<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1995 33-98594
------------------------- ----------------------
LEHMAN ABS CORPORATION
(as depositor under the Pooling and Servicing Agreement dated as of
December 1, 1994, providing for the issuance of the Lehman FHA
Title I Loan Trust 1995-2, FHA Title I Loan Asset-Backed
Certificates, Series 1995-2)
LEHMAN ABS CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 13-3447441
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Three World Financial Center
200 Vesey Street
New York, New York 10022
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 298-2000
Securities registered pursuant to Section 12(b) of the Act: Not Applicable.
Securities registered pursuant to Section 12(g) of the Act: Not Applicable.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No _
-
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. ( ).
Aggregate market value of voting stock held by non-affiliates of the
Registrant as of December 31, 1995: Not Applicable.
Number of shares of common stock outstanding as of December 31, 1995: Not
Applicable.
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DOCUMENTS INCORPORATED BY REFERENCE
Documents in Part II and Part IV incorporated herein by reference are as
follows:
Monthly Report to Certificateholders as to distributions made on January
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
February 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on March
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on April
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on May 25,
1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange
Commission.
Monthly Report to Certificateholders as to distributions made on June
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on July
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on August
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
September 25, 1995 hereby incorporated herein by reference as exhibits
to Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on October
25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
November 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
2
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Monthly Report to Certificateholders as to distributions made on
December 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
PART I
Item 1. Business.
The trust fund relating to Lehman FHA Title I Loan Trust 1995-2, Asset-
Backed Certificates, Series 1995-2 ("Series 1995-2") was established pursuant
to a Pooling and Servicing Agreement dated as of December 1, 1994 among
Lehman ABS Corporation, as depositor (the "Depositor"), The First National
Bank of Keystone, as seller (the "Seller"), Lomas Mortgage USA, Inc., as
master servicer and claims administrator (the "Master Servicer" and "Claims
Administrator"), Coast Partners Acceptance Corporation, as contract of
insurance holder (the "Contract of Insurance Holder") and First Bank National
Association, as trustee (the "Trustee").
With respect to the Series listed herein, Series 1995-2 issued Lehman
FHA Title I Loan Trust 1995-2, FHA Title I Loan Asset-Backed Certificates
(the "Certificates"). The Certificates represent beneficial ownership
interests in a trust fund (the "Trust"). The Trust consists primarily of a
pool of closed-end fixed-rate home improvement loans (the "Mortgage Loans"),
secured by first and junior mortgages, deeds of trust and security deeds on
residences (which are primarily condominiums, townhouses and one- to four-
family residences), including investment properties (the "Mortgaged
Properties") and partially insured by the Federal Housing Administration (the
"FHA") of the United States Department of Housing and Urban Development under
Title I of the National Housing Act of 1934 (the "Title I Program").
Certificateholders receive Monthly Reports regarding distributions.
Information with respect to the business of the Trust would not be
meaningful because the only "business" of the Trust is the collection on the
Mortgage Loans and distribution of payments on the Certificates to
Certificateholders. This information is accurately summarized in the Monthly
Reports to Certificateholders, which are filed on Form 8-K. There is no
additional relevant information to report in response to Item 101 of
Regulation S-K.
Item 2. Properties.
The Issuer owns no property. The Series 1995-2 Certificates, in the
aggregate, represent the beneficial ownership in a trust fund consisting
primarily of the Mortgage Loans. The Trust will acquire title to real estate
only upon default of the mortgagors under a Mortgage Loan. Therefore, this
item is inapplicable.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Certificateholders during the
fiscal year covered by this report.
3
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Series 1995-2 Certificates represent, in the aggregate, the
beneficial ownership in the Trust consisting primarily of the Mortgage Loans.
The Certificates are owned by Certificateholders as Trust beneficiaries.
Strictly speaking, Registrant has no "common equity," but for purposes of
this Item only, Registrant's FHA Title I Loan Asset-Backed Certificates are
treated as "common equity."
(a) Market Information. There is no established public trading market for
------------------
Registrant's Certificates. Registrant believes the Certificates are traded
primarily in intra-dealer markets and non-centralized inter-dealer markets.
(b) Holders. The number of registered holders of all classes of
-------
Certificates on December 31, 1995 was 1.
