the amount
actually included in such Certificateholder's income.
Interest on a REMIC regular interest must be included in income by a
Certificateholder under the accrual method of accounting, regardless of the
Certificateholder's regular method of accounting. In addition, a regular
interest could be considered to have been issued with original issue discount
("OID"). See "Certain Federal Income Tax Considerations --REMIC
Certificates--Regular Certificates--Original Issue Discount and Premium" in
the Prospectus. The prepayment assumption that will be used to in determining
the accrual of any OID, market discount, or bond premium, if any, will equal
the rate described above under "Yield, Prepayment and Maturity
Considerations--Weighted Average Lives" for Scenario [___]. No representation
is made that the Mortgage Loans will prepay at such a rate or at any other
rate. OID must be included in income as it accrues on a constant yield method,
regardless of whether the Certificateholder receives currently the cash
attributable to such OID.
Status of the Offered Certificates
The regular interest component of the Offered Certificates will be
treated as assets described in section 7701(a)(19)(C) of the Code, and as
"real estate assets" under section 856(c)(5)(B) of the Code, generally, in the
same proportion that the assets of the Trust Fund[, exclusive of the Excess
Reserve Fund Account,] would be so treated. In addition, to the extent a
regular interest represents real estate assets under section 856(c)(5)(B) of
the Code, the interest derived from that component would be interest on
obligations secured by interests in real property for purposes of section
856(c)(3) of the Code.
Non-U.S. Persons
Interest paid to or accrued by a Certificateholder who is a Non-U.S.
Person will be considered "portfolio interest", and will not be subject to
U.S. federal income tax and withholding tax, if the interest is not
effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Person and the Non-U.S. Person (i) is not
actually or constructively a "10 percent shareholder" of the Trust Fund or a
"controlled foreign corporation" with respect to which the Trust Fund is a
"related person" within the meaning of the Code and (ii) provides the Trust
Fund or other person who is otherwise required to withhold U.S. tax with
respect to the Offered Certificates with an appropriate statement (on Form W-8
or a similar form), signed under penalties of perjury, certifying that the
beneficial owner of the Offered Certificate is a Non-U.S. Person and providing
the Non-U.S. Person's name and address. If an Offered Certificate is held
through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8 or substitute form provided by the
Non-U.S. Person that owns the Certificate.
Any capital gain realized on the sale, redemption, retirement or
other taxable disposition of an Offered Certificate by a Non-U.S. Person will
be exempt from United States federal income and withholding tax, provided that
(i) such gain is not effectively connected with the conduct of a trade or
business in the United States by the Non-U.S. Person and (ii) in the case of
an individual, the individual is not present in the United States for 183 days
or more in the taxable year.
For purposes of the foregoing discussion, the term "Non-U.S. Person"
means any person other than (i) a citizen or resident of the United States;
(ii) a corporation (or entity treated as a corporation for tax purposes)
created or organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia; (iii) a partnership (or entity treated as a partnership for tax
purposes) organized in the United States or under the laws of the United
States or of any state thereof, including, for this purpose, the District of
Columbia (unless provided otherwise by future Treasury regulations); (iv) an
estate whose income is includible in gross income for United States income tax
purposes regardless of its source; or (v) a trust, if a court within the
United States is able to exercise primary supervision over the administration
of the trust and one or more U.S. Persons have authority to control all
substantial decisions of the trust. Notwithstanding the last clause of the
preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as U.S. Persons prior to
such date, may elect to continue to be U.S. Persons.
Prohibited Transactions Tax and Other Taxes
The Code imposes a tax on REMICs equal to 100% of the net income
derived from "prohibited transactions" (the "Prohibited Transactions Tax"). In
general, subject to certain specified exceptions, a prohibited transaction
means the disposition of a Mortgage Loan, the receipt of income from a source
other than a Mortgage Loan or certain other permitted investments, the receipt
of compensation for services, or gain from the disposition of an asset
purchased with the payments on the Mortgage Loans for temporary investment
pending distribution on the Certificates. It is not anticipated that the Trust
Fund will engage in any prohibited transactions in which it would recognize a
material amount of net income.
In addition, certain contributions to a trust fund that elects to be
treated as a REMIC made after the day on which such trust fund issues all of
its interests could result in the imposition of a tax on the trust fund equal
to 100% of the value of the contributed property (the "Contributions Tax").
The Trust Fund will not accept contributions that would subject it to such
tax.