(c) Dividends. Not applicable. The information regarding dividends
---------
required by Sub-paragraph (c) of Item 201 of Regulation S-K is inapplicable
because the Trust does not pay dividends. However, information as to
distribution to Certificateholders is provided in the Monthly Reports to
Certificateholders for each month of the fiscal year in which a distribution
to Certificateholders was made.
Item 6. Selected Financial Data.
Not Applicable. Because of the limited activities of the Trust, the
Selected Financial Data required by Item 301 of Regulation S-K does not add
relevant information to that which is provided by the Monthly Reports to
Certificateholders.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Not Applicable. The information required by Item 303 of Regulation S-K
is inapplicable because the Trust does not have management per se, but rather
the Trust has a Trustee who causes the preparation of the Monthly Reports to
Certificateholders. The information provided by the Monthly Reports to
Certificateholders does provide the relevant financial information regarding
the financial status of the Trust.
Item 8. Financial Statements and Supplementary Data.
Monthly Report to Certificateholders as to distributions made on January
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
February 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on March
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
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Monthly Report to Certificateholders as to distributions made on April
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on May 25,
1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on June
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on July
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on August
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
September 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on October
25, 1995 hereby incorporated herein by reference as exhibits to Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
November 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Monthly Report to Certificateholders as to distributions made on
December 25, 1995 hereby incorporated herein by reference as exhibits to
Registrant's Current Report on Form 8-K filed with the Securities and
Exchange Commission.
Annual Statement of Compliance by the Master Servicer attached hereto.
Independent Accountant's Report on Master Servicer's servicing
activities dated January 15, 1996 attached hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
5
<PAGE>
PART III
Item 10. Directors and Executive Officers of Registrant.
Not Applicable. The Trust does not have officers or directors.
Therefore, the information required by items 401 and 405 of Regulation S-K is
inapplicable.
Item 11. Executive Compensation.
Not Applicable. The Trust does not have officers or directors to whom
compensation needs to be paid. Therefore, the information required by Item
402 of Regulation S-K is inapplicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners. Under the Pooling
-----------------------------------------------
and Servicing Agreement governing the Trust, the holders of the
Certificates generally do not have the right to vote and are pro-
hibited from taking part in management of the Trust. For pur-
poses of this Item and Item 13 only, however, the Certificate-
holders are treated as "voting security" holders.
As of December 31, 1995, the following are the only persons
known to Registrant to be the beneficial owners of more than
5% of any class of voting securities.
TITLE NAME AND AMOUNT AND NATURE PERCENT
OF ADDRESS OF OF BENEFICIAL OF
CLASS BENEFICIAL OWNERS OWNERSHIP CLASS
_____ _________________ _________________ _______
Series 1995-2 Citibank, N.A. $5,600,000 23%
Class A-1 111 Wall Street
20th Floor, Zone 9
New York, NY 10043
Series 1995-2 The First National $10,770,000 45%
Class A-1 Bank of Boston
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Series 1995-2 LBI-Lehman Government $1,730,000 7%
Class A-1 Securities, Inc. (LBI)
200 Vesey Street
New York, NY 10285
Series 1995-2 Northern Trust Co.- $1,900,000 8%
Class A-1 Trust
801 S. Canal C-In
Chicago, IL 60607
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TITLE NAME AND AMOUNT AND NATURE PERCENT
OF ADDRESS OF OF BENEFICIAL OF
CLASS BENEFICIAL OWNERS OWNERSHIP CLASS
_____ _________________ _________________ _______
Series 1995-2 SSB-Custodian $3,700,000 15%
Class A-1 c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Series 1995-2 Bank of New York $1,000,000 9%
Class A-2 925 Patterson Plank Rd.
Secaucus, NJ 07094
Series 1995-2 Harris Trust & Savings $10,000,000 91%
Class A-2 Bank
Proxy Services
111 West Monroe Street,
1130
Chicago, IL 60603
Series 1995-2 Boston Safe Deposit $4,550,000 34%
Class A-3 & Trust Co.
c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Series 1995-2 Chemical Bank $1,000,000 7%
Class A-3 Auto Settle Department
4 New York Plaza, 4th Fl.
New York, NY 10004
Series 1995-2 Harris Trust & $2,000,000 15%
Class A-3 Savings Bank
Proxy Operations
111 West Monroe Street,
1130
Chicago, IL 60603
Series 1995-2 Northern Trust Co.-Trust $2,600,000 19%
Class A-3 801 S. Canal C-In
Chicago, IL 60607
Series 1995-2 SSB-Custodian $3,000,000 22%
Class A-3 c/o ADP Proxy Services
51 Mercedes Way
Edgewood, NY 11717
Series 1995-2 Bank One Trust Company $7,500,000 41%
Class A-4 N.A.-State
30 West Spring Street
Columbus, OH 43266-0581
7
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TITLE NAME AND AMOUNT AND NATURE PERCENT
OF ADDRESS OF OF BENEFICIAL OF
CLASS BENEFICIAL OWNERS OWNERSHIP CLASS
_____ _________________ _________________ _______
Series 1995-2 Northern Trust Co.-Trust $7,500,000 41%
Class A-4 801 S. Canal C-In
Chicago, IL 60607
Series 1995-2 The Fifth Third Bank $3,000,000 16%
Class A-4 Dept. 00850-Proxy
38 Fountain Square Plaza
Cincinnati, OH 45263
(b) Security ownership of management. Not Applicable. The Trust does
--------------------------------
not have any officers or directors. Therefore, the information required by
Item 403 of Regulation S-K is inapplicable.
(c) Changes in control. Not Applicable. Since Certificateholders do
------------------
not possess, directly or indirectly, the power to direct or cause the
direction of the management and policies of the Trust, other than in respect
to certain required consents regarding any amendments to the Pooling and
Servicing Agreement, the information requested with respect to Item 403 of
Regulation S-K is inapplicable.
Item 13. Certain Relationships and Related Transactions
(a) Transactions with management and others. Registrant knows of no
---------------------------------------
transaction or series of transactions during the fiscal year ended December
31, 1995, or any currently proposed transaction or series of transactions, in
an amount exceeding $60,000 involving the Registrant in which the
Certificateholders identified in Item 12(a) had or will have a direct or
indirect material interest. There are no persons of the types described in
Item 404(a)(1), (2) and (4) of Regulation S-K; however, the information
required by Item 404(a)(3) of Regulation S-K is hereby incorporated by
reference in Item 12(a) herein.
(b) Certain business relationships. None.
------------------------------
(c) Indebtedness of management. Not Applicable. The Trust does not
--------------------------
have management consisting of any officers or directors. Therefore, the
information required by Item 404(c) of Regulation S-K is inapplicable.
(d) Transactions with promoters. Not Applicable. The Trust does not
---------------------------
use promoters. Therefore, the information required by Item 404(d) of
Regulation S-K is inapplicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following is a list of documents filed as part of this report:
8
<PAGE>
EXHIBITS
--------
Monthly Report to Certificateholders as to distributions made
on January 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on February 25, 1995 hereby incorporated herein by reference
as exhibits to Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on March 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on April 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on May 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on June 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on July 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on August 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on September 25, 1995 hereby incorporated herein by reference
as exhibits to Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on October 25, 1995 hereby incorporated herein by reference as
exhibits to Registrant's Current Report on Form 8-K filed with
the Securities and Exchange Commission on.
Monthly Report to Certificateholders as to distributions made
on November 25, 1995 hereby incorporated herein by reference
as exhibits to Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission.
Monthly Report to Certificateholders as to distributions made
on December 25, 1995 hereby incorporated herein by reference
as exhibits to Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission.
9
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Annual Statement of Compliance by the Master Servicer attached
hereto.
Independent Accountant's Report on Servicer's servicing
activities dated January 15, 1996 attached hereto.
(b) No Reports on Form 8-K were filed during the last quarter of the
period covered by this Report:
(c) The exhibits required to be filed by Registrant pursuant to Item
601 of Regulation S-K are listed above and in the Exhibit Index
that immediately follows the signature page hereof.
(d) Not Applicable. The Trust does not have any subsidiaries or
affiliates. Therefore, no financial statements are filed with
respect to subsidiaries or affiliates.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE
NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
No annual report, proxy statement, form of proxy or other
soliciting material has been sent to Certificateholders, and
the Registrant does not contemplate sending any such materials
subsequent to the filing of this report.