In addition, a trust fund that elects to be treated as a REMIC may
also be subject to federal income tax at the highest corporate rate on "net
income from foreclosure property," determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property other
than qualifying rents and other qualifying income for a real estate investment
trust. It is not anticipated that the Trust Fund will recognize net income
from foreclosure property subject to federal income tax.
Backup Withholding
Certain Certificate Owners may be subject to backup withholding at
the rate of 31% with respect to interest paid on the Offered Certificates if
the Certificate Owners, upon issuance, fail to supply the Trustee or their
broker with their taxpayer identification number, furnish an incorrect
taxpayer identification number, fail to report interest, dividends, or other
"reportable payments" (as defined in the Code) properly, or, under certain
circumstances, fail to provide the Trustee or their broker with a certified
statement, under penalty of perjury, that they are not subject to backup
withholding.
The Trustee will be required to report annually to the Internal
Revenue Service (the "IRS"), and to each Certificateholder of record, the
amount of interest paid (and OID accrued, if any) on the Offered Certificates
(and the amount of interest withheld for federal income taxes, if any) for
each calendar year, except as to exempt holders (generally, holders that are
corporations, certain tax-exempt organizations or nonresident aliens who
provide certification as to their status as nonresidents). As long as the only
holder of record of a Class of Offered Certificates is Cede, as nominee of
DTC, the IRS and Certificate Owners of such Class will receive tax and other
information, including the amount of interest paid on such Certificates owned,
from Participants and Financial Intermediaries rather than from the Trustee.
(The Trustee, however, will respond to requests for necessary information to
enable Participants, Financial Intermediaries and certain other persons to
complete their reports.) Each non-exempt Certificate Owner will be required to
provide, under penalty of perjury, a certificate on IRS form W-9 containing
his or her name, address, correct federal taxpayer identification number and a
statement that he or she is not subject to backup withholding. Should a
nonexempt Certificate Owner fail to provide the required certification, the
Participants or Financial Intermediaries (or the Paying Agent) will be
required to withhold 31% of the interest (and principal) otherwise payable to
the holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
Such amounts will be deemed distributed to the affected Certificate
Owner for all purposes of the related Certificates and the Pooling and
Servicing Agreement.
STATE TAXES
The Depositor makes no representations regarding the tax consequences
of purchase, ownership or disposition of the Offered Certificates under the
tax laws of any state. Investors considering an investment in the Offered
Certificates should consult their own tax advisors regarding such tax
consequences.
All investors should consult their own tax advisors regarding the
federal, state, local or foreign income tax consequences of the purchase,
ownership and disposition of the Offered Certificates.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), prohibits "parties in interest" with respect to an
employee benefit plan subject to ERISA and/or a plan or other arrangement
subject to the excise tax provisions set forth under section 4975 of the Code
(each of the foregoing, a "Plan") from engaging in certain transactions
involving such Plan and its assets unless a statutory, regulatory or
administrative exemption applies to the transaction. section 4975 of the Code
imposes certain excise taxes on prohibited transactions involving plans
described under that section; ERISA authorizes the imposition of civil
penalties for prohibited transactions involving plans not covered under
section 4975 of the Code. Any Plan fiduciary which proposes to cause a Plan to
acquire any of the Offered Certificates should consult with its counsel with
respect to the potential consequences under ERISA and the Code of the Plan's
acquisition and ownership of such Certificates. See "ERISA Considerations" in
the Prospectus.
Certain employee benefit plans, including governmental plans and
certain church plans, are not subject to ERISA's requirements. Accordingly,
assets of such plans may be invested in the Offered Certificates without
regard to the ERISA considerations described herein and in the Prospectus,
subject to the provisions of other applicable federal and state law. Any such
plan which is qualified and exempt from taxation under sections 401(a) and
501(a) of the Code may nonetheless be subject to the prohibited transaction
rules set forth in section 503 of the Code.
Except as noted above, investments by Plans are subject to ERISA's
general fiduciary requirements, including the requirement of investment
prudence and diversification and the requirement that a Plan's investments be
made in accordance with the documents governing the Plan. A fiduciary which
decides to invest the assets of a Plan in the Offered Certificates should
consider, among other factors, the extreme sensitivity of the investments to
the rate of principal payments (including prepayments) on the Mortgage Loans.
The U.S. Department of Labor (the "DOL") has granted to Greenwich
Capital Markets, Inc. an administrative exemption (Prohibited Transaction
Exemption 90-59; Exemption Application No. D-8374) (the "Exemption") from
certain of the prohibited transaction rules of ERISA and the related excise
tax provisions of Section 4975 of the Code with respect to the initial
purchase, the holding and the subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements of the Exemption. The
Exemption applies to mortgage loans such as the Mortgage Loans in the Trust
Fund.
Among the conditions that must be satisfied for the Exemption to
apply are the following:
(1) the acquisition of the certificates by a Plan is on terms
(including the price for the certificates) that are at least as favorable to
the Plan as they would be in an arm's length transaction with an unrelated
party;
(2) the rights and interest evidenced by the certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust fund;
(3) the certificates acquired by the Plan have received a rating at
the time of such acquisition that is one of the three highest generic rating
categories from Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Credit Rating Co. ("DCR") or Fitch IBCA, Inc. ("Fitch" and, together with S&P,
Moody's and DCR, the "Exemption Rating Agencies");
(4) the trustee must not be an affiliate of any other member of the
Restricted Group (as defined below);
(5) the sum of all payments made to and retained by the underwriters
in connection with the distribution of the certificates represents not more
than reasonable compensation for underwriting the certificates; the sum of all
payments made to and retained by the seller pursuant to the assignment of the
loans to the trust fund represents not more than the fair market value of such
loans; the sum of all payments made to and retained by the servicer and any
other servicer represents not more than reasonable compensation for such
person's services under the agreement pursuant to which the loans are pooled
and reimbursements of such person's reasonable expenses in connection
therewith; and
(6) the Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Securities and
Exchange Commission under the Securities Act of 1933.
The trust fund must also meet the following requirements:
(i) the corpus of the trust fund must consist solely of assets of the
type that have been included in other investment pools;
(ii) certificates in such other investment pools must have been rated
in one of the three highest generic rating categories by an Exception
Rating Agency for at least one year prior to the Plan's acquisition of
certificates; and
(iii) certificates evidencing interests in such other investment
pools must have been purchased by investors other than Plans for at least
one year prior to any Plan's acquisition of certificates.
Moreover, the Exemption provides relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when
the Plan fiduciary causes a Plan to acquire certificates in a trust as to
which the fiduciary (or its affiliate) is an obligor on the receivables held
in the trust provided that, among other requirements, (i) in the case of an
acquisition in connection with the initial issuance of certificates, at least
fifty percent (50%) of each class of certificates in which Plans have invested
is acquired by persons independent of the Restricted Group; (ii) such
fiduciary (or its affiliate) is an obligor with respect to five percent (5%)
or less of the fair market value of the obligations contained in the trust;
(iii) the Plan's investment in certificates of any class does not exceed
twenty-five percent (25%) of all of the certificates of that class outstanding
at the time of the acquisition; and (iv) immediately after the acquisition, no
more than twenty-five percent (25%) of the assets of any Plan with respect to
which such person is a fiduciary are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the same
entity. The Exemption does not apply to Plans sponsored by the Underwriter,
the Trustee, the Master Servicer, any obligor with respect to Mortgage Loans
included in the Trust Fund constituting more than five percent of the
aggregate unamortized principal balance of the assets in the Trust Fund, or
any affiliate of such parties (the "Restricted Group").
It is expected that the Exemption will apply to the acquisition and
holding by Plans of the Senior Certificates and that all conditions of the
Exemption other than those within the control of the investors will be met.
Because the characteristics of the Class M and the Class B
Certificates may not meet the requirements of PTCE 83-1, the Exemption or any
other issued exemption under ERISA, the purchase and holding of Class M and
Class B Certificates by a Plan or by individual retirement accounts or other
plans subject to section 4975 of the Code may result in prohibited
transactions or the imposition of excise taxes or civil penalties.