10
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
By: First National Bank Association, not
in its individual capacity but solely as Trustee
on behalf of the Registrant Trust Fund,
By: /s/Christina Hatfield
---------------------
Christina Hatfield
Assistant Vice President
Date: March 28, 1996
11
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EXHIBIT INDEX
Sequential
Exhibit Document Page Number
- ------- -------- -----------
1.1 Monthly Report to Certificateholders as to distributions *
made on January 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.2 Monthly Report to Certificateholders as to distributions *
made on February 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.3 Monthly Report to Certificateholders as to distributions *
made on March 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.4 Monthly Report to Certificateholders as to distributions *
made on April 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.5 Monthly Report to Certificateholders as to distributions *
made on May 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.6 Monthly Report to Certificateholders as to distributions *
made on June 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.7 Monthly Report to Certificateholders as to distributions *
made on July 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.8 Monthly Report to Certificateholders as to distributions *
made on August 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.9 Monthly Report to Certificateholders as to distributions *
made on September 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
11
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1.10 Monthly Report to Certificateholders as to distributions *
made on October 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.11 Monthly Report to Certificateholders as to distributions *
made on November 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.12 Monthly Report to Certificateholders as to distributions *
made on December 25, 1995 (hereby incorporated herein by
reference as exhibits to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission.
1.13 Annual Statement of Compliance of the Master Servicer.
1.14 Independent Accountant's Report on Servicer's servicing
activities, dated January 15, 1996.
- -------------------------------------------------------
* Incorporated by reference.
12
<PAGE>
Exhibit 1.13
ANNUAL CERTIFICATION FOR
LEHMAN HOME IMPROVEMENT LOAN
ASSET-BACKED CERTIFICATES, SERIES 1995-2
Pursuant to Section 3.04 of the Agreement for the subject transaction
(Agreement) and the enclosed Subservicer Annual Officer Certifications, Lomas
Mortgage USA (Lomas), as Master Servicer for the subject transaction
certifies that:
1) a review of the activities of the Master Servicer for the period of
December 1, 1994 to September 30, 1995 and of the Master Servicer's
performance under the Agreement with respect to subject transaction
has been made under the supervision of the signer of such Officer's
Certificates and
2) to the best of such signer's knowledge and the attached
certifications from the subservicers, based on such review, the
Master Servicer has fulfilled all its obligations under the
Agreement throughout such year (or such portion of such year), or
if there has been a default in the fulfillment of any such
obligation, in which case such Officer's Certificate shall specify
each such default known to such signer and the nature and status
thereof and what action the Master Servicer proposes to take or has
taken is stated below.
Additionally, any known non-compliance issues have been communicated to the
Trust as required under the Agreement.
/s/ Kelly Stricklan
- -----------------------------------------
Kelly Stricklan, Assistant Vice President
Lomas Mortgage USA
13
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Exhibit 1.14
LOMAS MORTGAGE USA, INC.
Findings of Limited Examination
January 15, 1996
(With Independent Accountants' Report on
Applying Agreed-Upon Procedures Thereon)
14
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(FORM OF KPMG PEAT MARWICK LLP LETTERHEAD)
KPMG Peat Marwick, LLP
200 Crescent Court
Suite 300
Dallas, TX 75201-1885
INDEPENDENT ACCOUNTANTS' REPORT ON
APPLYING AGREED-UPON PROCEDURES
-------------------------------
Lomas Mortgage USA, Inc.
and
Financial Security Assurance Inc.
and
First Bank National Association:
Per your request, we have performed the procedures as noted in Exhibit A,
solely to assist you with respect to meeting the requirements of Section
3.05(b) of Pooling and Servicing Agreements with respect to FHA Title 1 Home
Improvement Loan Pass-Through Certificates, Series 1993-1, Series 1994-1,
Series 1994-2, Series 1994-3, and Lehman Home Improvement Loan Asset Backed
Certificates Series 1995-2. The sufficiency of the procedures is solely the
responsibility of the specified users of the report. Consequently, we make
no representation regarding the sufficiency of the procedures described in
Exhibit A either for the purpose of which this report has been requested or
for any other purpose.