Consequently, initial acquisitions and transfers of the Class M and Class B
Certificates will not be registered by the Trustee unless the Trustee
receives: (i) a representation from the acquiror or transferee of such
Certificate, to the effect that such transferee is not an employee benefit
plan subject to section 406 of ERISA or a plan or arrangement subject to
section 4975 of the Code, nor a person acting on behalf of any such plan or
arrangement nor using the assets of any such plan or arrangement to effect
such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general
account" (as such term is defined in Section V(e) of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and holding of
such Certificates are covered under PTCE 95-60. Such representation as
described above shall be deemed to have been made to the Trustee by the
acquiror or transferee's acceptance of a Class M or Class B Certificate. In
the event that such representation is violated, such attempted transfer or
acquisition shall be void and of no effect.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of PTCE 83-1
described in the Prospectus and the Exemption, and the potential consequences
in their specific circumstances, prior to making an investment in the Offered
Certificates. Moreover, each Plan fiduciary should determine whether under the
general fiduciary standards of investment prudence and diversification, an
investment in the Offered Certificates is appropriate for the Plan, taking
into account the overall investment policy of the Plan and the composition of
the Plan's investment portfolio.
LEGAL INVESTMENT CONSIDERATIONS
The Class A Certificates and the Class M Certificates will constitute
"mortgage related securities" for the purposes of the Secondary Mortgage
Market Enhancement Act of 1984 ("SMMEA") so long as they are rated in one of
the two highest rating categories by at least one nationally recognized
statistical rating organization and, as such, are legal investments for
certain entities to the extent provided for in SMMEA. The Class B Certificates
will not constitute "mortgage related securities" under SMMEA. Accordingly,
many institutions with legal authority to invest in "mortgage related
securities" may not be legally authorized to invest in the Class B
Certificates.
There may be restrictions on the ability of certain investors,
including depository institutions, either to purchase the Certificates or to
purchase Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors. See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, between the Depositor and the Underwriter (an affiliate of the
Depositor), the Depositor has agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase from the Depositor, the Offered
Certificates.
Distribution of the Offered Certificates will be made by the
Underwriter from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. The Underwriter may
effect such transactions by selling Offered Certificates to or through dealers
and such dealers may receive from the Underwriter, for which they act as
agent, compensation in the form of underwriting discounts, concessions or
commissions. The Underwriter and any dealers that participate with the
Underwriter in the distribution of such Offered Certificates may be deemed to
be underwriters, and any discounts, commissions or concessions received by
them, and any profits on resale of the Certificates purchased by them, may be
deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended (the "Act").
The Depositor has been advised by the Underwriter that it intends to
make a market in the Offered Certificates but has no obligation to do so.
There can be no assurance that a secondary market for the Offered Certificates
will develop or, if it does develop, that it will continue.
The Depositor has agreed to indemnify the Underwriter against, or
make contributions to the Underwriter with respect to, certain liabilities,
including liabilities under the Act.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Offered
Certificates will be passed upon for the Depositor and for the Underwriter by
Brown & Wood LLP, New York, New York.
RATINGS
It is a condition to the issuance of the Offered Certificates that
(i) the Class A Certificates be rated "___" by __________ and ______ (each, a
"Rating Agency"" and, together, the "Rating Agencies"), (ii) the M
Certificates be rated "__" by ___ and "___" by _______, and the Class B
Certificates be rated "___" by ___ .
The ratings assigned by the Rating Agencies to mortgage pass-through
certificates address the likelihood of the receipt of all distributions on the
mortgage loans by the related certificateholders under the agreements pursuant
to which such certificates are issued. The Rating Agencies' ratings take into
consideration the credit quality of the related mortgage pool, including any
credit support providers, structural and legal aspects associated with such
certificates, and the extent to which the payment stream on the mortgage pool
is adequate to make the payments required by such certificates. The Rating
Agencies' ratings on such certificates do not, however, constitute a statement
regarding frequency of prepayments of the mortgage loans.
The ratings on the Offered Certificates address the likelihood of the
receipt by the holders of the Offered Certificates of all distributions on the
Mortgage Loans to which they are entitled. The ratings on the Offered
Certificates also address the structural, legal and issuer-related aspects of
the Offered Certificates, including the nature of the Mortgage Loans. In
general, the ratings on the Offered Certificates address credit risk and not
prepayment risk. The ratings on the Offered Certificates do not represent any
assessment of the likelihood that principal prepayments of the Mortgage Loans
will be made by borrowers or the degree to which the rate of such prepayments
might differ from that originally anticipated. [The ratings on the Offered
Certificates do not address the likelihood of the payment of any Basis Risk
Shortfall Amount.] As a result, the initial ratings assigned to the Offered
Certificates do not address the possibility that holders of the Offered
Certificates might suffer a lower than anticipated yield in the event of
principal payments on the Offered Certificates resulting from rapid
prepayments of the Mortgage Loans or the application of the General Excess
Available Amount as described herein, or in the event that the Trust Fund is
terminated prior to the Assumed Final Maturity Date of the Classes of Offered
Certificates.
The Depositor has not engaged any rating agency other than the Rating
Agencies to provide ratings on the Offered Certificates. However, there can be
no assurance as to whether any other rating agency will rate the Offered
Certificates, or, if it does, what rating would be assigned by any such other
rating agency. Any rating on the Certificates by another rating agency, if
assigned at all, may be lower than the ratings assigned to the Offered
Certificates by the Rating Agencies.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating. In the event that the ratings
initially assigned to any of the Offered Certificates by the Rating Agencies
are subsequently lowered for any reason, no person or entity is obligated to
provide any additional support or credit enhancement with respect to such
Offered Certificates.
INDEX OF DEFINED TERMS
Accrual Period...........................................................49
Act......................................................................70
Adjustable Rate Mortgage Loans...........................................16
Adjustment Date..........................................................24
Advance..................................................................36
Allocable Loss Amount....................................................49
Assumed Final Maturity Date..............................................61
Available Funds..........................................................47
Available Funds Cap......................................................54
Balloon Loan.............................................................17
Balloon Payment..........................................................17
Basic Principal Distribution Amount......................................49
Basis Risk Shortfall Amount..............................................54
Beneficial Owner.........................................................42
Book-Entry Certificates..................................................41
Call Option Date.........................................................49
Cede.....................................................................41
Cedel....................................................................41
Cedel Participants.......................................................44
Certificate Owners.......................................................41
Certificate Principal Balance............................................49
Certificateholder........................................................42
Certificates.............................................................41
Class A Principal Distribution Amount....................................49
Class B Principal Distribution Amount....................................50
Class M Principal Distribution Amount....................................50
Closing Date.............................................................61
Code.....................................................................63
Collection Account.......................................................35
Compensating Interest....................................................38
Contributions Tax........................................................65
Cooperative..............................................................44
Cumulative Loss Trigger..................................................53
Cut-off Date.............................................................16
Cut-off Date Principal Balance...........................................16
DCR......................................................................67
Defective Mortgage Loans.................................................35
Definitive Certificate...................................................42
Delayed First Adjustment Mortgage Loan...................................17
Delinquency Percentage...................................................50
Delinquent...............................................................51
Depositor................................................................16
Determination Date.......................................................38
Distribution Account.....................................................35
Distribution Date........................................................41
DOL......................................................................67
DTC...................................................................41, 1
Due Date.................................................................17
Due Period...............................................................51
Eligible Account.........................................................36
Eligible Substitute Mortgage Loan........................................34
ERISA....................................................................66
Euroclear Operator.......................................................44
Euroclear Participants...................................................44
European Depositaries....................................................42
Excess Reserve Fund Account..............................................56
Excess Servicing Fee.....................................................38
Exemption................................................................67
Exemption Rating Agencies................................................67
Extra Principal Distribution Amount......................................51
FICO.....................................................................30
Financial Intermediary...................................................42
Fitch....................................................................67
Fixed Rate Mortgage Loans................................................16
Foreclosure Ratio........................................................32
General Excess Available Amount..........................................51
Global Securities.........................................................1
Gross Margin.............................................................24
Index....................................................................16
Interest Distributable Amount............................................51
IRS......................................................................65
LIBOR Business Day.......................................................55
LIBOR Determination Date.................................................55
Liquidated Mortgage Loan.................................................53
Loss Reimbursement Entitlement...........................................51
Maximum Cap..............................................................55
Maximum Loan Rate........................................................24
Mezzanine Certificates...................................................41
Minimum Loan Rate........................................................24
Monthly Interest Distributable Amount....................................51
Moody's..................................................................67
Mortgage.................................................................17
Mortgage Loan Schedule...................................................33
Mortgage Loans...........................................................16
Mortgage Pool............................................................16
Mortgage Rates...........................................................16
Mortgaged Property.......................................................16
Net Gains/(Losses).......................................................32
Net income from foreclosure property.....................................65
Net Liquidation Proceeds.................................................53
Non-U.S. Person..........................................................64
Offered Certificates.....................................................41
OID......................................................................63
One-Month LIBOR..........................................................55
Original Certificate Principal Balance...................................49
Overcollateralization Deficiency Amount..................................51
Overcollateralization Release Amount.....................................52
Overcollateralization Stepdown Trigger Event.............................53
Overcollateralization Target Amount......................................52