We have applied the agreed-upon procedures as noted in Exhibit A to the
following months' Master Servicer Certificates:
Series 1993-1 Series 1994-1 Series 1994-2 Series 1994-3 Series 1995-2
- ------------- ------------- ------------- ------------- -------------
July 1994 July 1994 July 1994 December 1994 December 1994
October 1994 October 1994 October 1994 February 1995 February 1995
February 1995 February 1995 February 1995 April 1995 April 1995
May 1995 May 1995 June 1995 June 1995
These Certificates are summaries of servicing information the Master Servicer
obtained from certain subservicers.
Reconciling differences were noted in comparing certain components of the
Certificates to the subservicer reports. As represented by Lomas management,
Lomas parallel processes the reports received from each of the subservicers
each month. Lomas reports the reconciled information to First Bank National
Association. Such reconciling differences are reported to the subservicers,
and per Kelly Stricklan. Lomas Mortgage USA, Inc., the subservicers make the
adjustments on their system in the following month. The agreed-upon
procedures indicated no exceptions except the following:
SERIES 1994-1
July 1994
- ---------
Defaulted Mortgage Loans:
15
<PAGE>
1) Amounts received with respect to a Mortgage Loan or any Foreclosed
Property subsequent to the date of repurchase of such Mortgage Loan or
Foreclosed property from the Trust (cumulative), did not include
Recoveries on Defaulted Loans during the prior Due Period (current) in
the amount of $84,847.12. It was noted that the amount was properly
included in the subsequent period's Certificate.
Because the above procedures do not constitute an audit made in accordance
with generally accepted auditing standards, we do not express an opinion on
any of the specified items referred to above. In connection with the
procedures referred to in Exhibit A, except as set forth above, no matters
came to our attention that caused us to believe that the specified items
should be adjusted. Had we performed additional procedures or had we
performed an audit of the Master Servicer Certificates in accordance with
generally accepted auditing standards, other matters might have come to our
attention that would have been reported to you. This report relates only to
the accounts and items specified above and does not extend to any financial
statements of Lomas Mortgage USA, Inc. taken as a whole.
KPMG Peat Marwick LLP is independent of the Master Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
/s/ KPMG Peat Marwick LLP
---------------------------
KPMG Peat Marwick LLP
January 15, 1996
16
<PAGE>
Exhibit A
---------
KPMG Peat Marwick LLP performed the following agreed-upon procedures for the
period since June 30, 1994, or the Closing Date through June 30, 1995, with
respect to the Master Servicer Certificates (four randomly selected Master
Servicer Certificates, three in the case of Series 1993-1). All reports
obtained from the Master Servicer were prepared by the Master Servicer by
dual processing data obtained from the subservicers:
1) Recalculated all components of the Total Distribution Amount by summing
amounts obtained from reports prepared by the Master Servicer. These
reports were prepared by the Master Servicer by dual processing; data
obtained from the subservicers. All amounts were agreed to the
reconciliation worksheet, which detailed any differences between amounts
reported by the subservicers and amounts recalculated by the Master
Servicer.
2) Recalculated FHA Insurance Information Amount by summing amounts
obtained from reports prepared by the Master Servicer, HUD statements
and the Delinquency Tracking Report.
3) Recalculated the Delinquency Information agreeing defaulted loan amounts
and aggregate unpaid principal balances obtained from reports prepared
by the Master Servicer to the Master Servicer Certificates. The amounts
noted were used in recalculating the delinquency percentages as reported
on the Certificates.
4) Recalculated the amounts reflected in Defaulted Mortgage Loans section
of the Certificates by summing amounts obtained from reports prepared by
the Master Servicer. All amounts were agreed to the reconciliation
worksheet, which detailed any differences between amounts reported by
the subservicers and amounts recalculated by the Master Servicer.
5) Recalculated the fees due FHA and the Master Servicer utilizing balances
obtained from reports prepared by the Master Servicer and fee rates
provided by the Master Servicer. All amounts noted on the Certificate
were agreed to the reconciliation worksheet, which detailed any
differences between amounts reported by the subservicers and amounts
recalculated by the Master Servicer.
6) Recalculated all other items in the Other section of the Certificates by
summing amounts obtained from reports prepared by the Master Servicer.
All amounts were agreed to the reconciliation worksheet, which detailed
any differences between amounts reported by the subservicers and amounts
recalculated by the Master Servicer.
17