Overcollateralized Amount................................................52
Pass-Through Margin......................................................54
Pass-Through Rate........................................................54
Periodic Rate Cap........................................................24
Plan.....................................................................66
Pooling and Servicing Agreement..........................................33
Prepayment Assumption....................................................61
Prepayment Interest Shortfall............................................38
Prepayment Period........................................................47
Principal Distribution Amount............................................52
Principal Prepayment.....................................................52
Principal Remittance Amount..............................................52
Prohibited Transactions Tax..............................................65
PTCE 95-60...............................................................69
Purchase Price...........................................................34
Rating Agencies..........................................................70
Rating Agency............................................................70
Realized Loss............................................................53
Record Date..............................................................41
Reference Banks..........................................................55
Related Documents........................................................33
Relevant Depositary......................................................42
Relief Act...............................................................37
REMIC....................................................................62
Required Reserve Amount..................................................56
Reserve Interest Rate....................................................55
Residual Certificates....................................................41
Restricted Group.........................................................68
Rolling Delinquency Percentage...........................................53
Rules....................................................................42
S&P......................................................................67
Seller...................................................................30
Senior Certificates......................................................41
Senior Credit Enhancement Percentage.....................................53
Senior Specified Enhancement Percentage..................................53
Servicing Advance........................................................37
Servicing Fee............................................................38
Servicing Fee Rate.......................................................38
SMMEA....................................................................69
Stepdown Date............................................................53
Structuring Assumptions..................................................62
Subordinate Certificates.................................................41
Substitution Adjustment..................................................34
Tax Counsel..............................................................63
Telerate Page 3750.......................................................55
Terms and Conditions.....................................................45
the......................................................................16
Total Portfolio..........................................................32
Trigger Event............................................................53
Trust Fund...............................................................16
Trustee..................................................................37
Trustee Fee..............................................................37
U.S. Person...............................................................5
Unpaid Interest Shortfall Amount.........................................54
Voting Rights............................................................38
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
[____________________] Certificates (the "Global Securities") will be
available only in book-entry form. Investors in the Global Securities may hold
such Global Securities through [any] of The Depository Trust Company ("DTC"),
[Cedel or Euroclear]. The Global Securities will be tradable as home market
instruments in [both] the [European and] U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
[Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).]
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
[Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedel
and Euroclear (in such capacity) and as DTC Participants.]
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. [As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.]
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to conventional eurobonds, except
that there will be no temporary global security and no "lock-up" or restricted
period. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
[Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no `lock-up' or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.]
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to prior
mortgage loan asset backed certificates issues in same-day funds.
[Trading between Cedel and/or Euroclear Participants. Secondary
market trading between Cedel Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a Cedel Participant or a Euroclear Participant, the
purchaser will send instructions to Cedel or Euroclear through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. Cedel or Euroclear will instruct the respective Depositary, as the
case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date, on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following
month. Payment will then be made by the respective Depositary of the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be system and by the
clearing system, in accordance with its usual procedures, to the Cedel
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade
fails), the Cedel or Euroclear cash debt will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of
credit to them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited
to their accounts. However, interest on the Global Securities would accrue
from the value date. Therefore, in many cases the investment income on the
Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will
depend on each Cedel Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Securities to the respective European Depositary for the benefit of Cedel
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two
DTC Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the Global Securities to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment to and excluding the settlement date on
the basis of the actual number of days in such accrual period and a year
assumed to consist of 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The payment will then be reflected in the account of the
Cedel Participant or Euroclear Participant the following day, and receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Cedel Participant or
Euroclear Participant have a line of credit with its respective clearing
system and elect to be in debt in anticipation of receipt of the sale proceeds
in its account, the back-valuation will extinguish any overdraft incurred over
that one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would instead be valued as of
the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day
(until the purchase side of the day trade is reflected in their Cedel
or Euroclear accounts) in accordance with the clearing system's
customary procedures;
(b) borrowing the Global Securities in the U.S. from
a DTC Participant no later than one day prior to settlement, which
would give the Global Securities sufficient time to be reflected in
their Cedel or Euroclear account in order to settle the sale side of
the trade; or
(c) staggering the value dates for the buy and sell
sides of the trade so that the value date for the purchase from the
DTC Participant is at least one day prior to the value date for the
sale to the Cedel Participant or Euroclear Participant.]
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities [through
Cedel or Euroclear] (or through DTC if the holder has an address outside the
U.S.[)] will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank with
a U.S. branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing
in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty
provides only for a reduced rate, withholding tax will be imposed at that rate
unless the filer alternatively files Form W-8. Form 1001 may be filed by the
Certificate Owners or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a
corporation or partnership for United States federal income tax purposes
organized in or under the laws of the United States or any state thereof or
the District of Columbia or (iii) an estate the income of which is includible
in gross income for United States tax purposes, regardless of its source, or
(iv) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have authority to control all substantial decisions of the trust. This
summary does not deal with all aspects of U.S. Federal income tax withholding
that may be relevant to foreign holders of the Global Securities. Investors
are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
<TABLE>
<CAPTION>
<S> <C>
================================================================================ ===================================================
You should rely only on the information contained or incorporated
by reference in this prospectus supplement and the accompanying $[ ]
prospectus. We have not authorized anyone to provide you with --------------------
different information. We are not offering the certificates in (Approximate)
any state where the offer is not permitted.
Dealers will deliver a prospectus supplement and prospectus when Mortgage Backed Certificates
acting as underwriters of the certificates and with respect to Series 199 -
their unsold allotments or subscriptions. In addition, all - -
dealers selling the certificates will be required to deliver a
prospectus supplement and prospectus until [________ __, 199__.
------------------------- $____ Class A
[Variable Pass-Through Rate]
[$____ Class M
TABLE OF CONTENTS [Variable Pass-Through Rate]
PAGE
PROSPECTUS SUPPLEMENT [$_____Class B
[Variable Pass-Through Rate]
Table of Contents...........................................S-2
Summary of Terms............................................S-3
Risk Factors................................................S-8
The Mortgage Pool...........................................S-15 GREENWICH CAPITAL ACCEPTANCE, INC.
Underwriting Standards......................................S-28 (Depositor)
The Master Servicer.........................................S-29
The Pooling and Servicing Agreement.........................S-31 [ ]
Description of the Certificates.............................S-38 --------------------------
Yield, Prepayment and Maturity Considerations...............S-55 Seller and Master Servicer
Use of Proceeds.............................................S-68
Certain Material Federal Income Tax Consequences............S-59
State Taxes.................................................S-62
ERISA Considerations........................................S-62 GREENWICH CAPITAL
Legal Investment Considerations.............................S-65 MARKETS, INC.
Method of Distribution......................................S-65
Legal Matters...............................................S-66
Ratings.....................................................S-66
Index of Defined Terms......................................S-68
Annex I.....................................................A-1
PROSPECTUS SUPPLEMENT
PROSPECTUS [ , 199_]
Table of Contents............................................2
Important Notice about Information in this Prospectus
and Each Accompanying Prospectus Supplement................4
Risk Factors.................................................5
The Trust Fund..............................................12
Use of Proceeds.............................................22
The Depositor...............................................22
Mortgage Loan Program.......................................23
Description of the Certificates.............................25
Credit Enhancement..........................................31
Yield and Prepayment Considerations.........................38
Pooling and Servicing Agreement.............................39
Certain Legal Aspects of the Loans..........................50
Certain Federal Income Tax Consequences.....................86
State Tax Considerations....................................84
ERISA Considerations........................................84
Legal Investment............................................87
Method of Distribution......................................88
Legal Matters...............................................88
Financial Information.......................................89
Available Information.......................................89
Rating......................................................89
Index of Defined Terms......................................90
================================================================================ ===================================================
</TABLE>
EXHIBIT 5.1
November 13, 1998
Greenwich Capital Acceptance, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Greenwich Capital Acceptance, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Greenwich Capital Acceptance, Inc., a
Delaware corporation (the "Company"), in connection with the preparation of
the registration statement on Form S-3 (the "Registration Statement") relating
to the Certificates (defined below) and with the authorization and issuance
from time to time in one or more series (each, a "Series") of up to
$857,094,400 aggregate principal amount of mortgage pass-through certificates
(the "Certificates"). As set forth in the Registration Statement, each Series
of Certificates will be issued under and pursuant to the terms of a separate
pooling and servicing agreement, master pooling and servicing agreement,
pooling agreement or trust agreement (each, an "Agreement") among the Company,
a trustee (the "Trustee") and, where appropriate, a servicer (the "Servicer"),
each to be identified in the prospectus supplement for such Series of
Certificates.
We have examined copies of the Company's Restated Certificate of
Incorporation, the Company's By-laws and forms of each Agreement, as filed or
incorporated by reference as exhibits to the Registration Statement, and the
forms of Certificates included in any Agreement so filed or incorporated by
reference in the Registration Statement and such other records, documents and
statutes as we have deemed necessary for purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. When any Agreement relating to a Series of Certificates
has been duly and validly authorized by all necessary action on the part of
the Company and has been duly executed and delivered by the Company, the
Servicer, if any, the Trustee and any other party thereto, such Agreement will
constitute a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency or other laws relating to or
affecting creditors' rights generally or by general equity principles.
2. When a Series of Certificates has been duly authorized by
all necessary action on the part of the Company (subject to the terms thereof
being otherwise in compliance with applicable law at such time), duly executed
and authenticated by the Trustee for such Series in accordance with the terms
of the related Agreement and issued and delivered against payment therefor as
described in the Registration Statement, such Series of Certificates will be
legally and validly issued, fully paid and nonassessable, and the holders
thereof will be entitled to the benefits of the related Agreement.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the laws of the State of New York
(excluding choice of law principles therein) and the federal laws of the
United States of America.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Matters" in each Prospectus forming a part of the Registration
Statement, without admitting that we are "experts" within the meaning of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Commission issued thereunder, with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 8.1
November 13, 1998
Greenwich Capital Acceptance, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Greenwich Capital Acceptance, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special tax counsel for Greenwich Capital
Acceptance, Inc., a Delaware corporation (the "Company"), in connection with
the preparation of the registration statement on Form S-3 (the "Registration
Statement") relating to the Certificates (defined below) and with the
authorization and issuance from time to time in one or more series (each, a
"Series") of up to $857,094,400 aggregate principal amount of mortgage
pass-through certificates (the "Certificates"). The Registration Statement is
being filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended. As set forth in the Registration Statement, each
Series of Certificates will be issued under and pursuant to the terms of a
separate pooling and servicing agreement, master pooling and servicing
agreement, pooling agreement or trust agreement (each an "Agreement") among
the Company, a trustee (the "Trustee") and, where appropriate, a servicer (the
"Servicer"), each to be identified in the prospectus supplement for such
Series of Certificates.
We have examined the prospectus and forms of prospectus supplement
related thereto contained in the Registration Statement (each, a "Prospectus")
and such other documents, records and instruments as we have deemed necessary
for the purposes of this opinion.
In arriving at the opinion expressed below, we have assumed that each
Agreement will be duly authorized by all necessary corporate action on the
part of the Company, the Trustee, the Servicer (where applicable) and any
other party thereto for such Series of Certificates and will be duly executed
and delivered by the Company, the Trustee, the Servicer and any other party
thereto substantially in the applicable form filed or incorporated by
reference as an exhibit to the Registration Statement, that each Series of
Certificates will be duly executed and delivered in substantially the forms
set forth in the related Agreement filed or incorporated by reference as an
exhibit to the Registration Statement, and that Certificates will be sold as
described in the Registration Statement.
As special tax counsel to the Company, we have advised the Company
with respect to certain material federal income tax aspects of the proposed
issuance of each Series of Certificates pursuant to the related Agreement.
Such advice has formed the basis for the description of selected federal
income tax consequences for holders of such Certificates that appear under the
headings "Certain Federal Income Tax Consequences" in each Prospectus forming
a part of the Registration Statement. Such description does not purport to
discuss all possible federal income tax ramifications of the proposed issuance
of the Certificates, but with respect to those federal income tax consequences
described therein, such description is accurate in all material respects.
This opinion is based on the facts and circumstances set forth in the
Registration Statement and in the other documents reviewed by us. Our opinion
as to the matters set forth herein could change with respect to a particular
Series of Certificates as a result of changes in facts or circumstances,
changes in the terms of the documents reviewed by us, or changes in the law
subsequent to the date hereof. Because the Prospectuses contemplate Series of
Certificates with numerous different characteristics, you should be aware that
the particular characteristics of each Series of Certificates must be
considered in determining the applicability of this opinion to a particular
Series of Certificates.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Certain Federal Income Tax Consequences" in each Prospectus forming a part of
the Registration Statement, without admitting that we are "experts" within the
meaning of the 1933 Act or the Rules and Regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours
/s/ Brown & Wood LLP
